Valuation Analysis of the Chinese Wine Sector Based on Indicators

Abstract

As a unique type of wine, Chinese wine is one of the traditional beverages in China, with a long history and profound cultural deposits, and has a wide consumer base. Moreover, as the subject of heavy foreign investment, it is also one of the sectors with the highest share of institutional investors in A-shares, which is of great research value. Contemporarily, the Chinese wine industry has entered the stage of recovery and the production has started to show a gradual growth. Therefore, this paper attempts to value the 20 Chinese wine companies currently listed through the PE, PEG, PCF, and EV valuation method to help investors find suitable investment options. According to the valuation analysis, Luzhou Laojiao and Fen Wine are currently the most worthwhile companies to invest in. In fact, they have good operating conditions, i.e., no cash flow problems, PEG less than 1, indicating that they are undervalued companies and have high enterprise value. In addition, Gujing Distillery and King's Luck Brewery are also performing well, although their enterprise values are lower compared to the leading companies, they are still worth considering. These results shed light on guiding further exploration of stock valuation of Chinese wine industry.