---
title: "Amidst formidable rivals, can Guotai's IPO sprint successfully land on A-shares and achieve a 'curve overtaking'?"
description: "On May 22, Guizhou Guotai Distillery Co., Ltd. (hereinafter referred to as 'Guotai') released its initial public offering prospectus on the CSRC website, planning to list on the Shanghai Stock Exchange. If successful, this sauce-flavored liquor company, also located in Maotai Town, will become the second listed sauce-flavored liquor company after Moutai, and the second baijiu stock in Guizhou Province. With the pandemic not yet fully over and the baijiu industry significantly impacted, is Guotai fully prepared for its IPO at this time? What actions has Guotai taken previously to advance its listing, and once successful, what advantages will it bring to Guotai?"
author: "陈峰"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-06-02"
language: "en"
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# Amidst formidable rivals, can Guotai's IPO sprint successfully land on A-shares and achieve a 'curve overtaking'?

> On May 22, Guizhou Guotai Distillery Co., Ltd. (hereinafter referred to as 'Guotai') released its initial public offering prospectus on the CSRC website, planning to list on the Shanghai Stock Exchange. If successful, this sauce-flavored liquor company, also located in Maotai Town, will become the second listed sauce-flavored liquor company after Moutai, and the second baijiu stock in Guizhou Province. With the pandemic not yet fully over and the baijiu industry significantly impacted, is Guotai fully prepared for its IPO at this time? What actions has Guotai taken previously to advance its listing, and once successful, what advantages will it bring to Guotai?

**On May 22, Guizhou Guotai Distillery Co., Ltd. (hereinafter referred to as 'Guotai') released its initial public offering prospectus on the CSRC website, planning to list on the Shanghai Stock Exchange.** Once successful, this sauce-flavored liquor company, also located in Maotai Town, will become the second listed sauce-flavored liquor company after Moutai, and the second baijiu stock in Guizhou Province.

The pandemic is not yet fully over, and the baijiu industry has been significantly impacted. Is Guotai fully prepared for its IPO at this time? What actions has Guotai taken previously to advance its listing, and once successful, what advantages will it bring to Guotai?

**-01-**
### **The sauce-flavored liquor boom drives Guotai's IPO sprint**
**Guotai's confidence in sprinting for IPO largely stems from its rapid performance growth in recent years. From 2017 to 2019, Guotai's performance soared**, with operating revenue of only 573 million yuan in 2017, rising to 1.888 billion yuan in 2019; net profit attributable to parent company shareholders in 2017, 2018, and 2019 showed a multiple growth trend, reaching 70.6723 million yuan, 247 million yuan, and 374 million yuan, respectively.

**Behind the rapid growth is the dividend from the sauce-flavored liquor boom.** In recent years, led by Moutai, sauce-flavored liquor has been on a continuous rise. The rapidly expanding sauce-flavored liquor market has ushered in a wave of dividends, and Guotai seized the opportunity to develop rapidly in recent years. However, production capacity has limited Guotai's further development.

Currently, Guotai's two major bases, Guotai Distillery and Guotai Winery, had production capacities of 1,800 tons and 3,500 tons respectively in the 2019 production season, with actual output reaching 2,003.91 tons and 3,970.77 tons. The capacity utilization rates of the two bases were 111.33% and 113.45%, respectively, indicating an overloaded operation.

Therefore, Guotai has an urgent need to expand base liquor production capacity. This is also evident in the prospectus: according to Guotai's plan, the raised funds, in addition to supplementing working capital, will mainly be invested in the technical renovation and expansion project for producing 6,500 tons of sauce-flavored baijiu annually. According to data disclosed by Guotai, the total investment in this project is 2.52 billion yuan, of which 2 billion yuan is planned to be raised funds.

**Guotai's tight grip on advancing the IPO may be based on the judgment that the sauce-flavored liquor boom trend is not yet over.** Although the baijiu industry was severely affected during the pandemic, many industry insiders believe that the pandemic will not change the overall industry trend. Tianyancha data shows that since March this year, a large number of enterprises have been established in Zunyi, where Moutai is located, after the pandemic, with total registered capital exceeding 2 billion yuan, and more than 20 enterprises have settled in Maoxi Town after March. (What does the name Maoxi Town remind you of? Yes, Luzhou has planned a new sauce-flavored liquor industrial park there.)

This shows that **on the one hand, the sauce-flavored aroma boom represented by Moutai is still continuing, and capital is still pouring into the core sauce-flavored production areas.** On the other hand, under the dual influence of the gradual saturation of Maotai Town resources and Luzhou's strong support for Maoxi Town, some people have begun to turn their attention to Maoxi Town. But **overall, it is obvious that the sauce-flavored liquor heat has not subsided.**

(Panoramic view of Maotai Town)

As the second largest liquor-making enterprise in Maotai Town, Guotai certainly does not want to miss such a golden development opportunity. What major actions has Guotai taken in its urgent sprint for IPO?

**-02-**
### **Years of planning, Guotai's road to listing**

As early as the 2016 Fuzhou Autumn Sugar and Wine Fair, Guotai Distillery General Manager Zhang Chunxin introduced Guotai's equity incentive investment promotion plan at the investment promotion meeting, with the main contents as follows:

**Guotai Distillery aims to list on the main board in 2019, and will adopt the 'equity incentive + manufacturer-merchant alliance' model, publicly recruiting 50 large distributors and 200 small distributors.** With Guotai's products aged five years or more as a link, they will purchase Guotai's original shares at a 10-fold premium of registered capital, and for participating distributors, they will directly receive returns from liquor sales and capital returns after Guotai's listing.

Such equity incentives attracted a group of capable distributors for Guotai at that time, laying the foundation for Guotai's subsequent rapid development.

**By May 2017, the 'Guotai Listing and Equity Cooperation Signing Ceremony' was held at Tianshili Group, the parent company of Guotai Distillery.** Guotai Distillery officials clearly stated: in 2018, the company will prepare for listing, apply in 2019, complete evaluation in 2020, and strive for listing. After listing, the company's market value is estimated to exceed 10 billion yuan.

**In the following years, benefiting from the sauce-flavored liquor boom led by Moutai, Guotai embarked on a path of full-speed advancement.** At this time, its good product structure provided it with sufficient upward momentum. According to the pre-disclosure documents, Guotai Distillery's existing products cover mid-to-high-end (retail price 300 yuan/500ml to 500 yuan/500ml) and high-end (retail price 500 yuan/500ml and above). These two price ranges are the mainstream price bands after Moutai raised the price ceiling for sauce-flavored liquor.

**To smoothly sprint for IPO, on January 5, 2020, Guotai officially announced the acquisition of Guizhou HNA Huai Liquor, adding another bargaining chip for the company's listing.**

**In addition, at the beginning of 2020, Guizhou Guotai Distillery Sales Co., Ltd. expanded its 7 branches to 11, increased regional offices from 43 to 62, and simultaneously launched the 'Kunpeng Plan' to add 'strong reinforcements' for Guotai.** According to Guotai, from February to April, since the implementation of the 'Kunpeng Plan', Guotai has introduced more than 100 industry elites, giving Guotai an advantage in seizing market share in the post-pandemic period. The talent strategy has also become an important part of Guotai's further development.

This series of actions is all to add momentum for the listing sprint. Is listing really that important for Guotai?

**-03-**
### **Is listing the key to Guotai's 'curve overtaking'?**

First, we must understand that although Guotai is currently ahead in the listing process, among sauce-flavored liquor enterprises, Guotai is far from being the true 'second'. So **who are Guotai's 'opponents'?**

Let's first look at the two well-known sauce-flavored liquor enterprises, **Langjiu and Xijiu**. These two companies are significantly stronger than Guotai in both scale and performance (Wang Junlin once publicly stated that Langjiu's 2019 revenue is expected to be 12-13 billion yuan; Xijiu's 2019 sales revenue also reached 7.98 billion yuan.) These two companies also want to list. Xijiu, due to various reasons related to its affiliation with Moutai Group, announced the termination of its listing at the end of October last year; Langjiu's listing goals over the years have also suffered repeated setbacks and have not been realized.

In addition to these two 'big guys', another noteworthy one is **Jinsha Distillery.** In 2019, Jinsha Distillery set a new revenue record. As of December 31, 2019, Jinsha Distillery achieved annual sales of 1.526 billion yuan, a year-on-year increase of 165%. Zhang Daohong, chairman of Jinsha Distillery, said in a media interview that according to Jinsha Distillery's current speed, it is possible to complete the listing ahead of schedule.

**If Guotai wants to seize the opportunity for further development, catch up with the first tier, or even achieve 'curve overtaking', leveraging the capital market is the best way.** Although its scale is somewhat smaller, due to its institutional reasons, the possibility of successful listing is actually not small. Once successfully listed on the A-share market, with the current capital market's favor for baijiu and the trend dividend of the sauce-flavored liquor itself, Guotai will surely enter a new high-speed track.

But on the other hand, **although Guotai is ahead in IPO progress, there are still many problems to face for successful listing. First, there is a big gap in brand influence and enterprise scale compared with Langjiu and Xijiu. Second, although Guotai's development speed is relatively fast, this is achieved against the backdrop of the sauce-flavored aroma category explosion, and the market still needs to test Guotai as a whole enterprise.**


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