During the second quarter, the Matthews China Fund purchased 2,267,626 shares of Wuliangye Yibin (SZSE:000858, Financial) at an average price of 29.47 yen ($4.44) per share. The trade had a 1.95% impact on the Matthews China Fund portfolio.
Headquartered in Yibin, in the southeastern part of Sichuan province of China, Wuliangye Yibin manufactures and sells liquor products.. The company's main product is Wuliangye, which is made from five crops, including broom corn, rice, glutinous rice, wheat and corn. The company also offers the following liquor products:Â Wuliangshen, Wuliangchun, Changsanjiao, Lianghuchun, Xiandairen, Jinliufu, Liuyanghe, Laozuofang and Jingjiu brand names.
Wuliangye Yibin has a market cap of 134.23 billion yen and an enterprise value of 108.49 billion yen, a price-earnings (P/E) ratio of 18.59, and a price-book (P/B) ratio of 2.77.
According to GuruFocus, Wuliangye Yibin has a 9 of 10 financial rating, with no debt. The company also has a 6 of10 profitability and growth rating, with an operating margin of 38.78%, ranking it above 96% of the 215 companies in the global beverages- wineries & distilleries industry. Since the Matthews fund purchased a stake of Wuliangye Yibin in the second quarter, the company has raised an estimated 19% in price and it is currently trading at 34.96 yen.
The Matthews China Fund (Trades, Portfolio) may have purchased a stake in Wuliangye Yibin for the following reasons:
- Wuliangye Yibin has great financial strength with no debt, something that the great investor Peter Lynch recommends when investing in securities.
- The company was founded in 1997, meaning that it has nearly 20 years of operating experience within its industry.
- Wuliangye Yibin has a diversified portfolio of liquor products and it has increased its dividends per share growth rate by 34.90% over the past five years.
Below is a Peter lynch chart for Wuliangye Yibin.
The Matthews China Fund (Trades, Portfolio) looks for long-term capital appreciation.The fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information, number of employees, size and stability of cash flow, management's depth, adaptability and integrity, product lines, marketing strategies, corporate governance and financial health.
Cheers to your investment success!
Disclosure: Author does not own any shares of this company.
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