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    Home > Biochemistry News > Biotechnology News > Can 60 times PE Moutai be bought?

    Can 60 times PE Moutai be bought?

    • Last Update: 2021-04-16
    • Source: Internet
    • Author: User
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    On March 30, Kweichow Moutai announced its financial report showing that the net profit for the whole year of 2020 was 46.
    697 billion yuan, an increase of 13.
    33% year-on-year.
    Although the performance is still good, the sharp correction of Kweichow Moutai's stock price since the beginning of the year still caught many investors by surprise.

    From: Visual China



    Among the many investors in Maotai, "alternative" investor Dong Baozhen left the market in 2018 after investing 12 times in Maotai.


    In the following two years, Maotai's stock price has soared from about 800 yuan to the current 2,000 yuan.




    "When the stock price of Moutai was 100 yuan, people mistakenly believed that Kweichow Moutai would be in a long-term recession.


    This created the investment value of Kweichow Moutai which was unprecedented in a thousand years.
    When the stock price of Kweichow Moutai rose to 800 yuan, everyone found that Kweichow Moutai was good, so 800 yuan Maotai in China has no value.




    Although Moutai's share price has recently recovered, there are still brokerage research reports that Kweichow Moutai has a target price of 3,000 yuan in the next year, which means that there is more than 50% room for increase in the current share price.



    But Dong Baozhen still insisted on his point of view.


    In a recent conversation between the author and Dong Baozhen, chairman of Lingtong Shengtai Investment Management Company, his loud voice can fill the entire office.
    He confidently insists that he only earns valuable money, not bubble money.
    However, some people think that this is just his "stubborn mouth" who has not made the most profit.




    Dong Baozhen believes that he is the true practitioner of Buffett's value investment theory, and he also defines himself as a "retrograde in the market.


    " He believes that true value investment is based on the most fundamental principles of things.
    From the original investment in Maotai to the current investment banking stocks, it is based on the most essential logic.




    Maotai's value discovery: spiritual consumer goods that will increase in price

    Maotai's value discovery: spiritual consumer goods that will increase in price



    In 2013, the "three public consumption" was restricted, the market was generally not optimistic about Moutai's prospects, and news that Moutai could not sell was raging.


    Dong Baozhen thinks that it is unreasonable that no one buys good wine.




    In order to confirm his judgment, he flew to the Kweichow Moutai packaging workshop to observe.


    He chatted with security guards, chatted with cleaners, stayed at the bathroom door and waited for workers to talk to workers when they went to the toilet, and went to the transfer warehouse to investigate the delivery and sales of Moutai.
    When the scenes he saw on the scene were completely consistent with his theoretical analysis When they agreed, he was so excited that he had dug up gold.
    Although Maotai's stock price fell by more than 60% in the following two years, Dong Baozhen was dubbed the "bearest fund manager" because of the severe drop in the fund's net value.
    However, time finally proved that he had indeed dug the "gold".




    Q: What made you pay attention to Moutai?



    Dong Baozhen: I have always been concerned before.


    I study Buffett’s value investment.
    Buffett is a major consumer and finance.
    I learn it mechanically and look for it in consumption.
    During this process, I suddenly discovered that there is a type of consumer stocks that can be raised in price.




    Question: You were steadfastly optimistic about Moutai during the period when Moutai was not favored.


    How did you discover the value of Moutai?



    Dong Baozhen: Around 2013, the main point of disagreement about Moutai is whether Moutai can sell well.


    No one has hyped the concepts of Moutai management level and production quality.
    At that time, the prevailing view was that no one in Moutai was drinking, so no one bought it.
    There was a backlog in Moutai, and some people even said that Moutai dealers sold instant noodles on the Internet.
    Our research and investigation center around demonstrating whether Moutai can sell or not.
    The main thing that sells is price, but there was a panic at the time, so the price was distorted, and the dealer did not dare to hold the inventory, and sold it as soon as it got the supply.
    It's like stocking up as soon as they get the goods, because the price was falling at that time, and the dealers were afraid to get the goods.
    So if you want to know the true supply and demand relationship, you can't simply look at price trends, but look at inventory.
    In my research, I inspected its inventory.
    I suppose I am a buyer.
    I asked the dealer for 50 boxes of Moutai.
    As a result, almost no one could provide it after calling all the dealers.
    At least no one could provide it right away.
    I knew that there was no inventory and they were all sold.



    Question: There is no question of whether Moutai can be sold, but whether it can be bought.
    Moutai is still the original wine, what factors have changed?



    Dong Baozhen: Luxury cars and ordinary cars have four wheels, but the price of luxury cars is dozens of times higher than that of ordinary cars.
    Where does the value of these dozens of times come from? This is the need from everyone's spiritual level.
    The production cost of luxury cars is a bit higher than that of ordinary cars, but not so much.
    Luxury cars have nothing to do with cost, and Moutai has nothing to do with cost.

    There are also many Internet celebrity economies.
    In order to support idols, even unused commodities have to be bought back.
    This is spiritual consumption.



    The price formation mechanism of star chasing phenomenon is similar to that of Maotai.
    For example, there are two fans, one fan is very rich and the other fan has no money.
    In the physical world, it spends 1,000 yuan more than 500 yuan, but in the spiritual world, the consumer's spending is based on income.
    I found that the price of Moutai fluctuates between one-third and one-half of the per capita monthly income.
    This is the characteristic of Moutai as a spiritual consumer product.



    Question: Speaking of prices, Moutai currently has two price systems, one is the official guide price, and the other is the dealer’s real market price.
    Moutai requires dealers to sell it at 1,499 yuan, but the market sells it at around 3,000.



    Dong Baozhen: The dual-track price system of Moutai essentially reflects that Moutai has problems with its sales channels and the market system.
    This is also a manifestation of Maotai’s inability to control channels.



    Any well-known consumer product has the ability to control the retail price.
    The control of retail price is the control of dealers.
    Only Moutai cannot control the price of its own products.
    Moreover, Moutai wanted to control it, but it didn't come true after so long.
    why? There is a problem with the market structure.
    The dealers in Moutai are all small stores, each of which is 3 to 5 tons, and there are thousands of such small stores.
    The small and scattered market structure makes it difficult to control.



    Question: But the structure of large distributors may also cause distributors to control the voice of the channel, and in turn "kidnap" the winery?



    Dong Baozhen: If an industry is supported by large companies and the industry is stable, small Maotai dealers are not easy to control, because there are too many subjects, and one-tenth of it will be broken if it doesn't listen to you.
    China's famous liquor brands have a common problem, focusing on production, because the market was outsourced in the early years, which caused the market to get out of control after it became bigger.
    The market channel can be understood as the princes.
    If the princes do not listen to the central government, they will be cut down.



    Q: Now Moutai’s sales channels are changing.
    Direct sales channels have been added to Tmall, JD.
    com, and local supermarkets.
    Do you think it will be a trend? Will some other distributors be cancelled more in the future?



    Dong Baozhen: It will be a gradual change.
    Incremental channels do not have the share of traditional dealers.
    The proportion of traditional dealers is getting smaller and smaller, and price control has returned.
    Moutai trades time for space.
    The prevailing view in the market is that Moutai will raise prices on a large scale, because the retail price is now only a few thousand yuan, and its ex-factory price is more than 1,000 yuan.
    Moutai distillery has suffered a miserable loss.
    This view is still thinking in the old model.
    Now the biggest interest for Moutai is to control the channels, not to put the interests of the channels in the pocket.
    It is still a short-term behavior of earning some money back.
    It is now to revolutionize the control of channels and solve the problem that it cannot control the retail price of the terminal.
    How to do? It is self-employed, neither the retail price nor the ex-factory price is increased.
    The self-operated recycling process not only recovers the profits, but also becomes the leading sales force.



    Question: There is a view that Moutai also needs dealers' enthusiasm to a certain extent?



    Dong Baozhen: No, no, no, I can say this responsibly.
    I have communicated with Li Baofang (the former chairman of Maotai).
    Li Baofang was painfully studying how to restrain the terminal retail price, but he couldn't restrain it.
    Moutai has tried many ways to suppress prices, but it can't be suppressed.



    Question: Take the price issue and return to the point of view of spiritual demand products you mentioned.
    If Moutai really succeeds in suppressing the price to a level of 1,499 yuan, will it affect its attributes as high-end consumer goods or luxury goods?



    Dong Baozhen: This is divided into two aspects.
    The first is that it cannot be suppressed.
    As long as the channel structure is not changed, the sales channel cannot be suppressed if Moutai is not allowed to dominate the sales channel.
    Second, the high price of Moutai is not the essence of spiritual consumption.
    It has a cultural attribute.
    Drinking Moutai is a representative of the elegant Eastern culture.
    This is the essence.
    Because of this "book", everyone loves to drink, like, and yearn for, and finally the price goes up.
    Of course, there are speculation factors in the price increase process, so even if you remove the speculation factor, it will still make everyone want to buy it as a spiritual source of the symbol of Eastern culture.



    Is Moutai overrated? 60 times the price-to-earnings ratio is very little time



    In 2020, Kweichow Moutai's performance will still maintain a high double-digit growth.
    The deterministic expectation has made Moutai's share price continue to soar in the past two years.
    The national grabbing of Moutai and stockholders' speculation in Moutai complement each other.



    However, Dong Baozhen successively liquidated Moutai stocks in 2018.
    In his view, when everyone recognizes the value of Moutai, Moutai has no investment value.



    Question: On the one hand, Moutai has been rushed to buy, on the other hand, Kweichow Moutai’s stock price keeps pushing up.
    Do the two influence and relate to each other?



    Dong Baozhen: It is possible to form a double bubble.
    Everyone is frying the wine, and after frying, the price increases again, leading to stockpiling.
    Some consumers didn't need so much, but they bought something quickly when the price increased, which formed a panic-buying rise.
    Rising prices for rush-buying wine are not driven by real demand.
    The rise in wine prices induces optimism in the stocks, and this has formed a double bubble, which is linked.
    Double bubbles will form a kind of double collapse.
    This mechanism is easy to understand.
    Once it happens, the lethality is too great and it will shake the Chinese liquor industry.
    Because the price of Moutai is the star of China's high-end liquor, all other products are priced compared to Moutai.
    Therefore, it suddenly triggered fluctuations in the liquor industry.
    This fluctuation may be very destructive to the industry, so we must be vigilant.
    That bubble must be broken.
    After the wine price bubble bursts, the stock price bubble may be hurt, so be careful.



    Question: You have mentioned many times that the stock price of Moutai has deviated from its value.
    What are your judgments?



    Dong Baozhen: I don't have any complicated algorithm, just historical price-earnings ratio.
    You have to respect history.
    Moutai has been on the market for almost 20 years, and the period of 60 times P/E ratio is very small, most of the time it is 20 or 30 times.
    Now 60 times price-earnings ratio is obviously a point that is not easy to last for a long time.
    This is common sense.
    A price-to-earnings ratio of 30 times is a reasonable valuation.
    Now a price-to-earnings ratio of 60 times is a negative margin of safety.
    30 times is a reasonable valuation.
    If this condition has not been met, it would be wrong to announce that it can buy bottoms just because the stock price has fallen tens of percent.
    I see many people on the Internet say that baijiu should be bargaining at the bottom again, and bargaining depends on its nature, which is whether it has a margin of safety.



    Q: The stock price of Moutai has soared sharply from over 800 since 2018.
    This time happens to be the time you sold.
    You seem to have lost a profit opportunity.
    Does this conform to the logic of your value investment?



    Dong Baozhen: It is exactly in line with my value investment logic.
    I made the investment based on whether Moutai has a margin of safety.
    There is no margin of safety above 800 yuan.
    But there is no margin of safety, why can it rise? That's money driven.
    I buy when there is a margin of safety and exit when there is no margin of safety.
    When there is no margin of safety, a rise is a bubble rise.



    Question: Will your valuation of Moutai consider factors other than the operating level, such as the significance of Moutai to the local economy? In addition, the regulatory level strictly investigates the hype of high-end liquor?



    Dong Baozhen: Value investors should all be long-termists.
    How to achieve long-termism? First of all, you must become an essentialist.
    Only by looking at the problem from the essence can you be based on the long-term.
    The long-term trend is not related to the short-term current events.
    Therefore, if you want to predict the long-term, you must become an essentialist.
    What is the essence? The essence is a limited number of variables at a deep level.
    The essence must be a small number.
    You can't say that there are a thousand essences.
    The essence must be a finite number.
    So the long-term influential ones that deserve attention must be a few variables, and It's not the lively and lively events at the moment.
    There are so many events at the moment, and the essence is unchanged.
    It hasn't changed for decades, so there is no need to consider those realistic ones.



    Question: From buying Moutai stocks to selling Moutai stocks, and in recent years you started to invest in bank stocks.
    Do you feel that you are a "retrograde" in the market?



    Dong Baozhen: Everyone says that Lao Dong is a value investor.
    I admit it, but I am a reverse value investor.
    I am greedy when others fear, and I fear when others are greedy.
    Because the value must have a margin of safety when others abandon it, and underestimation will occur, and it will be overestimated when others rush to buy it.
    Therefore, reverse investment should be a core feature of value investing.
    If you really find value, you must be opposed to most people.
    This is determined by the game nature of value discovery, which inherently contains game nature.
    The public cannot correctly understand the objective fundamentals, and you discover the truth and facts, and discover the public's mistakes.
    At this time, you and the public form a cognitive opposition and form a game relationship.
    Without the opposition and game about the same fundamental cognition, there is no value discovery.



    When Moutai's stock price was 100 yuan, people mistakenly believed that Kweichow Moutai would be in a long-term recession, which created the investment value of Kweichow Moutai that has never been seen in a thousand years.
    When the stock price of Kweichow Moutai rose to 800 yuan, because everyone found that Kweichow Moutai was good at that time, the 800 yuan Moutai was worthless.
    Misunderstanding is more important than objective attributes in the value generation process.



    Retrograde, a conservative who only buys 1 stock



    Q: In terms of risk appetite, do you think you are disgusting, preferential, or neutral? From the perspective of value investment you mentioned, I think you may be averse to some short-term chasing factors and risk factors.
    After the stock price of Moutai has soared, you are very cautious, but when you invest in Moutai, you have a full position and Increase the leverage to hold Moutai without considering diversifying investment and diversifying risks.
    From this perspective, are you risk-preferred?



    Dong Baozhen: There are two opinions about whether I am a prudent and extremely risk-sensitive investor or an imprudent and risk-ignoring investor.
    One argument is that from my behavior, the general public thinks that I am a reckless person.
    No one in China only holds one stock and adds leverage, and it has fallen by 50%.
    It is also difficult for China to find people who never diversify their investments.
    People, but I dare, from this perspective I am very reckless.
    However, people who know me well, including my partners, know that I am very cautious.
    I never make decisions lightly.
    I have bought two types of stocks in more than ten years, one is Moutai, and the other is the bank I buy now.
    The number of stocks I have bought in 10 years does not exceed 7 or 8 stocks.
    I don't make decisions lightly, but when I make a decision, I just pour out my bag.



    Q: So, how do you view the risk?



    Dong Baozhen: When Maotai's 8 times P/E ratio, I have a full position.
    Then there is no risk, there is no risk.
    There is no need to guard against risks when there is no risk! At that time, as long as possession is money, you should speed up to pick up money.
    On the surface, it looks like it was all invested and it is still falling, but in fact it is a rational behavior.
    I am actually a true conservative.
    For example, when I have lunch at noon, I don’t eat dishes that I have never eaten before, and I never drink milk, because I have never drank milk since I was a child, so I drank cold water when I was a child.
    But my behavior makes people feel like it's aggressive.
    It has a price-earnings ratio of 8 times.
    If it doesn't aggressively increase, wouldn't it be irrational?



    Question: What do you think of investment theories such as portfolio management and risk quantification?



    Dong Baozhen: I think the combination is difficult to understand.
    One question has not been figured out yet, but you have divided it into three questions.
    Isn’t it more confusion and unknown? I think diversified investment cannot avoid risks, but amplifies risks.
    In my opinion, risk is the unknown world, and risk is the unknown.
    Turning the ignorance into knowing and turning the unknown into knowing can control the risk.
    How to resolve it? Just focus on one stock.
    If a stock is not figured out, another five stocks are bought, and then they are safe now, because I have five stocks, I don’t know what the logic is, and it’s hard to understand this theory and write it in textbooks to people every day.
    I don't understand it very much.
    I once gave lectures in some universities.
    I said that you turned out the finance textbook and turned to the first few pages.
    You tore me the page of efficient market theory.
    My classmates did not dare to tear it.
    I said you turn to it again.
    For the diversified investment, you tore that chapter to me.
    Those are all harmful, and the students dare not.

    Question: In recent years, passive investment strategies such as ETFs have become popular.
    The theory behind it is that it is difficult for individuals to surpass the market.
    Do you disagree?



    Dong Baozhen: I don't agree with it.
    It is a question of the level of investors.
    Munger can surpass, Buffett can surpass, Graham can surpass.
    Munger has a sentence in The Poor Charlie Collection, saying, "We rely on not being scattered, and betting on the greatest opportunity to achieve excess returns.
    " This means that some people can find the most valuable and safest margins.
    The subject matter is then concentrated on investment.
    Some people can't surpass the market and form an index fund, but can't deny that someone can surpass? If I speak big words, I can surpass, although not every day, sometimes I am not as good as the index.
    When I buy stocks, I buy more and more.
    After a while, I will find that I can eventually surpass the market.



    Q: When your fund loses money, are there any investors who want to redeem it? How do you convince them?



    Dong Baozhen: Yes, most investors don't understand investment after all, and they rely on net worth to determine your level.
    This standard is wrong.
    I have a theory that my stock has fallen, but on the other hand, the margin of safety of the stocks I hold has risen? My stock was originally worth 10 yuan, and now it has fallen to 2 yuan.
    My net worth has also fallen by 80%.
    However, this net worth of 80% has increased my margin of safety.
    As long as the company does not go bankrupt, it will do.
    Knowing that it will not go bankrupt.
    If there is anxiety during the decline, such investors are actually not suitable for stock market investment.



    Question: Does an individual's personality determine his investment philosophy?



    Dong Baozhen: The final success or failure of investment is character.
    Li Lu (a well-known investor and Munger's partner) once said that he asked Buffett and Munger about the determinants of the final success or failure of value investing.
    Ba and Mang said that they are instinctive and natural.
    Therefore, the personalities of value investors are very similar.
    You see that I'm wearing bad clothes, have you noticed it? In fact, Li Lu also dressed badly.
    Once I met with Li Lu, I saw that an international investor looks a bit like my outfit, and a sense of intimacy arises at any time.
    He doesn't particularly care, he is very casual.
    He said in a speech at Peking University.
    He said that people who are particularly fond of luxury goods must be rich, but they are definitely not suitable for investment because he cares too much about other people's evaluations.



    Value investment, first of all



    Question: You are now investing in banking stocks.
    Can your previous glorious achievements be repeated?



    Dong Baozhen: I think it is possible, because its logical model is the same.
    Maotai’s investment opportunity is that excellent companies are treated as rubbish and mispriced.
    Under the interference of a certain event, the public mistakenly turned the gold stall into straw, and the gold was priced at the straw price.
    Over time, the price of straw has grown into the price of gold and then into diamonds.
    The same is true for banks, which are now considered to be bankrupt.



    Question: There is a question on the Internet.
    The third and the new third of stock holdings may be older and old stockholders who hold oil, banking, and traditional industries.
    Now the new generation, such as the post-90s, Post-00s are holding things from the Internet and emerging industries.
    What do you think of this?



    Dong Baozhen: I can say that Buffett has never bought a stock with a P/E ratio of 20 times in his life.
    However, Buffett has become a stock god.
    But now so-called emerging companies, I don't know what their P/E ratio is, and I never look at them.
    The high valuation itself is a source of risk, even if it has a growth advantage.
    In fact, old investors are capable.
    It is often seen in the capital market that old investors can’t beat new investors, but after a few years, the new investors have long disappeared.
    The old investors are still there.
    The old investors have earned 30% in a few years, and the new investors Earned 300% first, then went bankrupt, just like this game.



    Q: How do you usually do investment research?



    Dong Baozhen: I mainly think about profound concepts and principles.
    For example, in this subject research, I think about logic and reason the most, including sources of wealth, investment ability, humanity, and soul.
    These things seem to be useless and useless, but the more useless, the more useful.
    I mainly think about this thing and complete it.
    Own theory.
    I have designed many concepts myself, such as "spiritual economics" and "mental marginal science".
    I string these theoretical concepts together with a rope to come up with a set of theories and continue to improve them.
    Then my behavior is in this theoretical framework.
    It evolves naturally and executes naturally.



    Question: Your research method is very different from those of industry researchers.



    Dong Baozhen: Research can be divided into two types.
    One is phenomenon-oriented.
    The chairman has changed and new products are launched.
    This is phenomenon-oriented.
    The phenomenon-oriented type is blind people touching the elephant, purely blind people touching the elephant.
    The other is an essentialist.
    The typical representative is Buffett.
    Buffett said that the core job of researchers is to find competitive advantage.
    Competitive advantage has nothing to do with new products.
    Competitive advantage is the company’s deep-level and internal competitive advantage, or called a moat.
    With this element, you know its future.
    As for what it does every day, what is its importance?



    Q: Don't pay attention to daily dynamics, do you usually watch the news?



    Dong Baozhen: Anyway, I haven't watched TV in 15 or 16 years.
    I will study "Animal World".
    I especially don't watch movies, and I don't like to watch entertainment.
    I consciously shut down the daily news information, because it is a trend and smoke, it has nothing to do with the essence of the moat of competitive advantage.
    Someone asked, how do you study Mr.
    Dong's Trump policy, and why is it necessary? You say that this company has closed down because of Trump's policies, indicating that this company is too fragile.
    right? Look at Huawei being beaten like that and continue to grow stubbornly.
    So don't look at the phenomenon.
    There are many things you fail because you know too much, and it is better not to know.



    Q: I see your Weibo is still updated every day, are you writing it yourself?



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