Shares of Kweichow Moutai Co, the best-known high-end Chinese liquor, have experienced consecutive losses for six trading days, as a result of an excessive surge earlier, with industry analysts regarding it as rational declines.
On Wednesday, Moutai shares edged up 1.82 percent to close at 460.13 yuan (.7). Its share price is now the highest among listed Chinese companies. In the six trading days before Wednesday, Moutai's cumulative drop reached 6.76 percent, and its market value shrunk by more than 40 billion yuan.
Last week, Moutai's market value exceeded 600 billion yuan, as its share price had been consistently advancing this year, and its market value had topped that of other global liquor producers.
Earlier this year, a number of institutions have been bullish about the growth potential of Moutai stock, rating it "recommend to buy" or "strongly recommended". TF Securities earlier proposed that Moutai's target price could reach 615 yuan.
Huang Fusheng, an analyst at Pacific Securities, said in the past three years, the growth rate of Moutai's net profit had been lower than 10 percent, its shares had been affected by speculative investment.
In 2016, 2015 and 2014, Moutai's net profit attributable to shareholders grew by 7.84 percent, 1 percent and 1.41 percent, respectively, according to the company's earnings report.
"The earlier growth and valuation were too high, so the whole market was concerned about Moutai's share price, and some people have been reluctant to buy it," Huang said.
"Moutai's valuation bubble, and the fluctuation of the market, as well as the decrease of the growth rate, could be the signals of the end of the booming growth of the Chinese liquor sector and Moutai, but that remains far off."