• Guizhou Moutai has unexpectedly raised the price of liquor for the first time in the past six years

  • Investment banks say the price increase is good for the Guizhou government to increase tax

  • Heavy local debt pressure in Guizhou

  • The issuance of the province's special recycling bonds currently ranks fourth

Tu Reuters/Thomas Peter Chinese sauce-flavored liquor leading-Guizhou Maotai has adjusted the price of liquor for the first time in the past six years, which is very different from the time background of the past price increase, making the market directly surprise.As Guizhou was facing a huge local debt to resolve the pressure, analysts believe that Moutai's price increase is also conducive to the Guizhou government increased taxes.

As a large taxpayer and local state -owned enterprise holding company in Guizhou Province, Guizhou Maotai has passed the equity transfer as the "blood transfusion" of urban investment companies and has become a well -known "Moutai" model.US investment bank Ferry stated in his report that the background of Moutai's price increase is different from the past price increase. "We expect that the shareholders of Moutai, Guizhou will have a significant benefit, which may help the Guizhou provincial government increased taxes."It is said that from November 1st, the 53%VOL Moutai (Feitian, five -star) factory prices were raised, with an average increase of about 20%; this adjustment does not involve the market guidance price of the company's products.The stock closed up 5.7%on Wednesday, the largest single -day increase since November 29, 2022."As a state -owned holding enterprise in Guizhou Province, Moutai's profit is definitely helpful to alleviate Guizhou's fiscal pressure," said Lin Feng, chairman of Beijing Jundu Consultation, said, but Moutai's price increase itself is "three conforms", which conforms to the industry trend, National Policy and Future Situation.

He also pointed out that the price of the entire liquor industry is upside down, that is, the market transaction price is lower than the factory price.Except for Moutai, everyone is under great pressure and has a high channel inventory.In the case of retail prices, the factory price has actually increased the space of the white wine industry's price ceiling in disguise, and the industry generally holds a welcome and excited attitude.Lin Feng continued that the central bank also released signals in September, allowing the economy to inflation properly, and Maotai also conforms to this background trend.At the same time, in view of China's plans to increase trillion yuan of government bonds and the Federal Reserve ’s interest rate cut cycle, it will sooner or later, according to historical experience, these factors will promote the vigorous needs of China's high -end liquor.Prosperous by the "stock king" Moutai price increase, the Chinese stock market liquor sector rose strongly on Wednesday, and the CSI liquor index raised 2.1%.The controlling shareholder of Moutai in Guizhou is Moutai Group, and the actual controller is the Guizhou SASAC.

According to the official website of Moutai Group, it paid 65.744 billion yuan in taxes in 2022.From 2019 to 2020, Moutai Group transferred more than 100 million Guizhou Moutai shares to Guizhou State-owned Capital Operation Company for free, and then Guizhou State-owned Assets Co., Ltd. sold the shares of Moutai in Guizhou. ** The issuance of the issuance of Guizhou Special Reinstation Bonds is currently ranked fourth **

In the fourth quarter, China restarted the issuance of special re -financing local debt to repay stock debt and resolve hidden debt.According to Reuters, Guizhou's special refinancing local debt issuance is currently ranked fourth among 25 provinces and cities.Guizhou, as one of the provinces with high debt pressure in China's local governments, has always attracted much attention.In April of Guizhou Province, a seminar on industrial bonds was held, proposed to study and establish a coordination mechanism for the issuance work of Guizhou industrial bonds, and formulated and introduced policies to guide bond issuers to plan to develop industrial projects to promote the development of key industries through its efforts.At that time, some local media quoted the Guizhou Provincial Government Development Research Center and pointed out that in terms of investigations on Guiyang Gui'an, Zunyi, Bijie, Liupanshui and other places, the promotion of debt work was extremely difficult, and it was not effective to solve the effect of relying on their own ability to solve it effectivelyEssence

The Guizhou Provincial Department of Finance stated earlier this year that it is planned to optimize the local debt structure and reduce debt costs by issuing government bonds to replacement of hidden debt;mechanism.At the same time, coordinated financial institutions to support debt restructuring and interest rate cuts, and actively and orderly mitigate debt risks.According to the reporting agency, the report of Pengyuan reported that at the end of 2022, Guizhou Province adjusted the government debt rate by 258.08%, at a high level.Among them, the government debt ratio = (local government direct debt balance+regional urban investment company debt balance*50%)/total fiscal revenue.According to exclusive Reuters last week, the Chinese State Council issued a document at the end of September to guide financial institutions to support the resolution of local financing platform debt risks. In addition to key projects supported by the state, 12 high -risk areas with heavy debt burden shall not add other government investment projects.The 12 high -risk areas include Guizhou, Yunnan, Liaoning, Jilin, and Tianjin and Chongqing.

The financial work conference held by China for six years has recently proposed that it is necessary to establish a long -term mechanism for preventing and resolving the long -term risk of local debt, establishing a government debt management mechanism that is compatible with high -quality development, and optimizing the central and local government debt structures. ** Investment banks calling the timing of Moutai's price increase is different from the past ** Furui mentioned that in the past cycle, Guizhou Moutai tend to increase prices after the retail price soared. At this timeExpansion and very much hope to expand Moutai inventory.However, in the past 12 months, the wholesale price of Feitian Moutai has stagnated, and Maotai's secondary product has faced price pressure.This is the time for this price increase to be different from the past.Investment Bank Citi also refers to the "unexpected" move, which has brought positive surprises to the market, and also left room for other liquor companies to pricing in the future, which has a positive impact on the entire Chinese liquor industry.

Furui pointed out that about 55%of Moutai in Guizhou comes from wholesale channels, and 45%of the income comes from consumer direct selling channels; expected price increases will benefit the income of the wholesale channels of Guizhou Moutai, and consumers' direct sales channel incomeIt should be less sensitive to rising factory prices.The Citi Report emphasized that Moutai has a high profit visibility and superior operating cash flow. It is still attractive to investors as the core holding of China's consumer industry, especially in the case of uncertain macro environment.

The bank believes that Moutai is still the first choice for the Chinese liquor industry.Furui said that what needs to be paid in the future is: First, in the past cycle, rising factory prices will often send strong positive signals to distributors to encourage distributors to increase more inventory.However, given the special timing of this price increase, it is necessary to pay attention to whether the price increase will enhance the confidence of the distributor to increase the inventory.Second, due to continuous destocking and meager channel profits, brands, including Wuliangye, provide dealers with more rebate subsidies.Pay attention to whether other brands will follow Moutai's actions.