Guizhou Maotai Financial Policy Analysis

In a booming economic market, how to make full use of current cash is the key to thedevelopment of companies, and in modern finance, we name it microcosmic financialpolicy. These policies include investment, finance, dividend, working capital etc. Theinvestment is the core of the policies, which is supported by other3ones.This paper sets Kweichow Moutai Co., Ltd as example, and does some research on itsfinancial policies with the financial theories at home and abroad. We start with the Tobin’sQ in the discussion of investment. Compared with the same industry, we find that Moutai’sQ is much higher than the average of the same industry, while its investment-cash flowratio is much less, which isn’t in accordance with Tobin’s Q theory. In regression, weconclude that Moutai’s stock price has the direct matter with Q value, and the stock price isrelevant with its performance, and the government policy has much influences on Moutai’sperformance.Moutai’s cash flow is from its net income in the result of its little long-term debts.Although Moutai is named “The King of Dividend per share”, its dividend yield is far lessthan the same industry. Moutai’s investment, Q value and dividend have no evidentcorrelation in regression, but there’s corporate governance with extreme individualcharacter behind this irrational financial policy. Its number of bank deposits is about50%of total assets, and we surprisely find that the grow path of Moutai’s bank deposits is verysame as the deposits of Zunyi City Commercial Bank. what’s more, the parent firm ofMoutai is also the second largest shareholder of this bank, so we have good reason to havea suspicion that Moutai has been conveying capital to the bank.We can make such conclusions that:1) In the economic market of mixed system andChinese characteristics, the applicability of Tobin’s Q theory is still to be verified, for theGovernment intervention leads to a inflated stock price;2)In Moutai’s corporategovernance, the government, as the largest shareholder, having absolute control, depositslarge amount of capital, which has violated minority stockholders’ rights and isn’tbeneficial to the long-term development.