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Buyback plan boosts Moutai stock price

By Fang Yunyu  (Global Times)

09:18, December 13, 2012

China's high-end liquor producer Kweichow Moutai Co saw its shares surge Wednesday after the firm issued a major share-buying plan to calm investors' qualms about its recent contamination scandal.

Kweichow Moutai closed up 4.72 percent in Shanghai Wednesday, the biggest gain this month.

The world's second largest liquor producer after UK-based Diageo suspended trading Monday after a Sina blogger with the handle shui jing huang posted a test result by an unnamed Hong Kong testing agency, claiming that a sample of the company's liquor contained excessive amounts of DEHP plasticizer, a chemical that may harm human immune and reproductive systems.

"Some people exaggerate food safety issues and use them to create public panic, to hit China's liquor industry and damage investors' interests," Yuan Renguo, board chairman of Kweichow Moutai, announced at a press conference in Guiyang, capital of Southwest China's Guizhou Province.

Yuan also thanked shui jing huang because he said his actions "remind our liquor industry to pay more attention to food safety and product quality."

"But I also want to remind him that the country's liquor industry, with a history of thousands of years and a deep cultural background, will not stop (developing) or die due to one event," said Yuan.

Investors are not fully convinced. "I think today's share jump can be better described as a temporary rally, which can not last long," Zhao Yong, an industry analyst with Haitong Securities in Shenzhen, told the Global Times, noting that the company's buyback plan is a critical factor in the stock rally.

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