Business
Kweichow Moutai Implements First-Ever Stock Repurchase Plan Amidst Sluggish Market Performance
Kweichow Moutai is looking to boost its faltering stocks with its inaugural buyback scheme. The company is introducing its first stock buyback plan, in an effort to support its shares in the face of lukewarm spending domestically.
The business, located in China's southern province of Guizhou, intends to invest between 3 billion yuan (equivalent to US$425.4 million) and 6 billion yuan in its own stock over the course of the next year, pending approval from its shareholders, as per an announcement given to the Shanghai Stock Exchange during the past weekend. The shares that are bought back will be eliminated, resulting in a decrease in registered capital, the company stated.
The decelerating Chinese economy has impacted Kweichow Moutai along with other businesses in the consumer goods sector. Over the past year, the cost of the company's leading product, Flying Fairy liquor, has experienced a decline. This downward trend has continued into September, a month that usually sees a surge in Chinese baijiu sales in anticipation of the National Day celebration.
Industry statistics reveal that the wholesale costs of Flying Fairy have seen a reduction of 30 per cent compared to last year, currently standing at 2,300 yuan per bottle.
"Doubts about the alcohol industry and its demand are high this year because of a slow rebound in corporate catering and sluggish consumer expenditures," stated Wei Hongmei, a market analyst at Dongguan Securities. "Current prices of alcohol stocks are at their lowest in half a decade. The repurchasing strategy of Kweichow Moutai is beneficial in safeguarding both the corporation and its shareholders' interests."
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