Kweichow Moutai: Left hand with non-standard liquor, right hand with series liquor, not afraid of the slowdown of Feitian?

On the afternoon of April 29th Beijing time, $Moutai(600519.SH) released its Q1 2025 earnings. Since the interval between this report and the annual report disclosure was less than one month, and the stock price fluctuation during this period was not significant, this article will focus more on the analysis of Moutai's Q1 performance & the outlook for its full-year 2025 results:

1. Earnings Slowdown as Expected: In Q1 2025, Moutai achieved revenue of 51.44 billion yuan, up 10.7% YoY, slightly exceeding market consensus (507 billion yuan). While this modestly surpassed the full-year growth target of 9%, historical quarterly revenue patterns show that Q1—which includes the traditional peak season of Spring Festival—typically records the highest growth. A 10% Q1 growth strongly suggests that full-year 2025 growth will likely slow to high single digits.

In terms of profitability, Q1 net profit attributable to shareholders reached 26.85 billion yuan, up 11.6% YoY, reaccelerating compared to revenue growth. Dolphin Research attributes this mainly to increased shipments of Moutai's non-standard products (kilogram bottles, 100ml mini bottles, and zodiac-themed liquors).

2. Moutai Liquor: Controlling Supply to Stabilize Prices: Q1 revenue from Moutai Liquor grew 9.7% YoY to 43.56 billion yuan. Though production/sales figures are undisclosed, Dolphin Research believes the growth primarily stems from higher-priced non-standard products, given the tight control on Feitian Moutai shipments.

3. Series Liquors: Lightened Inventory, Reclaiming Momentum: Series liquors revenue rose 18.3% YoY to 7.02 billion yuan, reaccelerating after two consecutive quarters of slowdown in Q3-Q4 2024. Dolphin Research notes that since H2 2024, Moutai halted shipments of its flagship series product 1935 to clear channel inventory and restructured its distributor network. Channel checks indicate robust Spring Festival 2025 sales for 1935, with inventory at cyclical lows—marking a return to healthy growth.

4. Slight Rise in Direct Sales Ratio: Direct sales accounted for 45.9% of Q1 revenue, edging up from Q4. Dolphin Research suggests this reflects Moutai's strategy to alleviate Feitian distributor pressure by boosting non-standard product shipments (e.g., zodiac liquors, 100ml gift sets) (typically sold via direct channels). Long-term, expanding direct sales remains inevitable—it stabilizes pricing and boosts margins, though short-term balance with distributor interests is needed.

5. Margin Dip Offset by Efficiency Gains: Despite higher non-standard product sales, gross margin dipped to 91.8% (vs. 92.7% YoY) due to series liquors' volume growth. Sales expense ratio rose to 2.9% on 1935 promotions, but management efficiency shone—administrative expense ratio fell to a 3-year low of 3.7%, driving net margin to 52.2%.

6. Key Financial Metrics

Dolphin Research's View:

Years ago, conventional analysis would have projected 2025 as a banner year for Moutai—base liquor supply expansion (2021 production jumped 12.6% YoY) and a 20% Feitian ex-factory price hike (to 1,169 yuan) should have delivered >20% revenue growth. Instead, Moutai's 9% 2025 target signals a tough year ahead.

The disconnect stems from flawed supply-side assumptions—stable demand. Reality: economic slowdowns crushed government/business demand, driving wholesale prices down. Moutai's volume controls aim to prevent a 2013-style price collapse. Despite these measures, post-Spring Festival Feitian wholesale prices slid further to 2,140 yuan, though Dolphin Research views this as seasonal (Q2 is traditionally weak) and already priced in.

On valuation, Dolphin Research argues the current 20x P/E leaves limited downside, but catalysts await clearer demand signals. Investors should weigh risk appetite accordingly.

Ultimately, Moutai's challenge is demand-driven. Its shift from real estate-linked clients to tech firms shows proactive adaptation. If it navigates this cycle smoothly, the next upswing could restore its legendary status.

Detailed Earnings Analysis:

I. Broad-Based Slowdown

Q1 revenue of 51.44 billion yuan (+10.7% YoY) edged past consensus. The 10% growth, though above the 9% annual target, likely foreshadows single-digit full-year growth given Q1's seasonal strength.

Net profit (+11.6% YoY) reaccelerated, likely due to non-standard product mix.

II. Moutai Liquor: Supply Controls

9.7% revenue growth to 43.56 billion yuan likely reflects non-standard products' price premiums amid Feitian shipment constraints.

III. Series Liquors: Rebound

18.3% growth to 7.02 billion yuan marks a turnaround after H2 2024 inventory clearance. 1935's Spring Festival sales and low inventory signal sustainable growth.

Management targets ≥15% CAGR for series liquors, backed by a 50% increase in 2025 marketing spend—a clear push into mid-range competition.

IV. Direct Sales Inching Up

Direct sales ratio rose to 45.9%, reflecting non-standard product focus. Long-term, this trend will continue, balancing price stability and margins with distributor relations.

V. "Reservoir" Buffer Improves Marginally

Contract liabilities fell 8% YoY to 8.79 billion yuan, though the decline narrowed from Q4's 32%, indicating persistent shipment controls. 21% YoY collection growth likely reflects seasonal timing.