Interpretation of Kweichow Moutai's 2025 Interim Report Data

0. Brief Review

On July 7, Moutai's sales company held a mid-year market meeting, revealing that it had completed the operational targets for the first half of the year.

On August 12, Moutai became the first leading liquor company to release its semi-annual report:

1) Semi-annual performance:

Revenue for the first half of the year was 89.389 billion yuan, a year-on-year increase of 9.10%, slightly exceeding the annual target of 9% set at the beginning of the year, thus achieving the planned goals. Net profit attributable to shareholders was 45.403 billion yuan, a year-on-year increase of 8.89%.

Compared to other liquor companies or the vast majority of A-share listed companies, this performance remains quite stable.

2) Quarterly performance:

However, looking at Q2 performance alone, even a strong company like Moutai could not escape the impact of gravity, showing signs of pressure: Q2 revenue was 38.788 billion yuan, a year-on-year increase of 7.28%; Q2 net profit attributable to shareholders was 18.555 billion yuan, a year-on-year increase of 5.25%, almost below all broker expectations and showing a further decline compared to Q1.

3) Product tier performance:

Moutai liquor grew by 10.24% in the first half of the year, stabilizing and slightly improving from Q1;

However, the growth rate of series liquor in the first half was only 4.68%, significantly lower than the 18.30% in Q1. On a quarterly basis, series liquor saw a negative growth of 6.53% in Q2.

4) Sales channels:

The proportion of direct sales slightly declined from 74.72% in Q1 to 73.11%, but remained at a high level;

iMoutai's growth rate in Q2 2025 slightly dropped to 4.98%, lower than the 9.88% in Q1.

5) Contract liabilities at the end of Q2 2025 were 5.507 billion yuan, a year-on-year decrease of 44.89%, with the reserve level accelerating its decline; the significant year-on-year drop was also due to a high base in the same period last year.

6) Other key metrics:

i) Net operating cash flow for the first half of the year was 13.119 billion yuan, a year-on-year plunge of 64.18%.

This looks alarming, but the actual impact is not as severe. Moutai explained: "The decrease in net cash flow from operating activities was mainly due to a reduction in deposits absorbed by the company's subsidiary, Kweichow Moutai Group Finance Co., Ltd., from group member units, as well as an increase in deposits with the central bank and non-withdrawable interbank deposits."

The financial statements also show that operating receipts increased normally year-on-year, while the decrease was mainly in the red-boxed item "Net increase in customer deposits and interbank deposits" in the figure above, which was approximately 11.5 billion yuan in the same period last year but -2.5 billion yuan this year.

ii) Sales expenses in the first half were 3.26 billion yuan, a year-on-year surge of 24.56%, mainly due to increased advertising and marketing expenses, reflecting the pressure Moutai faces to ensure revenue growth;

iii) Notes receivable at the end of the first half were 2.816 billion yuan, a massive year-on-year increase of 748.79% compared to 332 million yuan in the same period last year;

The sharp increase in receivables first appeared in last year's annual report and continued in the semi-annual report: although notes receivable are backed by banks and are safe for Moutai, it also reflects that Moutai is no longer insisting on immediate payment from suppliers but is granting more leniency to alleviate potential financial difficulties for suppliers.

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1. Operating Performance

1.1 Operating Performance - Quarterly