Kweichow Moutai's Competitive Strength in the Premium Baijiu Market Secures Robust Profit Outlook

As China's most distinguished spirit brand, Kweichow Moutai has remarkable pricing power, premium product quality, a long history, and unparalleled brand strength. Its premium position is reflected in its 67% operating margin and 86% return on invested capital over the past five years between 2020 and 2024. The Chinese government’s sweeping anticorruption initiative since 2012 has squeezed short-term sales of premium spirits in 2014-15. However, Moutai has recovered quickly from 2016 with an average of 21% net profit growth through 2016-24. Moutai remains a leading brand in China's culinary and consumption culture, and we believe it will continue its premium position over the long term.