Although the stock price has undergone more than three years of adjustment, the performance of the leading baijiu companies has not been greatly impacted, and they continue to reward investors by increasing dividends. Recently, the three-year shareholder return plan of the leading baijiu companies has also stabilized this expectation, highlighting the cash return value of these leading baijiu companies.

A share repurchase announcement by Kweichow Moutai (600519.SH) immediately attracted attention in the capital market. At the time of the semi-annual report, leading baijiu companies, with Kweichow Moutai at the forefront, established a high dividend system by strengthening dividend distribution. When the stock price encounters adjustments, Kweichow Moutai's proactive market value management action of repurchasing and canceling shares will further deepen the company's characteristic of high dividends.

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Previously, Kweichow Moutai announced that the dividend distribution for the next three years will not be less than 75% of net profits. Similarly, another leading baijiu company, Yanghe股份 (002304.SZ), also announced that the dividend rate for the next three years will not be less than 70% and not less than 7 billion yuan (including tax).

When determining investments, the basic premise that investors need to establish is a good business, a good company, and a good price. Baijiu, which generally has high gross margins, is a good business, and this is no longer debatable. Calculated at the previous price of less than 1300 yuan per share of Kweichow Moutai, the implied dividend yield of the company is already over 4%.

Repurchasing and canceling shares and reducing the company's registered capital will only further increase Kweichow Moutai's dividend yield. The high dividend public utility stocks that are currently popular in the market are not only due to stable dividends but also because of future certainty. In the last round of adjustments, Kweichow Moutai's revenue did not experience negative growth. When investing in leading baijiu stocks, the cash return indicator is becoming increasingly important.

First Repurchase

On September 21, Kweichow Moutai issued a repurchase announcement, stating that the company plans to repurchase 3 billion yuan (inclusive) to 6 billion yuan (inclusive) with its own funds, and the upper limit of the repurchase price is 1795.78 yuan per share. The day before the repurchase announcement, Kweichow Moutai's stock price closed at 1263.92 yuan per share.

Kweichow Moutai stated that, based on the upper limit of the repurchase price, the number of shares to be repurchased this time is approximately 1.67 million to 3.34 million shares, accounting for about 0.13% to 0.27% of the company's total share capital.

A major context for Kweichow Moutai's repurchase is that the company's stock price and liquor price are facing a double test. Due to market feedback that baijiu sales during the Mid-Autumn Festival were not good, Kweichow Moutai's stock price has continued to fall. As of the end of trading on September 20, Kweichow Moutai's cumulative decline in five trading days exceeded 8%, with a market value evaporation of about 145.8 billion yuan.

The wholesale price of Feitian Moutai has also continued to adjust. Data from third-party institutions' liquor prices show that since August 30, the price of Feitian Moutai has started to decline. On September 1, the loose bottle of Moutai fell to 2380 yuan, breaking through 2400 yuan. A few days later, on September 6, the original box of Moutai broke through 2600 yuan per bottle to 2595 yuan.After the Mid-Autumn Festival, the original box of Moutai once again fell below 2,500 yuan on September 19th, and on September 21st, it broke through 2,400 yuan to 2,390 yuan. The loose bottle of Moutai fell below 2,300 yuan to 2,270 yuan on September 22nd. As of September 25th, the loose bottle of Feitian has fallen to 2,200 yuan, and the original box of Moutai has fallen to 2,320 yuan. The last time the loose Fei fell below 2,300 yuan was during the "618" e-commerce promotion period, but it quickly rebounded and stabilized.

Faced with market pressure, Kweichow Moutai took the initiative to implement its first share repurchase in 23 years since going public, and the repurchased shares were directly canceled, not used for other purposes. Driven by Kweichow Moutai, in response to market concerns, Wuliangye (000858.SZ) also indicated that it has organized discussions on stock repurchase or special dividends and is actively studying related matters to respond to investors' concerns and expectations.

Driven by Kweichow Moutai's repurchase, not only Wuliangye has indicated that it will study repurchase matters. On the investor interaction platform, in response to whether to implement a repurchase, Luzhou Laojiao also stated that it needs to seriously study. Yanghe shares also stated that if there are related matters, they will be announced.

The repurchase of shares for cancellation and reduction of the company's registered capital will thicken Kweichow Moutai's earnings per share, but the significant importance lies in Huatai Securities pointing out that for the industry, against the backdrop of some liquor enterprises with outstanding valuation cost performance and relatively weak industry demand, Moutai, as the industry leader, this market value management action has a certain industry demonstration effect and is expected to boost market confidence.

Dongwu Securities stated that in 2015, Kweichow Moutai's dividend payout ratio reached 50%, leading the average level of the liquor industry. The consecutive special dividends from 2022 to 2023 will push the annual dividend payout ratio to over 80%, with the dividend amount significantly leading.

Regarding the issue of price decline, Dongwu Securities stated that Kweichow Moutai has taken measures such as canceling the 12-bottle box of Maotai; reducing the supply of loose Maotai points purchase on the Guizhou platform; adjusting the supply including Xunfeng 375ml Maotai; and channel discussions to stabilize confidence, with significant effects. Recently, the wholesale price of Maotai has fallen, and the prices of the original box of Maotai and ordinary Feitian have fallen to the low point in June, with the core being insufficient demand. The company's response measures are to adjust the iMoutai supply rules, and dynamically optimize the supply ratio of regular Fei and non-standard Maotai.

The leader increases dividends

More than a month ago, when Kweichow Moutai released its semi-annual report, it also announced a dividend plan. From 2024 to 2026, the company's annual cash dividend distribution will not be less than 75% of the net profit attributable to the shareholders of the listed company for that year, and the annual cash dividend will be implemented twice (annual and interim dividends). This means that Kweichow Moutai has established a special dividend plan that has been implemented for two years in the form of a system, establishing the company's future dividend ratio in the form of a system.

In November 2022 and November 2023, Kweichow Moutai implemented special dividend plans of 21.91 yuan (including tax) and 19.11 yuan (including tax) per share, respectively. After implementing the special dividend, the total dividend amount of Kweichow Moutai including tax for 2022-2023 was 54.751 billion yuan and 56.55 billion yuan, accounting for 87.3% and 75.67% of the net profit attributable to the mother company for that year, respectively.

In contrast, in 2021, Kweichow Moutai distributed a total of 24.236 billion yuan (including tax), accounting for about 46.2% of the net profit attributable to the mother company. After implementing the special dividend, Kweichow Moutai's dividend payout ratio has been significantly increased.Coincidentally, just like Kweichow Moutai, Yanghe shares also announced the company's dividend plan for the next three years along with the release of its semi-annual report.

Yanghe shares announced that from 2024 to 2026, the company's annual cash dividend will not be less than 70% of the net profit attributable to shareholders of the listed company for the year and not less than 7 billion yuan (including tax).

Although the semi-annual report performance did not have many eye-catching achievements, after the dividend plan was released, Yanghe shares' stock price soared by more than 6% that day. Yanghe shares not only increased the dividend rate but also directly stipulated a "bottom-line indicator".

In the past three years, Yanghe shares has been continuously increasing the dividend rate. The company's cash dividends for 2021-2023 were 4.519 billion yuan, 5.634 billion yuan, and 7.02 billion yuan, respectively, accounting for 60.19%, 60.01%, and 70.09% of the net profit attributable to the parent company for the year.

In 2023, Yanghe shares' cash dividend reached 7 billion yuan for the first time, and the dividend ratio exceeded 70%. In the next three years, this will become the norm, and it will only be higher and will not be lower than this indicator.

Another leading liquor company, Wuliangye, has not yet introduced a future cash dividend plan, but the company's dividend ratio is not low. In 2023, the company's total cash dividend was 18.127 billion yuan, and the dividend ratio was 60%, an increase of nearly five percentage points compared to 2022. Both the dividend ratio and the dividend scale have reached a new high since the company went public.

During investor research, Wuliangye introduced that the company has accumulated a total of 94.1 billion yuan in cash dividends, which is 25 times the total amount of funds raised through the listing, and has maintained a dividend rate of over 50% for eight consecutive years, with cash dividends exceeding 1 billion yuan each year in the past three years.

Strong anti-cyclical ability and confidence in dividends

At present, high-dividend stocks have received great enthusiasm from the market, and stocks with stable returns and the ability to maintain stable growth are particularly concerned by the market.

The consensus forecast of Dongfang Fortune Choice shows that in 2024, Kweichow Moutai's net profit attributable to the parent company is expected to be 87.033 billion yuan. According to the minimum 75% dividend regulation, the company can distribute 65.275 billion yuan. At present, before implementing share repurchase and cancellation, Kweichow Moutai's total share capital is 1.256 billion shares, and the dividend per share is 51.97 yuan per share.As of September 20th, the share price of Kweichow Moutai was 1,263.92 yuan per share, which means the company's dividend yield was 4.11%, and the dynamic price-to-earnings ratio was 18 times. The implied dividend yield exceeding 4% is certainly not low. Even after a significant market-driven increase in share price, calculated based on the closing price on September 24th, Kweichow Moutai's dividend yield still reached 3.79%.

Yanghe shares have an even higher implied dividend yield. Consensus expectations from Eastmoney Choice indicate that the company's net profit attributable to the parent company is expected to be 10.314 billion yuan in 2024. According to the minimum dividend payout requirement of 70%, the minimum dividend amount for Yanghe is 7.22 billion yuan. Based on the company's share capital of 1.506 billion shares, the dividend per share is 4.79 yuan.

On September 20th, Yanghe shares closed at 73.74 yuan per share, which means the company's implied dividend yield has already reached 6.5%, and the price-to-earnings ratio is less than 11 times. Based on the closing price on September 24th, when the share price increased, the company's dividend yield also remained at a high level of 6.22%.

In terms of performance growth, the certainty of Kweichow Moutai, as the leader in the baijiu industry, seems high. Since its listing, regardless of any industry or company turmoil, Kweichow Moutai has never stopped growing. The company's revenue and net profit have never experienced negative growth.

Introducing the experience of the past decade, in 2012, the industry faced adjustments, and the baijiu industry encountered significant challenges, yet Kweichow Moutai's revenue and net profit continued to grow.

Since the pandemic in 2020, baijiu sales have gradually faced pressure, with channel inventory and promoting sales becoming common challenges for the industry. Kweichow Moutai's revenue and net profit have maintained double-digit growth, and there is even a trend of accelerating growth.

Since 2015, Wuliangye's revenue and net profit have maintained growth, and Yanghe has only experienced a profit decline once. This means that the certainty of performance growth for the leaders in the baijiu industry is not bad at all.