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(Yicai Global) April 8 -- The share price of China's leading baijiu distiller Kweichow Moutai has climbed to a historic high after the firm released expectations of strong earnings.
Kweichow Moutai's stock price [SHA:600519] rose nearly 3.5 percent to CNY895 (USD133.20) in the morning session. It reached as high as CNY908 intraday, pushing the Guizhou-based company's market cap temporarily to exceed CNY1.3 trillion (USD193.5 billion). The equity has cumulatively gained about 70 percent since early January.
The revenue in the first quarter is expected to rise 20 percent from last year, while net profit is anticipated to grow about 30 percent, according to the rice wine maker. The company logged a 27 percent increase in operating income and a 30 percent increase in net profit in 2018.
Goldman Sachs has reacted to the confident projections by lifting its 12-month target price for the stock to CNY1,033 from CNY1,016. This is the fourth time the US investment bank has hiked the target price in the past three weeks. Morgan Stanley also raised the price estimate to CNY990 from CNY890.
Daiwa Capital Markets, a unit of Japanese investment bank Daiwa Securities Group, edged up its estimate to CNY941 from CNY735.
Moutai liquor seeks exclusivity by restricting its production. "The contradiction in the supply and demand of Moutai will continue to intensify," Chairman Li Baofang told Yicai Global last month, adding that a short supply will become the new normal.
The firm will lift its annual production capacity to 6,600 tons by the end of this year, but no further expansions are in the cards due to limitations of resources and the environment, Li added.
Editor: Emmi Laine