Kweichow Moutai Valuation

As a representative of Chinese value investment stocks,Kweichow Moutai has achieved an average annual return of 22.31% in the past ten years,which has attracted many investors to hold it for a long time.In this context,this article evaluates Moutai to explore the reasons why the stock price of Moutai has risen all the way.This paper uses a three-stage discounted company free cash flow discount model in the relative valuation method and the absolute valuation method to conduct a detailed valuation of Moutai.After research,it has been found that Kweichow Moutai,as a leading enterprise in the domestic liquor industry,lies in the strong brand moat effect brought by the stable consumer demand for its products and the special financial investment demand for high-end liquor.For the valuation of Kweichow Moutai,All of the revenue growth comes from the sustainable consumer demand of Moutai Liquor and ignores the impact of Moutai high-end liquor’s unique investment demand on the company’s revenue.This article starts from the consumer demand and investment demand of Moutai liquor,and studies and deals with the free cash flow of Moutai from an innovative perspective,and uses this to evaluate.This paper uses two valuation models to evaluate and compare Kweichow Moutai.The first is the traditional valuation model,which only considers the inherent consumer demand of Moutai as a consumer product.It considers that all sales revenue of Kweichow Moutai comes from the long-term sustainable consumer demand of Moutai.On this basis,Above,this paper uses the free cash flow discount model in the absolute valuation method to obtain the intrinsic value of Moutai stock at 997.48 yuan per share.At the same time,referring to the average price-earnings ratio,price-to-book ratio,and market-to-sales ratio of the liquor industry,this paper uses the valuation method concluded that the value of Kweichow Moutai was 868.86 yuan per share.The second valuation model first considers the inherent consumer demand of Moutai Liquor as a consumer product.At the same time,the valuation model considers that Moutai High-end Liquor as an investable product has investment needs that other consumer goods do not have.Kweichow Moutai sales revenue comes from the combined effect of these two needs.As the sales income of Moutai supported by this investment demand is unsustainable,the impact of investment demand should be excluded when estimating the long-term investment value of Kweichow Moutai.Considering the investment demand of Moutai high-end liquor for the company the impact of product sales volume,this article uses scenario analysis,the specific method is as follows:Research on optimistic situation: Moutai high-end liquor sales increased by 20% due to investment demand,and Moutai high-end liquor sales increased by 80% due to consumer demand.Considering the unsustainable growth of Moutai’s sales revenue supported by investment demand,excluding the impact of this demand on the company’s sales revenue,the valuation result obtained using the discounted free cash flow model in the absolute valuation method is the per share The intrinsic value is 885.42 yuan;meanwhile,referring to the average price-earnings ratio,price-to-book ratio,and market-to-sales ratio of the liquor industry,the relative valuation method is used to obtain the value of 720.24 yuan per share in Kweichow Moutai.Research on the neutral situation: Moutai high-end liquor sales increased by 50% due to investment demand,and Moutai high-end liquor sales increased by 50% due to consumer demand.Considering the unsustainable growth of Moutai’s sales revenue supported by investment demand,excluding the impact of this demand on the company’s sales revenue,the valuation result obtained using the discounted free cash flow model in the absolute valuation method is the per share The intrinsic value is 717.32 yuan;meanwhile,referring to the average price-earnings ratio,price-to-book ratio and market-to-sales ratio of the liquor industry,the relative valuation method is used to obtain the value of Kweichow Moutai at 474.00 per share.Research on pessimistic situation: The increase in sales volume of high-end liquor in Moutai caused by investment demand accounted for 80%,and the increase in sales volume of high-end liquor in Moutai due to consumer demand accounted for 20%.Considering the unsustainable growth of Kweichow Moutai’s sales revenue supported by investment demand,excluding the impact of this demand on the company’s sales revenue,the valuation result obtained using the discounted free cash flow model in the absolute valuation method is the per share The intrinsic value is 549.23 yuan;meanwhile,referring to the average price-earnings ratio,price-to-book ratio,and market-to-sales ratio of the liquor industry,the relative valuation method is used to obtain the value of 237.12 yuan per share in Kweichow Moutai.In view of the fact that no other company in the liquor industry possesses the industry status and brand influence unique to Kweichow Moutai,the valuation results of the relative valuation method can only be used as a supplement to the absolute valuation method.At present,the stock price of Moutai has exceeded 1,000 yuan.With reference to the valuation results obtained by the two valuation models,the research conclusion of this article is that after excluding the influence of investment requirements unique to Moutai high-end liquor,the intrinsic value of Moutai is lower than the current value.Valuation of Moutai on the one hand helps to enrich the relevant case studies of domestic valuation;on the other hand it can help investors determine whether to invest in Kweichow Moutai to provide a basis.Investors can learn from the valuation results of Kweichow Moutai,and choose a reasonable time to buy or sell the shares of Kweichow Moutai.