In-Depth Analysis of Kweichow Moutai's Long-Term Valuation Logic: Social Currency Attribute and Investment Value Assessment

Based on the correlation analysis between Moutai liquor prices and China’s average urban wages from 2001 to 2024 that you mentioned, I will systematically analyze Kweichow Moutai’s long-term valuation logic and investment value from multiple dimensions.

According to brokerage research data, there is indeed a significant correlation between Moutai prices and urban residents’ income [1]:

• Historical stable range
  : Moutai liquor prices have long been stable in the range of 30%-50% of the monthly wages of urban private sector employees
• Current ratio
  : In January 2025, the per capita monthly disposable income of urban residents was about 4335 yuan, and the wholesale price of original box Feitian Moutai was about 2255 yuan, with a ratio of about 52%
• Bubble clearing
  : The ratio has fallen by 50 percentage points from the peak of 102%, indicating that the bubble is accelerating to clear [1]

Data shows that changes in China’s income structure provide a long-term growth foundation for Moutai [1]:

• Expansion of middle-income groups
  : It is expected that the middle-income group will increase to 550-600 million people during the ‘14th Five-Year Plan’ period, with an annual growth rate of about 3%
• Growth of high-income groups
  : From 2018 to 2023, the compound growth rates of the 20% upper-middle-income group and high-income group reached 5.47% and 5.07% respectively
• Sales-GDP correlation
  : Over the past decade, Moutai’s sales compound growth rate was 8.9%, which basically matches the GDP compound growth rate of 8.5%

From a technical analysis perspective [0]:

• Current price
  : 1433.10 yuan, at a relatively low historical level
• RSI indicator
  : 43.23, in a neutral to lower range
• Relative price position
  : 18.2%, close to the historical low range (below 20%)
• Moving average
  : The stock price is below the 200-day moving average (1483.30 yuan), indicating a weak medium-term trend

According to market data [1]:

• Absolute wholesale price
  : The current 2255 yuan is basically the same as that in June 2020
• Adjustment range
  : Down 42% from the 2021 peak of 3870 yuan, which is relatively mild compared to the 2012-2015 adjustment period (56% drop)
• Channel profit margin
  : Has fallen from 299% to 93%, but there is still room for further regression

Calculated based on the DCF model [0]:

Average data over the past 5 years provides support for valuation [0]:

• Revenue growth rate
  : 20.0% (CAGR)
• EBITDA margin
  : 79.1%
• Net profit margin
  : 55.3%
• ROE
  : 36.48%, showing extremely strong profitability

• Net profit margin of 51.51% and operating profit margin of 71.37%, reflecting extremely strong pricing power [0]
• Current ratio of 6.62, sound financial condition
• Dividend policy improvement: Dividend rate will be increased to no less than 75% from 2024 to 2026 [1]

• The Matthew effect in the baijiu industry is significant; the revenue share of the three companies (Moutai, Wuliangye, Luzhou Laojiao) increased from 11.92% in 2016 to 34.92% in 2023 [1]
• High-end baijiu benefits significantly from the consumption upgrade trend

• Moutai’s sales are closely related to China’s economic cycle; economic slowdown may affect demand
• The current channel profit margin is still higher than the historical low, with room for further decline

• Technical analysis shows that the price is at a relatively low level of 18.2%, but it takes time to break through
• RSI of 43.23 shows limited oversold degree, but has rebound potential

Long-term logic based on ‘social currency’ attribute:

• Income growth support
  : The continuous expansion of China’s middle-income group provides a demand foundation for Moutai
• Upward shift of price center
  : With the growth of per capita income, Moutai’s reasonable price center will gradually move upward
• Scarcity value
  : As a social currency, Moutai has irreplaceable social value compared to other consumer goods

• Relative price position of 18.2% is at a historical low, providing a margin of safety
• RSI of 43.23 shows limited oversold degree, but has rebound potential
• It is recommended to build positions in batches and wait for trend confirmation signals

• DCF base value of ¥1,576.71 provides 10% upside space
• High dividend rate (75%+) provides income protection
• Industry concentration enhancement brings strengthened competitive advantages

Moutai’s ‘social currency’ attribute indeed provides a solid theoretical foundation for its valuation. Historical data from 2001 to 2024 shows that Moutai’s price maintains a relatively stable proportional relationship with per capita income, and the stability of this relationship stems from Moutai’s unique position in Chinese social culture.

• Long-term
  : Benefiting from China’s income growth and consumption upgrade, it has long-term allocation value
• Medium-term
  : Current valuation is at a relatively low level, and technical analysis provides a margin of safety
• Short-term
  : Need to pay attention to wholesale price stabilization signals and channel inventory destocking progress

Based on the current stock price level of 1433.10 yuan, combined with DCF base valuation and the long-term logic of ‘social currency’, Moutai is gradually gaining allocation value, but investors need sufficient patience to wait for the completion of the valuation repair process.

[0] Gilin API Data - Moutai stock price, financial data, technical indicators and DCF valuation analysis

[1] Caida Securities Research Report - “Kweichow Moutai (600519) Analysis Report”, https://95363.com/plat_files/upload/png_upload/20250226/202502261740542825516.pdf