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Source: Beijing Business Today

“The hydraulic Maotai”—Wang Liping, the actual controller of Hengli Hydraulic, has been placed under investigation; the “tax-free Maotai” China International Trust and Investment Corporation’s 2025 performance preliminary report shows both revenue and net profit fell. Once again, the investment value of various “Maotai stocks” has drawn renewed attention from the market. Maotai stocks are absolute leaders in their respective industries; generally speaking, they have a high safety factor, and their investment value is relatively stable. However, Maotai stocks may also see changes in investment value due to factors specific to individual companies, industry shifts, and more—requiring investors to dynamically adjust their investment strategies.

The core value of Maotai stocks stems from their industry-leading position, stable cash flows, and stronger market pricing power. This is their key advantage compared with ordinary individual stocks. Over the past many years, most Maotai stocks, thanks to continuous performance growth and reliable dividend capabilities, have become a core direction for market capital allocation, and they have also shaped a market image characterized by high safety and low volatility. But the investment logic of Maotai stocks is not absolute. The “leader aura” cannot conceal value fluctuations brought by company-specific risks and industry changes.

Broadly speaking, the factors affecting the dynamic value of Maotai stocks mainly fall into three categories. First are sudden risks at the individual-stock level. Such risks, like corporate governance issues, management changes, compliance risks, and others, often have sudden onset. They directly undermine market confidence, causing the stock price to adjust sharply in the short term and weakening its short-term investment value.

二 is changes in industry cycles and competitive landscape. Some Maotai stocks’ industries are not fixed and unchanging; technological upgrades, policy adjustments, and changes in supply and demand can all weaken their leading position. For example, when an industry enters a capacity-overcapacity cycle or when new competitors rise, these will all affect judgments about their long-term value.

Third is valuation and market style rotation. Maotai stocks enjoy a valuation premium over the long term. When the market style shifts toward growth stocks and cyclical stocks, or when macro liquidity and interest-rate levels change, their valuations may face contraction pressure, and their value will adjust dynamically as well.

In response to these changes, investors need to build a dynamic analytical framework and avoid static judgments. First, they should continuously track company fundamentals, with a focus on the stability of core businesses, the quality of earnings, cash-flow conditions, and governance structures—these are the key indicators for determining whether a Maotai stock’s investment value has undergone fundamental changes.

Second, they should analyze in combination with industry trends, distinguishing short-term fluctuations from long-term trends. For instance, the performance decline caused by cyclical adjustments in an industry versus the long-term value erosion caused by industry decline—each has a completely different response logic.

Third, it is necessary to take a rational view of valuation. Do not blindly worship the valuation premium of leaders. Assess whether the valuation is reasonable based on industry attributes, earnings growth rates, and the level of the risk-free interest rate, and avoid chasing into the market amid valuation bubbles.

In addition, investors should adjust their investment strategy, shifting from static holding to dynamic optimization. For Maotai stocks whose fundamentals have not changed fundamentally and are only affected by short-term sentiment or industry cycles, investors can maintain patience and wait for value to revert. For Maotai stocks whose value continues to shrink due to corporate governance issues or industry decline, investors should exit in a timely manner to prevent the stock price from entering an adjustment cycle.

It is especially important to note that investors can reduce the risk of a single asset through diversified allocation. Based on their own risk tolerance, they should reasonably mix Maotai stocks from different industries and different styles, avoiding excessive concentration in a single stock.

As capital markets develop amid change, the sample set of Maotai stocks will not remain unchanged forever. There will always be old Maotai stocks fading out and new ones emerging. Investors also need to continually eliminate Maotai stocks whose performance and growth are poor, and switch into new Maotai stocks with excellent performance and growth—this is the essence of a mature value investing philosophy.

Commentator at Beijing Business Today: Zhou Kejing

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