SHANGHAI, Feb 10 (Reuters) - Kweichow Moutai Co shares hit record levels on Wednesday after the Chinese liquor maker scrapped plans to donate $127 million to fund public projects in response to investors’ objections.
Moutai’s shares jumped nearly 6% to a record 2,601 yuan ($403.95) on Wednesday, cementing Moutai’s position as the biggest listed company in China, and the world’s top liquor brand by market cap.
The rally was also fuelled by the company’s newly-released promotional video featuring a rap song entitled “Oh It’s Moutai”, which went viral on social media.
Investors cheered after Moutai backed away from a plan to donate 820 million yuan ($127.32 million) to fund public projects including a highway and a city sewage system, which had been announced in October.
Xu Caiyuan, an activist investor, hailed the decision a “historic victory for small shareholders.”
“Moutai is not a private asset owned by the Guizhou government. It’s owned by all shareholders. Had Moutai succeeded (in making the donation), the company would have become local government officials’ ATM.”
The view was widely shared by investors on social media, highlighting growing shareholder activism in China, where it used to be virtually impossible for individual investors to challenge powerful state-owned companies.
“This victory belongs to all who actively defended shareholders’ rights,” said an activist investor, who spearheaded a lawsuit by 197 shareholders in December against Moutai’s donation decision. The blogger didn’t disclose his name.
The share rise also came after the company released a promotional video on Monday which ended up trending on social media.
The song on the video, which features three foreigners travelling in China with their Chinese friend, gained immediate popularity with its catchy rhythm and youthful style. Previously, Moutai’s promotions largely centered on the liquor’s heritage and exclusivity.
“Awareness of the Moutai brand is penetrating into the mass consumer market,” Citic Securities said in a report on Wednesday, adding that sales could get a boost from China’s week-long Chinese New Year holiday that starts on Thursday.
Moutai is traditionally popular among government officials and business elites.
Although Moutai’s share prices are already up 30% this year, after doubling in 2020, Citic said the stock “still has big room to grow over the long term.”
The brokerage raised Moutai’s price target to 3,000 yuan, 15% higher than the current level. ($1 = 6.4407 Chinese yuan ) (Reporting by Samuel Shen and Brenda Goh; Additional Reporting by Sophie Yu Editing by Vidya Ranganathan and)