A CAMPAIGN by regulators about the risks of investing in Kweichow Moutai Co. shares has intensified, with domestic media reporting Tuesday that the Shanghai Stock Exchange criticized a brokerage for being too bullish.

Essence Securities Co. failed to conduct “prudent analysis” on Kweichow Moutai and fully disclose related risks when the brokerage raised its price target on the liquor maker last week, domestic media reported, citing a notice from the Shanghai exchange.

A Xinhua commentary Thursday said the stock should rise at a slower pace, while the company itself issued a statement saying analysts’ share price targets and valuations in the market are “overly high.”

Kweichow Moutai has doubled this year, with Goldman Sachs raising its price estimate on the firm 11 times, amid expectations the firm could boost profit margins by increasing direct sales.

Shanghai-listed Kweichow Moutai already has an operating margin of more than 70 percent. Xinhua’s warning triggered a slump of as much as 5.8 percent in Kweichow Moutai shares Friday, while some other high-flying stocks also tumbled.

Regulators are targeting Kweichow Moutai to reduce risks in the market, according to Hong Hao, chief strategist at Bocom International Holding Co. in Hong Kong. (SD-Agencies)