KWEICHOW MOUTAI(SH:600519)2025-08-13 02:16Kweichow Moutai (600519.SS) 2Q25 Results Review Company Overview - Company: Kweichow Moutai - Ticker: 600519.SS - Industry: Consumer Staples (Alcoholic Beverages) Key Financial Results - 1H25 Results: Sales increased by 9.1% year-over-year (yoy) to Rmb89.4 billion, and net profit (NP) rose by 8.9% yoy to Rmb45.4 billion, aligning with the full-year sales growth target of 9% yoy [1][3] - 2Q25 Results: - Total sales reached Rmb39.7 billion, up 7.3% yoy, slightly below Goldman Sachs estimates (GSe) of Rmb39.9 billion [1][11] - Net profit was Rmb18.6 billion, a 5.2% increase yoy, which was 3% lower than GSe of Rmb19.1 billion [1][11] Product Performance - Moutai Spirits: Revenue increased by 11% yoy to approximately Rmb32.0 billion [9] - Series Spirits: Revenue declined by 7% yoy to about Rmb6.7 billion, impacted by a high base from the previous year (up 43% in 2Q24) and policy effects [1][9] - Sales Channels: - Wholesale sales grew by 1% yoy, while direct sales surged by 17% yoy, driven by non-standard Moutai sales [1][9] - Direct sales accounted for 43% of total spirits sales in 2Q25, compared to 46% in 1Q25 and 40% in 2Q24 [1][9] Margin and Expense Analysis - Net Profit Margin (NPM): Decreased to 46.8%, down 0.9 percentage points yoy [1][9] - Gross Profit Margin (GPM): Contracted by 0.3 percentage points to 90.5% [1][9] - Selling Expenses: Increased by 0.5 percentage points to 4.5% of revenue, while administrative expenses decreased slightly [1][9] Balance Sheet and Cash Flow - Customer Advances: Dropped by 45% yoy to Rmb5.5 billion, indicating reduced prepayment demand due to anti-extravagance policies [1][9] - Note Receivables: Increased significantly to Rmb2.8 billion from Rmb332 million a year ago, suggesting more support to the distribution channel [1][9] Price Trends and Market Outlook - Wholesale Price Trend: Original case Feitian Moutai's wholesale prices fell to around Rmb1,900 in late July but have shown slight recovery recently [1][9] - Future Expectations: Anticipated shipment increases for the Mid-Autumn Festival may lead to short-term volatility, but the company is expected to manage channel health effectively [1][9] Earnings Forecast and Valuation - Earnings Revision: Adjusted 2025-27E sales estimates down by 1-2% due to weaker Series spirits sales and margins [8][13] - Target Price: Updated target price is Rmb1,742, reflecting a 23.4x 2026E P/E [14][16] - Current Valuation: Trading at 19x/18x 2025E/26E P/E with a 2025E dividend yield of 3.8% [1][16] Risks and Considerations - Key Risks: Potential regulatory changes, environmental concerns, slower macroeconomic recovery, capacity constraints, and volatility in US interest rates [15] Conclusion - Investment Recommendation: Maintain Buy rating based on resilient sales growth and strategic management of market challenges [1][16]