Key takeaway

The company, based on the principle of prudence, adjusted the accounting treatment related to revenue recognition for some businesses in 2025, which impacted revenue for the first three quarters of 2025 by approximately RMB30.3bn and net profit attributable to shareholders of the parent company by approximately RMB15.0bn. This more objectively and fairly reflects the financial position and operating results, aligning with the company's substantial balance sheet cleanup in 2025. Against the backdrop of controlled shipments and a low base in 1Q25, along with relatively strong sales momentum during the 2026 Spring Festival, the company achieved high revenue and profit growth in 1Q26. For the full year, the eighth-generation Wuliangye is expected to achieve volume expansion amid a lower effective payment price, and full-year revenue and profit may likely recover. Attention should be paid to reform initiatives under a lightened load in 2026, as well as high dividend yields supported by high dividends and large-scale buybacks.

Event

The company released its 2025 annual report and 1Q26 report.

Based on data restated for prior-period accounting errors, 2025 revenue was RMB40.529bn (-54.55%); net profit attributable to shareholders of the parent company was RMB8.954bn (-71.89%). 1Q26 revenue was RMB22.838bn (+33.67%); net profit attributable to shareholders of the parent company was RMB8.063bn (+82.57%).

Quick Take

In 2025, the baijiu industry entered a period of deep adjustment, leading to a temporary increase in Wuliangye product inventory

In 2025, Wuliangye product revenue was RMB27.936bn (-58.84%), with volume/price down -53%/-12.44% YoY. In 2025, other liquor product revenue was RMB9.168bn (-39.89%), with volume/price down -22.46%/-22.47% YoY.

The 2025 annual report newly added other current liabilities - regulated goods proceeds of RMB26.3bn, and newly added other current assets - regulated goods of RMB4.9bn. At the end of 2025, Wuliangye product inventory stood at 25,000 tonnes (an increase of 19,000 tonnes YoY), mainly because the baijiu industry entered a period of deep adjustment, with consumption scenarios contracting and stock-based competition intensifying, leading to lower sales volume and a temporary inventory buildup.

The company continued to refine its product matrix, launching products such as Yijianqingxin. The eighth-generation Wuliangye adhered to a volume-price balance strategy, continuously consolidating its leading position in the RMB1,000 price band. Products such as Wuliangye 1618 and 39% vol. carried out market operations centered on bottle-opening QR code scanning and banquet scenarios. In 2025, the top five distributors accounted for 15% of revenue. The company continued to refine its "three stores, one home" channel layout

In 2025, distribution/direct sales revenue fell -53.65%/-57.80% YoY, with the direct sales share reaching 39.11% (-2.26pcts). Before the restatement, sales to the top five distributors in 1H25 were RMB30.1bn, accounting for approximately 57% of total revenue. After the restatement, sales to the top five distributors in 1H25 were RMB5.275bn, accounting for approximately 22% of total revenue. The restatement reduced top-five distributor sales by RMB24.8bn and revenue by RMB29.3bn. Top-five distributor revenue was likely the main component affected by the revenue recognition adjustment under the principle of prudence. In FY25, sales to the top five customers totaled RMB5.9bn, accounting for 15% of revenue (compared to RMB14bn and 16% in FY24).

In traditional channels, the company continued to refine its "three stores, one home" layout, optimize terminal deployment, and deepen cooperation with core terminals. It added 12,000 new cooperative terminals, bringing the total number of purchasing terminals for the year to 55,000. In e-commerce channels, the company established a dedicated e-commerce task force, deepened cooperation with platforms such as JD.com, promoted pilot programs for instant retail, enhanced its matrix of online merchants and stores, and continued to strengthen governance of the online market order. In emerging channels, the company actively expanded cross-industry cooperation, food and beverage, and group-buying channels, advanced direct sales cooperation with corporate clients, and continued to cultivate incremental channel growth.

In FY25, revenue from the Eastern, Southern, and Northern regions was RMB12.832bn, RMB17.825bn, and RMB6.447bn, representing YoY changes of -58.99%, -54.69%, and -48.42%, respectively. In FY25, the number of Wuliangye distributors in the Eastern, Southern, and Northern regions decreased by 31, 29, and 30, respectively, while the number of Wuliang Nongxiang distributors increased by 112. The number of exclusive stores in the Eastern, Southern, and Northern regions changed by +5, -2, and -26, respectively, resulting in a total net decrease of 23 stores to 1,763.