Friends, good morning, good afternoon, good evening.
In 2012, under the double blow of the alcoholic liquor plasticizer incident and the restriction of "three public consumption", liquor entered a "period of deep adjustment".
In 2013, the price of liquor began to drop wildly, and liquor stocks became a "prairie", and the originally prosperous liquor collectively declined.
Let's review the net profit growth and stock price decline of liquor during that period.
From this chart, we can see that, on the whole, the stock price of liquor at this stage reflects the increase in net profit.
The decline of A-share liquor in 2023 is basically the same as that of 13 years, the overall decline is down, but there is no horror of 13 years of decline.
Then let's take a look at the liquor revenue in the first three quarters of '23. This chart shows that in the first three quarters of 23, both revenue and net profit of liquor showed a substantial increase.
So why did the overall revenue growth and net profit growth of liquor in 23 years, while the stock price plummeted?
Part of the reason is that the imaginary economic take-off did not take place after the pandemic.
There is also part of the reason for the inversion of liquor prices and the unfavorable sales of channels.
The ghost stories hanging over the head of the liquor are endless.
In addition, the overall market is falling, which also drives the decline of high-quality assets.
Of course, if you want to find a reason, there must be many, many more.
But fortunately, for the investors we look at, there is no need to pay attention to so many variables, only to grasp the essence.
That is, whether the demand for liquor is still there, and whether liquor still has the power to raise prices.
This thinking is the same as the performance of liquor facing a decline and the stock price plummeting under the restriction of the consumption of the three publics. This thinking has a certain reference significance for us to continue to invest in liquor.
If this problem is not solved, then every time the stock price falls, we will once again doubt the investment logic of baijiu.
Restricting the consumption of the three publics, a major scene of liquor consumption has changed. Gifts and treats, and the consumption of liquor in official activities has decreased. This is indeed a big blow to liquor.
Let's take a look at Moutai's views on the liquor industry after the restriction of the consumption of the three publics was proposed.
At that time, Moutai was very pessimistic about the overall market environment. Seeing such a trend, are you pessimistic? The industry bosses have said this, pessimism is inevitable.
There are many obstacles to economic development, the future is difficult to predict, and the growth rate of liquor is inevitable.
From the macro situation. First, the international political situation is changing, economic development is full of obstacles, various factors are affecting the global economic trend, the United States is recovering slowly, the European debt is far from over, the growth rate of emerging economies is slowing down, the political situation in the Middle East is continuing to be turbulent, the Asia-Pacific region is constantly contending, and the future development is difficult to predict.
Second, China's economy is facing various risks such as increasing downward pressure, weak endogenous momentum, inflationary pressure, unstable market confidence, and insufficient effective demand, and the growth rate of the liquor industry is inevitable.
Third, investment has decreased, exports have been blocked, consumption growth has been slow, and some industries have overcapacity.
Moutai's 2012 annual report
Policy pressure has increased and overcapacity has increased. The end of the high-prosperity growth trend of the industry will enter an adjustment period of medium and low-speed development. The liquor industry is under unprecedented pressure.
From the perspective of industry development trends. Policy pressure increases, various crisis events occur frequently, liquor industry overcapacity, market demand and price decline, inventory increase and other factors are increasingly apparent, affected by factors such as increasing downward pressure on the economy, the liquor industry high prosperity growth trend ends, will enter the adjustment period of medium and low-speed development, industry cyclical fluctuations and policy level restrictions on the adjustment of the liquor industry will be fully manifested in 2013. The liquor industry is under unprecedented pressure.
2012 Moutai Annual Report
In such a situation, the liquor industry has a revenue and net profit after restricting the consumption of the three publics.
The overall liquor industry continued to grow after a brief decline in 13 and 14 years.
The figure below is the statistics of the study classmate @ Bangkok Little Elephant, the rise of liquor listed companies from the end of 13 to the present.
From pessimistic expectations to another round of liquor boom cycle, this is due to the consumption upgrade brought about by economic development.
It is also a reflection of the increasing concentration of liquor enterprises.
At the same time, baijiu as a carrier of Chinese people's emotional communication has not changed; as one of the cultural symbols of the Chinese nation, it has not changed; as a preferred consumer product of the Chinese; the traditional customs and cultural habits of Chinese people consuming liquor have not changed; this underlying logic has not changed.
People don't stop consuming liquor because they don't drink alcohol on official occasions because they are now restricting the consumption of the three publics.
Today's decline in the stock price of liquor is not the same as the decline in the stock price of liquor in 13 years.
Ghost stories are pretty much the same, though.
Baijiu is an excellent business model in A-shares, and it has not changed. Almost all of them are payment before delivery, the gross profit margin is super high, the inventory will not depreciate, there is no receivable, the business model is simple, the product changes are small, addictive, and the probability of being subverted by technology is almost zero. People can't do without it, and the cultural heritage is strong.
This business model has not changed. And the only thing that has changed is whether it is three and four, or four and three. But that's no change for us long-term investors.
Well, let's briefly sort out today, after the changes in the industry of liquor under the consumption of Sangong, the stock price plummeted, and even companies like Moutai did not predict the future development of liquor accurately. Today's stock price decline, although the company's revenue and net profit have increased significantly, but the market does not buy it. This drop is even more nonsensical. However, whether it is inventory pressure or channel pressure, it will not change, and the excellent business model of liquor.
Thank you friends for your patience in reading, and you will meet a better version of yourself.