China Liquor Giant Moutai Finally Puts Brakes on Stock Slump

Updated on
  • State media said the firm’s shares had been rising too fast
  • Moutai’s losses contributed to last week’s market volatility
Bottles of China Kweichow Moutai Distillery Co. baijiu liquor await packaging at the company's facility in the Maotai section of the Renhuai District in Zunyi, Guizhou Province, China, on Thursday, April 7, 2011. China Kweichow Moutai Distillery Co., parent of China's biggest liquor maker Kweichow Moutai Co., said on March 29 growth in material costs will probably slow this year.

Photographer: Nelson Ching/Bloomberg

China’s Kweichow Moutai Co. rallied for the first time in eight days, halting a 14 percent tumble that was sparked by a critique of its gains from state-run media.

Shares in the world’s biggest liquor company by market value climbed 4.3 percent in Shanghai on Tuesday for their first daily advance since China’s Xinhua News Agency said on Nov. 16 they had been rising too fast. Moutai made intraday gains in four of the subsequent seven sessions through Monday, but it always slid back into the red by the close.

Moutai’s mini-recovery coincides with an upbeat research note published Tuesday by China International Capital Corp. Analysts Tingzhi Xing and Wenkai Chen said sales of high-end liquor -- retailing at 2,000 yuan ($303) or more a bottle -- will increase as Chinese consumers upgrade their buying habits. The company’s revenue from top-shelf products such as its blue- and black-bottled Moutai could reach 13.7 billion yuan this year and maintain fast growth beyond, the CICC analysts said.

The recent stock dive wiped $18 billion off Moutai’s market value, spurring declines in other liquor makers and China’s wider equity market.

Moutai was the second-best performer among China’s large-cap consumer stocks on Tuesday as it took its advance this year to 94 percent. The CSI 300 Index managed to eke out a 0.2 percent gain after trading lower through most of the day.

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