Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<p>Kweichow Moutai is China’s most valuable non-technology firm by market capitalisation and the investment thesis held by most long term investors centres on the domestic popularity of the Moutai <em>baijiu, </em>the fiery and potent spirit manufactured by the company.  However, a closer look at the financial disclosures and local media reports reveal potential areas of concern for investors in terms of the continuing financial support to the Guizhou local government, the relatively slow pace of channel reform efforts, and sizeable fund balances held with related parties. While there are no conclusive findings or specific regulatory breaches, investors in Kweichow Moutai should be cognisant of these issues and, where applicable, actively monitor and engage management in respect of such issues.</p>

Kweichow Moutai is China’s most valuable non-technology firm by market capitalisation and the investment thesis held by most long term investors centres on the domestic popularity of the Moutai baijiu, the fiery and potent spirit manufactured by the company.  However, a closer look at the financial disclosures and local media reports reveal potential areas of concern for investors in terms of the continuing financial support to the Guizhou local government, the relatively slow pace of channel reform efforts, and sizeable fund balances held with related parties. While there are no conclusive findings or specific regulatory breaches, investors in Kweichow Moutai should be cognisant of these issues and, where applicable, actively monitor and engage management in respect of such issues.

Kweichou Moutai - A Gift that Keeps Giving