Value Evaluation of White Wine Enterprise based on DCF Model:
Taking Moutai Ltd. of Guizhou as an Example
Ziyang Deng
Hubei University of Economics, Hubei, Wuhan, China
Keywords: Free Cash Discount Flow Model, Enterprise Value Evaluation, Kweichow Moutai.
Abstract: As a leading enterprise in China's liquor industry, Kweichow Moutai's business performance and financial
status have always been a hot issue of concern. Especially in recent years, its stock price fluctuation is obvious,
has attracted the majority of investors to its investment enthusiasm. This paper will use the DCF free cash
discount flow model to evaluate the enterprise value of Kweichow Moutai, and analyze the internal value of
Kweichow Moutai Company (hereinafter referred to as Kweichow Moutai), to derive its internal value and
compare it with the company's market value, so as to explore the feasibility of the DCF model to evaluate the
liquor enterprises.
Guizhou Moutai Limited by Share Ltd is a landmark
enterprise in the Baijiu industry. It founded in 1999.
The registered capital is RMB 185 million. 2001
Guizhou Maotai is listed on the Shanghai Stock
Exchange. Its main business includes: Maotai liquor
and series liquor. Production and sales of. Other
businesses include: production of beverages, food
and packaging materials. Production and sales; anti-
counterfeiting technology development, research and
development of information industry related
products; hotel management, accommodation,
catering, entertainment, bath and parking lot
management services, etc. As of December 31, 2019,
the controlling shares of Guizhou Maotai Liquor Co.,
Ltd. East is Guizhou Maotai distillery (Group) Co.,
Ltd. (actual holding proportion 58.00%), and the
actual controller is the state owned assets supervision
and Administration Committee of Guizhou
Provincial People's government Meeting (Zhang,
Under the situation of China's continuous
economic development, the Baijiu industry is in a
good position. National income water. The
continuous improvement of people's living standards,
the further improvement of people's lives and the
increase of consumers' disposable income. The long
term will help improve the competitiveness of famous
Baijiu enterprises and China's new economic
structure. New opportunities brought Moutai to a
high quality growth in the Baijiu industry. A new
stage of the exhibition.
In 2020, COVID-19 led to a short run in Baijiu
consumption demand, and manufacturers stopped.
Production, franchised stores or other distributors
also stop operation, so it is necessary to consider
sudden changes. Only under the influence of
economic development conditions or other uncertain
factors can we maintain sustained economic growth
(Zhou, 2021).
Moutai Group is involved in liquor, wine, health
wine, real estate, hotel, etc., with Kweichow Moutai
Co., Ltd. as the core enterprise. The main product is
Kweichow Moutai. Kweichow Moutai has a long
history and profound cultural connotation. It is a
typical representative of Daqu sauce flavor liquor in
China. It is in the leading position in China's liquor
industry and has a great impact on the trend of the
liquor industry (Wang, 2021).
In recent years, Moutai's stock price has
fluctuated significantly and is at the commanding
heights of the liquor industry, and its investment
value has naturally attracted many investors. This
paper will evaluate the value of Kweichow Moutai
from the perspective of investors, which is conducive
to grasping the future development trend of the liquor
Deng, Z.
Value Evaluation of White Wine Enterprise based on DCF Model: Taking Moutai Ltd. of Guizhou as an Example.
DOI: 10.5220/0011170300003440
In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 190-193
ISBN: 978-989-758-593-7
2022 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
industry and helping more investors to make
investment decisions.
2.1 Brief Introduction to the DCF
The DCF cash flow discount model is to restore the
expected cash flow of the enterprise for a specific
period in the future to the present value. Only by
ensuring its future profitability can an enterprise get
a reasonable enterprise value, and its value can be
recognized by the theoretical and practical circles. In
this evaluation case, the historical cash flow of
Kweichow Moutai in the past period of time was first
analyzed (generally about ten years), so as to predict
the free cash flow of enterprises for a future period of
time. Then the discount rate is obtained through the
risk-free reward rate, the risk reward rate and the beta
coefficient, and finally the value of the enterprise is
obtained through the discount model (Song, 2021).
2.2 Advantages and Disadvantages of
DCF Model
Based on the company's own growth rate and
expected future cash flow, it is less affected by market
wrong sentiment; the valuation framework is
rigorous, requires a large amount of information, a
comprehensive perspective, and considers the long-
term development of the company.
Parameter selection is difficult, and data
estimation has strong subjectivity and uncertainty;
the calculation is complex, and the accuracy of
valuation is greatly affected by the input value (Li,
2.3 Specific Operation Steps
1) Estimate the enterprise free cash flow (FCFF)
Free Cash flow (FCFF) = (After-tax net profit + after-
tax interest expense + depreciation and amortization +
other non-cash expenses) - working capital addition -
capital expenditure (1)
2) Determine the discount rate for the discount
Weighted average cost of capital (WACC) = (equity
market price * expected return rate of equity + debt
market price * (1-tax rate) * company debt cost) / /
(equity market price + debt market price) =
proportion of equity to market value * equity
expected return rate + proportion of debt to market
value * (1- tax rate) * company debt cost (2)
Expected return rate of equity: Capital asset
pricing model (CAPM) is generally used to calculate.
Expected return on equity = risk-free interest rate +
market risk * (market yield-risk-free interest rate) +
adjustment factor (3)
Risk-free yield: generally replaced by Treasury
yield, about 3% -4%;
Market yield: due to the unstable yield of A-share,
the yield of US stocks with Chinese characteristics,
about 10% -11%;
Market risk: the market risk of the company's
industry is calculated by a comparable company in the
same industry;
Adjustment factor: that is, the special risk of the
enterprise, generally between 1% -5%.
Debt cost: generally determined according to the
current debt yield of the enterprise, such as bank loan
interest rate, bond interest rate, etc. (Lu, 2007).
3) Final value and cash flow discount value plus
total value of the enterprise value
The final value calculation formula
TV=FCF2025 (1+g) / (WACC-g) (4)
in which, the sustainable annuity growth rate of the
enterprise g is generally expressed by the growth rate
of gross national product (GDP).
After the free cash flow discount, the cash flow
discount value and the final value will be added total
to get the enterprise value.
4) Calculate the equity value
On the basis of the enterprise value, (-) deducting
interest-bearing liabilities, (+) plus excess assets, that
is, to get the equity value of the enterprise (Wang,
3.1 Calculate the Free Cash Flow of
Cash flow = EBITDA (1 income tax rate) increased
depreciation increased amortization - increased
working capital - capital expenditure. (5)
The income tax rate is calculated at 25%.
According to the annual report, Table 1 of the balance
sheet, profit statement and cash flow sheet of
Kweichow Moutai over the years.
Value Evaluation of White Wine Enterprise based on DCF Model: Taking Moutai Ltd. of Guizhou as an Example
Table 1: Cash flow statement of data over the years.
2020 2019 2018 2017 2016
Cash flow 28757038300 21381278450 17099530261 9573181252 10575906002
As can be seen from the above table, the overall
cash flow of Kweichow Moutai Co., Ltd. was an
upward trend from 2016 to 2020, and only decreased
in 2017 (Zhang, 2020). Therefore, according to the
cash flow of the company in 2016-2020, the average
growth rate of the enterprise is calculated as 28.66%,
thus making the cash flow forecast for Kweichow
Moutai Company.
3.2 Forecast the Enterprise's Cash
Flow in the Next 5 Years
Table 2: Cash flow of the enterprise in the next five years.
Project 2021 2022 2023 2024 2025
Businesses forecast
cash flow
36,997,638,408 47,599,660,073 61,239,790,877 78,788,629,602 101,366,253,308
3.3 The Calculation of the Discount
The discount rate is calculated using a weighted
average cost of capital:
WACC=(E/V) ×Re+(D/V)×Rd×(1-Tc) (6)
Among them, Re is the share capital cost, the
necessary return rate of investors; Rd is the debt cost;
V=E + D is the market value of the enterprise; E / V
is the percentage of share capital in total financing,
capitalization ratio; D / V= debt percentage of total
financing, asset-liability ratio; Tc is the enterprise tax
The CAPM model was used to determine the cost
of equity:
Re=Rf+β(Rm-Rf) (7)
In practice, the yield of Treasury bonds is
generally selected to replace the risk-free return rate
Rf, and with the continuous operation as the
accounting assumption, the yield of the 10-year
Treasury bonds in 2021 is 3.15%.
Rm, select the CSI and Shenzhen 300 index, and
query that the average risk reward rate of the
evaluation base date (of June 3, 2021) is 6.42%. That
is, the Rm is 6.42% (Shen, et al, 2017). The
coefficient indicates the volatility of a certain
enterprise relative to the whole industry, reflecting
the price fluctuations of individual stocks to the entire
stock market. According to GuoTai'an database,
Kweichow Moutai Co., Ltd. has a coefficient of 2.17.
Therefore, it can be concluded that the equity cost
of the enterprise Re is 10.25%, the debt cost takes the
long-term loan interest rate in May 2021 is 4.65%,
and the income tax rate is Rd is 3.49%. According to
the 2021 enterprise annual report, the enterprise
assets are 213,395,820,000 yuan, with the total
liabilities 45,675,130,000 yuan, the equity total
167,720,680,000 yuan. The income tax rate is 25%
and WACC 8.62%.
3.4 Forecast Enterprise Value
According to the confirmed parameters, Kweichow
Moutai Co., Ltd. evaluates the enterprise value.
Table 3: Forecast enterprise value table.
Project 2021 2022 2023 2024 2025
forecast cash flow
36,997,638,408 47,599,660,073 6,123,979,0877 78,788,629,602 101,366,253,308
discount rate 8.62% 8.62% 8.62% 8.62% 8.62%
The value of the
34,061,534,160 40,344,492,880 47,786,398,850 56,601,032,410 67,041,604,880
Therefore, the total cash flow of Kweichow
Moutai Co., Ltd. in the forecast period is 245,835.06
million yuan.
The sustainable annuity growth rate of enterprises
is generally expressed by the growth rate of gross
national product (GDP). In order to make the research
data more accurate, this paper selects the driving
percentage of the secondary industry from 2016 to
2019, and 2.50%, 2.40%, 2.30% from 2016 to 2019
2.20%. Its arithmetic average is 2.35%, so this article
adopts 2.35% is the sustainable annuity growth rate
of Kweichow Moutai Co., Ltd.
BDEDM 2022 - The International Conference on Big Data Economy and Digital Management
Table 4: Enterprise value.
Follow-up final value RMB 1,654,678.79 million yuan
Discount rate 8.62%
Current value of the final value of the subsequent period 1,094,371.33 million yuan
Enterprise value 1,900,513.85 million yuan
The subsequent final value of Kweichow Moutai
Co., Ltd. TV=FCF2025 (1+g)/(WACC-g) =
1,654,678.790 million, obtained in Table 4.
According to the data of the benchmark date of
Oriental Wealth Network (June 3, 2021), the market
value of Kweichow Moutai Co., Ltd. is 2.5 trillion
yuan, the predicted value of DCF model is 1.9 trillion
yuan, and the error with the market value of
Kweichow Moutai Co., Ltd. is 24%.
This paper uses the DCF model to evaluate the
enterprise value of Kweichow Moutai Co. The study
found that the cash flow of Kweichow Moutai Co.,
Ltd. has been positive and showing an increasing
momentum in recent years, indicating that this shows
that the business activities of Kweichow Moutai Co.,
Ltd. have actually generated capital value increase
(intrinsic value), and the ability of value-increase is
continuously improving. Although there are some
differences between the market value of Kweichow
Moutai Co., Ltd. and the calculated theoretical value,
there is an error rate of 24%, and the calculated results
are slightly lower than the market value. Compared
with the traditional value evaluation model, the DCF
model has more research value and research space,
which is relatively stable for cash flow. Enterprises
with high predictability have strong applicability. But
for companies with frequent and volatile cash flows,
its feasibility will reduce (Huang, et al, 2021). As an
old enterprise and Moutai and a leading enterprise in
the liquor industry, Kweichow Maotai Co., Ltd. is in
line with the hypothetical premise of DCF model
evaluation. Therefore, the DCF model can be used in
the enterprise evaluation of liquor enterprises.
Thanks to the foreign professors, the teaching
assistant and the paper teachers for giving me some
guidance, they have a great help to my paper, and I
would like to express my heartfelt thanks here.
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Value Evaluation of White Wine Enterprise based on DCF Model: Taking Moutai Ltd. of Guizhou as an Example