Morgan Stanley: Kweichow Moutai (600519) 1Q26 Results - Stabilization After Destocking
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Kweichow Moutai reported first-quarter 2026 financial results that broadly aligned with market expectations and Morgan Stanley's channel checks. Revenue grew 6.5% year-over-year, while net profit increased by 1.5%. The performance reflects underlying stabilization following deliberate inventory destocking initiatives. A significant structural shift occurred during the quarter as the direct-to-consumer sales ratio surged to 55%, up from 46% in the first quarter of 2025. This acceleration was heavily driven by robust sales on the i-Moutai platform following the successful introduction of Feitian Moutai. The platform now accounts for 40% of total liquor sales.
However, this strategic pivot towards direct sales coincided with a steep drop in customer prepayments, which fell from RMB 8.8 billion to RMB 3.0 billion year-over-year. This decline illustrates management's intentional transition toward direct and more market-oriented channel management. Core Moutai brand sales grew 5.6% year-over-year, representing 85% of total liquor revenue. Operating margins contracted by 3.0 percentage points to 68%, pressured by a 3.3 percentage point drop in gross margins, though partially offset by tighter operating expense control. The company's net cash position strengthened to RMB 188 billion.
Looking ahead to the second quarter, anticipated price increases for Feitian Moutai should help cushion potential softness in non-Feitian stock keeping units. Morgan Stanley anticipates a broader industry recovery in the second half of the year. The firm maintains an Overweight rating with a target price of RMB 1,678, offering 15% upside potential.