On the evening of September 20, Guizhou Maotai Distillery Co., Ltd. (Maotai) announced that it will repurchase company shares at a price not less than 30 billion yuan (RMB) and not more than 60 billion yuan within 12 months from the date of approval by the shareholders’ meeting, making it the first time Maotai has implemented a cancellation-style buyback since its listing 23 years ago.
The announcement stated that the repurchase will be funded using the company’s own funds and will be conducted through centralized bidding trading. The repurchase price will not exceed 1795.78 yuan per share (inclusive), with the upper limit set at 130% of the average trading price of the company’s stock in the 30 trading days prior to the board resolution to repurchase shares. It is estimated that the repurchased shares will amount to approximately 1.670583 million to 3.341164 million shares, accounting for approximately 0.1330% to 0.2660% of the total issued share capital as of the announcement date. The repurchase plan will be implemented using the company’s own funds in accordance with relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange. The repurchased shares will be used for cancellation to reduce the company’s registered capital.
The announcement also indicated that as of September 19, the company’s directors, supervisors, controlling shareholders, and shareholders with more than 5% of shares have no plans to reduce their holdings in the next 3 or 6 months.
Financial commentator and columnist Guo Shiliang analyzed on September 21 that Maotai’s valuation has dropped to a historically low level, with a Trailing Twelve Months (TTM) price-earnings ratio falling below 20 times. On the other hand, Maotai has cash and cash equivalents of over a hundred billion, making share repurchases at this time more cost-effective.
Data shows that on September 20, Maotai’s stock price closed at 1263.92 yuan per share, up by 0.23%. Since May 2024, Maotai’s stock price has been on a downward trend, sliding 27.11% from its short-term peak of 1734.10 yuan back then, and a cumulative decline of 50% from its high in 2021.
Guo Shiliang believes that the significant drop in stock price is the direct reason for Maotai’s announcement of the buyback plan. As a former “stock king” in the A-share market, with the total market value shrinking by almost half from its peak, the company’s first issuance of a buyback plan since its listing reflects that the current stock price has been undervalued. A massive buyback and cancellation can effectively hedge against the risk of slowing revenue growth, increasing the possibility of short-term price stabilization.
A netizen named “Traveler” commented, “In the current environment, a decline in stock price attracts attention, and is likely to trigger another round of significant drop, similar to Dongfang Yuhong, which fell from 60 to 25, causing more people to pay attention and discuss the stock. Now the price has dropped to 10 yuan.”
While Maotai’s stock price is falling, the wholesale price of Maotai liquor is also declining. According to today’s liquor prices, on September 20, the price of a bottle of 53-degree Feitian Maotai (bulk) was 2365 yuan, which had previously risen to above 2400 yuan per bottle before dropping again on September.
On the same day, the price of a crate of 2024 Feitian Maotai (original) was reported at 2470 yuan per bottle, down by 20 yuan per bottle compared to the previous day. This follows a continuous decline in the wholesale price of a crate of 2024 Feitian Maotai (original) after it fell to 2500 yuan per bottle on September 18.
A liquor merchant revealed to Hai Bao News on September 19, “The current market price for an original crate is around 2600 yuan per bottle, which is too low. This year is really unusual—prices have fallen instead of rising during the Mid-Autumn Festival.”