On the last trading day of the first quarter of this year, driven by the excellent annual report of Kweichow Moutai, liquor strengthened again, even driving the whole Baima plate and even the whole market to soar. The CSI liquor index, which represents liquor, has soared by 60.87% this year. Then some people will ask why liquor is soaring this year, because of performance or style. If so, will 10 continue in the future?

We have always said that the fundamental reason for the long-term rise of stocks is Buffett's long-term stable ROE, so let's build a simplified model of ROE and see the relationship between long-term ROE and stock price.

We assume that the initial annual owner's equity is 100, the net profit returned to the mother is 20, and the price is 400, so PE = 400/20 = 20 roe = 20/100 = 20% (strictly speaking, it should be divided by the average value of the owner's equity during this period, which is simplified here). We assume that the annual profits are all included in the owner's equity, which is also simplified here. If the annual price does not rise, we can see that if