Kweichow Moutai (600519.SH) third quarter performance meeting: Demerger requires careful decision-making, highly values market value management.

On December 17th, Kweichow Moutai (600519.SH) held its 2024 third quarter performance briefing online. The company's party secretary and chairman, Zhang Deqin, independent director Wang Xin, party committee member and deputy general manager, finance director, and board secretary Jiang Yan interacted with investors online through presentations and network interactions. During the briefing, the company's management responded to questions regarding stock splitting, buybacks, annual goals, internationalization, and emphasized the importance of "highly valuing market value management". In terms of performance, data showed that in the first three quarters of this year, Kweichow Moutai achieved a total operating income of 123.123 billion yuan, a year-on-year increase of 16.91%; net profit attributable to shareholders of the listed company was 60.828 billion yuan, a year-on-year increase of 15.04%. Chairman Zhang Deqin stated that the company's operational goals are based on scientific factors such as production, market, and base liquor. This year, the board of directors and the production management team have diligently fulfilled their duties and responsibilities, laying a solid foundation for achieving the annual growth target. At the same time, the company is confident in achieving the annual 15% growth target in total operating income. Specific growth targets for next year will be disclosed in the "2024 Annual Report". Splitting stocks requires careful decision-making and buybacks are about to complete preliminary work Some investors suggested to Chairman Zhang Deqin that Kweichow Moutai should consider splitting stocks to allow more participation from the public and share dividends. Zhang Deqin responded that regarding whether Kweichow Moutai should split stocks, shareholders' views are not entirely unified, and the board of directors needs to consider factors such as the healthy, stable, and sustainable development of the company, as well as long-term shareholder interests, in a systematic manner and make decisions carefully. Zhang Deqin reiterated that Kweichow Moutai has always attached great importance to market value management and carefully analyzed various market value management tools. The company will stand at the perspective of the board of directors, considering the healthy, stable, and sustainable development of the company as well as long-term shareholder interests in making decisions carefully. When asked about the company's buyback plan, the company stated that on November 27, the company held a shareholders' meeting to approve the "Proposal on Repurchasing Company Shares through Centralized Competitive Trading". The company plans to use its own funds of 3 billion to 6 billion yuan to repurchase shares for cancellation and to reduce registered capital, with the repurchase price not exceeding 1,795.78 yuan per share, and the repurchase period being within 12 months from the date when the shareholders' meeting approves the buyback plan. Jiang Yan, the board secretary, stated that this is Kweichow Moutai's first implementation of a share repurchase plan, and the company is about to complete preliminary work such as selecting professional intermediary organizations and opening a special account for repurchases. Subsequently, in accordance with the relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange, the company will timely disclose a repurchase report and carry out related work of share repurchase. As of the close of December 17th, Kweichow Moutai's stock price was 1,558 yuan per share, with a total market value of 1.96 trillion yuan. Emphasizing internationalization as an important strategy Regarding the internationalization strategy, Chairman Zhang Deqin responded that internationalization is one of the company's important strategies. This year, the company has conducted research and market promotions in Europe, North America, and Southeast Asia. In the process of promoting internationalization, the company continuously improves its international perspective and continues to shape Moutai's overseas product strength, brand power, and market power from the aspects of brand promotion system, regulatory system, product system, channel system, price system, and policy system, making Moutai a well-known Chinese brand in the world. In 2023, Kweichow Moutai achieved overseas operating income of 4.35 billion yuan, accounting for 2.89% of total revenue; the gross profit margin was 92.18%, an increase of 0.14 percentage points year-on-year. By the end of the second quarter of 2024, Kweichow Moutai had 106 overseas distributors. When asked about the sales performance of Moutai series liquors, Jiang Yan stated that by the end of the third quarter, the company's series liquor sales revenue was 19.393 billion yuan, a year-on-year increase of 24.36%, accounting for 16.09% of the company's liquor sales revenue, an increase of 0.93 percentage points compared to the same period last year. Regarding the implementation of ESG work, Zhang Deqin stated that in recent years, Moutai has deeply practiced the ESG concept, promoting the deep integration of ESG management and production and operation business. The company has specially established a three-level management structure managed by the decision-making ESG promotion committee of the board of directors, which includes environmental, social, and governance subcommittees. Furthermore, based on disclosure guidelines and mainstream rating methodologies at home and abroad, the company has formulated ESG strategic goals, established quantitative indicators, promoted the integration of ESG into production and operational business, continuously improved ESG management levels, and promoted Moutai's high-quality development and modernization. This year, the company has been awarded honors such as "China ESG Model Enterprise" and "ESG Golden Bull Award Top 100", and the MSCI rating has been upgraded to BBB. In the future, the company will continue to work hard to further improve its ESG performance. During the exchange, Zhang Deqin and Jiang Yan also answered questions from investors regarding financial management and other aspects.