As the soul of the A-share consumer sector, Moutai has been adjusting for over four years. After the significant rise in 2021, some of the top-performing liquor stocks have already halved in price, yet Moutai adjusts slowly, with funds reluctant to part with it.

In fact, from a funding perspective, one can see that expectations for Moutai are very contradictory, and the issues surrounding Moutai itself are quite complex, so the timing of Moutai's reversal can only be a matter of waiting.

Let's first talk about the positives of Moutai.

Moutai's profitability and cash flow level need not be elaborated; even after four years of adjustment, its valuation is still around 20 times, indicating that funds can fully accept a 20 times valuation for Moutai.

At the same time, Moutai has increased its buybacks, accumulating over 5.3 billion yuan this year, and has raised its dividend ratio.

The above information gives investors the impression of an excellent consumer leader company with a certain moat.

Let's talk about the worries of Moutai.

Wholesale prices continue to decline, significant pressure from economic recovery leads to weak consumption, business banquets are sluggish, young demographics are not buying in, and so on. These are all reasons for a bearish outlook on Moutai.

In comparison, Moutai has become a bundle of contradictions.

Looking at Moutai's valuation, the valuation has been below the 10th percentile in the last 10 years, with historical valuations around the 25th percentile. From a valuation perspective, it is still relatively low; even if Moutai enters single-digit growth in the future, the current share price can still withstand it.

Currently, Moutai can only be described as reasonable, but not very attractive. Excellent investments are about buying good assets at low prices. If Moutai undergoes another accelerated adjustment, it would be a good time to enter.

Let's make an assumption: if Moutai clears dealer inventory in two specific quarters and net profit experiences negative growth, this could lead to market panic and pessimistic expectations triggering fund sell-offs, creating a golden pit for Moutai. Subsequently, if the economy bottoms out and reverses, it could enter the next cycle.

If there is such an opportunity, it is definitely worth participating. $Kweichow Moutai (SH600519)$