Key takeaway

LUZHOU LAO JIAO remains committed to its product volume and pricing strategy, controlling the supply and supporting the price of high-alcohol Guojiao while expanding low-alcohol Guojiao nationwide and penetrating lower-tier markets. The company temporarily lowered its earnings targets and conducted a substantial earnings reset to ease market pressure, with revenue growth of -36.35% in 1H26 and -65.54% in 2Q26. By product tier, sales of mid to high-end products such as Guojiao and Tequ declined by 38.86%, and market inventory of core products is expected to decrease further. In the near term, LUZHOU LAO JIAO will continue its earnings reset, streamline the market, improve channel health, and stabilize its brand positioning, laying a foundation for long-term growth.

Event

The company released its 1H 26 earnings report.

In 1H2 6, the company achieved operating revenue of RMB 10.472 bn (-36.35%); net profit attributable to shareholders of the parent company of RMB 4.339 bn (-43.37%); and recurring net profit attributable to shareholders of the parent company of RMB4.291bn (-43.90 %).

In 2Q2 6, the company achieved operating revenue of RMB 2.447 bn (-65.54%); net profit attributable to shareholders of the parent company of RMB 631 mn (-79.45%); and recurring net profit attributable to shareholders of the parent company of RMB608mn (-80.10 %).

Risks:

The recovery of consumption may not meet expectations: Due to factors such as the macro environment, economic growth has slowed over the past two years, while national income growth has also been affected. The recovery of residents' income growth and improvement in purchasing power may be slower than expected in the short to medium term. Slower-than-expected economic recovery: If business interactions decrease, the recovery in demand for the company's liquor products in business consumption scenarios may be slower than expected. Food safety risks: Food safety has remained a key concern for consumers in recent years. Although companies across the industry chain continue to improve production quality control, risks to food quality and safety remain because the industry chain is long and involves numerous processes and companies.