Chinese liquor maker Kweichow Moutai plans to repurchase between 3 billion yuan ($426 million) and 6 billion yuan of its shares in a bid to boost investor confidence and shore up its stock price, which has been dragged down by the sluggish catering and gift-giving markets.
The announcement came after the liquor maker’s stock pric lost around a quarter of its value since the beginning of the year.
The shares bought in the repurchase will be retired so as to reduce the company’s registered capital, the company said, marking the first time in Kweichow Moutai’s 23 years as a publicly traded company that it will cancel repurchased shares.
Kweichow Moutai will not pay more than 1,795.78 yuan per share, which means if the full amount of 6 billion yuan is utilized, the purchased shares would account for about 2.1% of the firm’s total assets as of June 30. The number of shares to be repurchased ranges from 1.67 million and 3.34 million, representing 0.13% – 0.26% of its total shares.
The prices of some Moutai liquor products have been sliding since the Mid-Autumn Festival holiday as demand stays weak and market confidence remains low. The price of Moutai Flying Fairy had dropped by almost 100 yuan to below 2,400 yuan per bottle as of Sunday and the wholesale price dropped by a similar amount to 2,270 yuan per bottle, according to industry data.