Jinhui Liquor's revenue and net profit declined year-over-year for the first time since listing last year, failing to meet the annual targets | Financial Report Analysis

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Caixin Media March 20 (Reporter: Zhu Wanping) The liquor industry is undergoing an in-depth adjustment, with intensifying competition. Combined with policy adjustments, “Gansu liquor leader” Jinhui Liquor (603919.SH) saw a first double decline—both revenue and net profit—in 2025 since going public, failing to achieve the annual target it had previously set.

Jinhui Liquor released an announcement tonight. In 2025, the company achieved operating revenue of RMB 2.918 billion, down 3.40% year over year; net profit attributable to shareholders of listed companies was RMB 354 million, down 8.70% year over year; net profit excluding non-recurring gains and losses was RMB 348 million, down 10.36% year over year; net cash flow from operating activities was RMB 480 million, down 13.95% year over year.

Regarding the decline in performance, Jinhui Liquor stated that it was mainly due to industry policy controls and intensified competition, leading to lower sales volumes, along with increased brand promotion spending that pushed up selling expenses. However, the company offset some of the earnings pressure to a certain extent by achieving a year-over-year decrease in cost of sales of 8.95% through cost control.

Previously, in its 2024 annual report, Jinhui Liquor said that in 2025 the company planned to “strive to achieve operating revenue of RMB 3.280 billion (up 8.57% year over year); and net profit of RMB 408 million (up 7.37% year over year).” And last year’s double decline in both revenue and net profit meant the company failed to meet its annual targets.

Overall, Jinhui Liquor’s net profit last year fell short of the expectations of most securities firms. According to Choice data, since last October, 24 securities firms have made forecasts for the company’s 2025 performance, with the range of forecast net profit attributable to shareholders at RMB 361-390 million. As it turns out, Jinhui Liquor’s net profit last year was below the securities firms’ forecasts.

That said, optimizing product mix became a major highlight for Jinhui Liquor last year, showing a pattern of growth in high-end, stable performance in mid-end, and contraction in low-end categories. Specifically, last year Jinhui Liquor’s high-end products priced above RMB 300 generated revenue of RMB 709 million, up 25.21% year over year, with sales volume up 37.52% year over year; mid-end products priced between RMB 100 and RMB 300 generated revenue of RMB 1.532 billion, up 3.09% year over year, serving as the company’s basic earnings base; low-end products below RMB 100 saw revenue down 36.88% year over year, with sales volume down 33.56%. The company said this was due to proactive shrinkage and a focus on high-gross-margin categories.

Jinhui Liquor storage jars Image source: Caixin Media reporter Zhu Wanping / photo

In terms of channel and regional layout, the company’s revenue from the distributor channel last year was RMB 2.583 billion, accounting for about 93%. However, internet sales channels have surged unexpectedly: revenue from internet sales was RMB 118 million last year, up 40.26% year over year. In Gansu Province, as a core market, it contributed revenue of RMB 2.112 billion last year, down 5.34% year over year; while markets outside Gansu generated revenue of RMB 665 million, down slightly by 0.81% year over year.

For its 2026 operating plan, Jinhui Liquor did not provide specific target guidance. It only said it would build “Eco Jinhui,” “Cultural Jinhui,” and “Smart Jinhui,” aiming for a spot among China’s top 10 liquor brands. The company will focus on live-streaming e-commerce and community-based marketing. In market planning, it will adhere to “covering the whole country, going deep into the Northwest, and making focused breakthroughs,” and cultivate East China and the North as its second growth curve.

Worth noting is that Jinhui Liquor also announced tonight that it is rolling out a second employee shareholding plan. The plan covers no more than 800 core employees; the proportion of middle-level and core backbone personnel is 82.74%. The transfer price is RMB 10.05 per share, which is a discount of about 44.5% versus the current share price. It sets a 60-month vesting term and a three-tranche unlocking mechanism, with performance assessment covering 2026-2028. The plan is expected to result in RMB 84.0573 million of share-based payment expenses, which will be amortized in installments. In 2026, amortization is RMB 32.6889 million, and the impact on performance is controllable.

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