(Yicai) Sept. 23 -- Chinese liquor maker Kweichow Moutai plans to repurchase between CNY3 billion (USD426 million) and CNY6 billion (USD850 million) of its own shares in a bid to boost investor confidence and shore up its stock price, which has been dragged down by the sluggish catering and gift-giving markets.

Kweichow Moutai’s share price [SHA:600519] was trading up 0.2 percent at CNY1,267.05 (USD190) as of 1.30 p.m. The stock has lost around a quarter of its value since the beginning of the year.

The shares bought in the repurchase will be retired so as to reduce the company’s registered capital, the Zunyi-based company said on Sept. 20. It is the first time in Kweichow Moutai's 23 years as a publicly traded company that it will cancel repurchased shares.

The company will not pay more than CNY1,795.78 (USD255) per share, it said. If the full amount of CNY6 billion is utilized, this would account for approximately 2.1 percent of the firm’s total assets as of June 30. The number of shares to be repurchased ranges from between 1.67 million and 3.34 million, representing 0.13 percent to 0.26 percent of its total shares.

The price of its fiery liquor Moutai has been tumbling since the Mid-Autumn Festival holiday held from Sept. 15 to Sept. 17 as demand stays weak and market confidence remains low, a number of liquor merchants told Yicai. There was a significant drop in alcohol consumption over the Mid-Autumn Festival this year, making it the most challenging year in the past decade.

The price of Moutai Flying Fairy had slumped almost CNY100 (USD14) to below CNY2,400 (USD340) per bottle as of yesterday from the start of the week, and the wholesale price dropped by a similar amount to CNY2,270 per bottle, according to data from third-party platforms.

Editor: Kim Taylor