China's Kweichow Moutai Stock Jumps to All-Time High on Optimistic Earnings Forecast
Tang Shihua
DATE:  Apr 08 2019
/ SOURCE:  yicai

(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 

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Keywords:   Stock Price,Financial Performance,Kweichow Moutai