Bloomberg News

Moutai Falls Most in Month on Credit Suisse Cut: Shanghai Mover

January 27, 2013

Moutai Falls Most in Month on Credit Suisse Cut

Bottles of China Kweichow Moutai Distillery Co. baijiu liquor are displayed at the company's facility in Zunyi, Guizhou Province, China. Photographer: Nelson Ching/Bloomberg

Kweichow Moutai Co. (600519), China’s biggest liquor maker by market value, fell the most in a month in Shanghai stock trading after Credit Suisse Group AG cut its rating and forecast a drop in volume growth this year.

Moutai slid 4.7 percent to 180.21 yuan as of 10:23 a.m. local time, heading for the steepest single-day drop since Dec. 24. China’s benchmark Shanghai Composite Index gained 1 percent.

Vincent Chan, an analyst at Credit Suisse, downgraded Moutai’s stock to neutral from outperform and estimated a 3 percent decline in volume growth for its “high-end” liquor products in 2013, according to a report dated today.

Chan had an outperform rating on Moutai stock dating back to at least September 2011, data compiled by Bloomberg show. A neutral rating means that the stock’s total return is expected to be in line with the benchmark index over the next 12 months.

Moutai on Jan. 24 estimated 2012 net income will rise about 50 percent, trailing estimates from brokerages such as Fortune CLSA Securities Ltd. Credit Suisse said in the report that this “disappointment is probably due to less sales volume reported from Moutai’s self-operated stores and is a sign that the company has started giving in to weakening fundamentals.”

Volume growth this year from direct government and military purchases may slide as much as 40 percent from 2012, Chan wrote in the report. China’s new party leadership pledged last month to reduce lavish receptions and live more frugally.

To contact Bloomberg News staff for this story: Allen Wan in Shanghai at awan3@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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