Innovative step in channel reforms
? The iMoutai e-commerce platform was officially launched on 19 May. A small bottle of
the Company’s star product, Feitian (100ml), is formally launched at the same day.
? We expect the small bottle of Feitian, with a retail price of Rmb399/bottle, to increase
Moutai’s ASP and attract more consumers, and in particular, expand the influence of
the Moutai brand among young consumers.
? Reiterate Add with an unchanged DCF-based TP of Rmb2,218.
Small bottle of Feitian Moutai expected to improve the ASP
The Company launched a small bottle of 53°Feitian (100ml) through its iMoutai online
platform on 19 May. 53°Feitian is the Company’s star product, with a long history and
strong brand power, contributing 75%–80% of the Company’s total sales. The regular size
of 53°Feitian is a 500ml bottle, which has an ex-factory price of Rmb969 per bottle and a
suggested retail price of Rmb1,499 per bottle, but the current market price from distributors
is Rmb2,700–2,800 per bottle. The small bottle is 100ml, and its ex-factory price for
distributors and the suggested retail price will be Rmb379 and Rmb399 per bottle,
respectively. So the introduction of the small bottle of Feitian will be an important innovation
for Moutai’s channel reforms, because 1) it will increase the ASP; 2) the small bottle is
quite suitable for the current baijiu consumption trend of drinking less but better; and 3) the
price of the small bottle is affordable for mainstream consumers, particularly to attract the
young generation. The small bottle will be distributed in both the Company’s self-operated
e-commerce platform, iMoutai, and the distributor channels.
Good results from iMoutai on a 49-day trial operation
As at 18 May, the Company’s e-commerce platform, iMoutai, had made over 340m
reservations since its launch on 31 Mar, with over 130m people making reservations. Over
1.17m bottles of Moutai’s super-premium products were sold on the platform (560.7 tons),
resulting in sales of c.Rmb1.8bn, based on our estimate. The Company’s chairman, Mr.
DING Xiongjun, said that iMoutai had been officially launched on 19 May and that on the
iMoutai platform, consumers could find the links to 12 third-party e-commerce platforms to
purchase the Company’s products. Management also said in the future the Company
would continuously adjust its product launch strategy on iMoutai to enrich its product
diversification. With a new small bottle of Feitian Moutai joining in, we expect sales on
iMoutai to ramp up quickly this year and the Company’s brand image to be further
strengthened among young consumers.
Limited impact from the current Omicron situation
On 13 May, Moutai’s general manager, LI Jingren, said that market demand for the
Company’ products is still strong and that it has continued to optimize its product structure.
The Company is confident that the impact of Omicron can be minimized and that it will be
able to achieve its annual sales growth target of 15% yoy for FY22F. LI Jingren also said
that the Company’s production was not impacted by the current Omicron situation and that
the output and quality of its base liquor remained stable. We expect the Company to
improve its direct sales contribution in FY22F. In 1Q22, the direct sales contribution
improved to 33%, up from 22.7% in FY21 and 17.5% in 1Q21.
Reiterate Add with an unchanged DCF-based TP of Rmb2,218
We reiterate our Add rating for Moutai, which is our top pick for the baijiu sector, as it has
initiated a couple of measures to accelerate distribution channel reforms and has made
effective progress. We believe the Company can achieve its target of 15% yoy sales growth
in FY22F, despite the current Omicron situation, given its strong premium brand position.