Soy sauce technology has crushed hard technology, and it has always been an unspeakable pain for Big A.

However, over the past few years, things have finally changed.

Unbeknownst to me, Maotai has been weak and volatile for a full 3 years. Since the highest price in 2021, it has dropped by more than 25%. The magnitude is nothing compared to other “high” ones, but its trend just makes people feel uncomfortable.

In the past 3 years, it has entered a “technical bear market” 4 times (fall of more than 20% during the period), and fell by more than 10% during the 3 periods. Although it quickly drew back each time, it gradually slipped back down.

It was like a big fat guy who suddenly became thin, his pants became loose, and his pants began to fall frequently, so he quickly pulled them up with his hands, over and over again, probably like this.

Nervous, heartbroken, irritated...

It's not that Maotai hasn't made any downward adjustments since it went public; in '08, '12, and '18, the adjustments only took 1 year to advance.

But this is really the first time they've been screwed for such a long time.

01

Over the past few days, Maotai's stock price has dropped significantly again.

This is an abnormal trend in a situation where it has just released its 2023 annual report and the performance data is very good.

According to the annual report, Maotai's revenue reached the 150 billion threshold for the first time, reaching 15.56 billion yuan, an increase of 18.04%; net profit of 74.734 billion yuan, an increase of 19.16%. Regardless of the scale or growth rate of the two, it is almost the best performance since 2019.

How good is this data? Half of the revenue is net profit!

A powerful company like Huawei had revenue of 704.2 billion yuan in 2023, and net profit of only 87 billion yuan.

As for its ability to make money, Maotai far surpasses Huawei; it is no exaggeration to say that it is a cash cow.

Mao Wang, who earns 200 million yuan a day, is also generous to shareholders, making great efforts to pay shareholders 308.76 yuan in dividends.

The stock price was unsupported by such a ludicrous performance background.

Any fool can see that something is wrong here.

Earlier, it was rumored that the two shareholders in the annual report who had only bought Maotai for a long time and didn't sell it have reduced their holdings in Maotai. These two companies, called Jinhui Rongsheng Wealth and the shareholders of Zhuhai Ruifeng Huibang, are said to be the well-known investor Duan Yongping.

Although Duan Yongping was quick to respond: Not a single share of Maotai was sold.

However, the effect of this statement was as if there were no silver 3002 in this place; instead, it attracted more attention and suspicion.

Capital is most sensitive to the latest developments. The 2023 annual report shows that the number of Maotai holders decreased by 3 in the fourth quarter, and 1 company withdrew, and there are still people running around. Not many, though.

But once things fermented, the results were the same regardless of whether Duan Yongping was running or not.

Second, the rumor that the wholesale price of Maotai Feitian Liquor continues to drop has been hotly discussed in the community recently. According to the latest price on April 9, the 2024 53% vol500ml Flying Moutai Liquor loose bottle is 2,510 yuan, down 150 yuan to 200 yuan from the previous one.

Some people blamed the reason for this because 375ml of Xunfeng wine sold 200,000 bottles. Maotai also quickly refuted the rumor, but the impact did not stop.

Obviously, it is a cyclical fact that terminal sales enter the off-season after the holiday season. There is no problem with wholesale prices falling every year at this time.

But now the big guys are running small essays, and the prices of the main products are falling in the off-season. Let go of the cold arrows. Which veteran cadre can stand such a test?

No need to delve into it; the horror brought about by these hints is enough to drink a pot.

02

There is a classic line in Zhao Benshan's sketch: Your grandpa is still your grandpa, but your aunt is no longer your aunt.

How similar is it to Maotai in terms of current market relationships.

Maotai has always been the king of A-shares. In 2016, Maotai leapt into the top ten A-shares for the first time with a market capitalization of 419.758 billion yuan. Back then, the first place was ICBC, with a market capitalization of 1.55 trillion yuan.

After only three years, Maotai's market value doubled to reach 1 trillion yuan in 2019, reaching 1486.082 billion yuan, ranking fourth.

Instead, the 2020 pandemic made Maotai, and its market capitalization once again doubled to 2.5 trillion dollars, successfully crowning the crown.

It once surpassed $3 trillion in 2021.

The six major state-owned banks, CNPC, and China Mobile, which are all taken down by King Mao.

Since then until now, despite fluctuations, the market value has basically hovered around 2 trillion dollars.

In addition to capital support, Mao Wang was able to become a king. The foundation also lies in his own fundamentals.

From 2013 to 2023, Maotai's revenue grew at a compound annual rate of 15%, and profit increased from 15.137.5 billion yuan to 74 billion in 2023. The compound annual growth rate reached 17.17%, and the average compound growth rate of profit to mother was 15%.

In the 23 years since its listing, Maotai's cumulative dividends have reached 247.4 billion yuan. In particular, in recent years, annual dividends have been distributed tens of billions of dollars. It can be called a money printer.

Soaring market capitalization, continued steady performance, and huge dividends have all combined to make countless institutions and shareholders become firm followers of it over the years.

However, on the other hand, Maotai's dividend rate is less than 3 points all year round. Even if the stock price falls quite a bit over the past three years, the dividend rate is still relatively unattractive.

It's not that it doesn't pay enough dividends; it's that its stock price is rising too fast, causing the dividend ratio to look uncost-effective.

Before 2021, believers liked Maotai nothing more than its exaggerated and firm stock price, which was able to overcome the continuous rise of bulls and bears.

For believers from a long time ago, I was also interested in its dividends, which have always been impressive.

However, for new investors who want to enter the market after 2021, both of these “points of faith” seem to have become much weaker than before.

Here's a rough proof:

If you buy Maotai at the beginning of January 2014 when the price of Maotai was 126 yuan, then by 2021, you can get a dividend of 21.68 yuan per share, and in 2022 you can even get 47.82 yuan. For you, your dividend returns are as high as 17.2% and 38% respectively, which is enough for you. This is also the reason why many investors who have held Maotai for a long time are reluctant to sell Maotai.

However, if you only start buying in 10 years, in 2024, at the price of 1,700 yuan/share in Maotai, then your treatment may be very different.

Maotai's profit growth rate in the previous few years was 15%, and the dividend payment rate was about 50%. If it continues to be maintained in 2024, then how much will your dividend per share be at that time?

Last year, Maotai's net profit to mother was about 74.7 billion yuan, with a total share capital of 1,256 billion shares, so the dividend per share for 2024 is approximately 747*1.15*0.5/12.56 = 34.2 yuan.

And if your own holding cost is 1,700 yuan/share, then your dividend rate is 2%.

This kind of actual dividend return is hardly cost-effective at Big A, and it can't even beat treasury bonds.

Now the dividend rate has been stable at more than 5% for a long time, and there are simply not many of them.

You can only count on its stock price rising.

Continuing to assume:

Maotai's average PE over the past ten years has been around 30 times. Assuming that Maotai's business situation has not changed significantly and profits continue to grow 15%, then in 2024, Maotai's net profit per share can be 747*1.15/12.56 = 68.4 yuan, and the corresponding stock price of 30 times PE is 2,050 yuan.

At this level, apart from your holding cost of 1,700 yuan/share, there is still room for growth of about 20.5%. Even if you pay half the price, there is room for a 10% increase.

For large institutions, this is also quite a bit of room; at least the certainty will be much more guaranteed than other stocks.

But with the current macroeconomic environment and the continuing pressure on sales, how confident are you that it will go as expected?

So, what does Maotai rely on to attract investors standing outside the market?

03

The liquor industry has become the king of capital markets; in fact, it was only formed over the past ten years.

Before that, they weren't even as good as steel and coal manufacturing.

It can be said that the growth and continued prosperity of the liquor industry is inseparable from major infrastructure, a blowout in real estate and other commercial activities, and the catalysis of massive amounts of capital.

If it weren't for capital's intentional or unintentional impetus, it would be almost impossible for liquor to be king.

However, the times cannot stay where they are; they will change eventually.

Today, the golden age of major infrastructure has passed. Under the new economic environment, government consumption and business banquet consumption scenarios have also shrunk markedly compared to before, and sales in the liquor industry can only continue to decline.

In fact, starting in 2016, the trend of shrinking liquor production began, falling from a maximum of 1.4 million kiloliters to 4.492 million kiloliters in 2023, and even a sharp drop of 33% year-on-year in 2023.

In contrast, liquor companies' inventories are constantly increasing. Earlier, it was reported that at the end of the third quarter of 2023, the total inventory of the 20 listed liquor companies was 136.354 billion yuan. The leading wine companies all accounted for more than 40% of the inventory, the inventory value all exceeded 10 billion yuan, and Maotai even exceeded 40 billion yuan.

The pressure has long been on the dealers.

However, in the current market environment, what can dealers do?

High-end wine has been accumulated over so many years, and it is no longer known how large the inventory is, whether it is in the hands of dealers or end consumers. In the past, drinkers are cutting back on their diet, and the number of “application scenarios” is constantly decreasing, and young people can't afford it even if they don't talk about “alcohol morality.”

So, who else can you sell high-end wine in bulk to?

This is also the reason why Maotai's stock price has been so tight over the past three years.

This problem, like the real estate issue, is actually all the same.

But fortunately, they may not have ended in the same way. The real estate industry, along with the various “leaders” of the entire real estate industry chain, has long been unknown how many times they have lost their backs. High-end liquor is clearly in a much better situation due to stable consumer groups and future industry expectations.

Especially for Maotai, which has a strong moat and steady performance growth expectations, the situation will definitely be much better than other liquor rivals. There is no doubt that until the economy and consumption recover strongly again in the future, its market value will continue to grow steadily along with its profits.

However, as total demand continues to shrink, the internal situation in the liquor industry is largely unavoidable.