The company held its AGM in late June, where the new chairman, Mr . Deng Min made his public debut after the restatement of financial results in April 2026. He took office on 8 June and in his first meeting with investors, he reaffirms that the company is committed to a long-term value creation strategy, instead of pursuing short-term earnings. Under his leadership, the company will remain focused on its core business and brand equity, navigating the cycle with resilience and discipline. He agrees that the baijiu industry is experiencing cyclical correction but emphasized that historical precedents indicate such cycles ultimately benefit brands with strong heritage and uncompromising product quality. As a leading player, he believes Wuliangye faces more structural opportunities than prevailing headwinds.
Our views: The baijiu industry maintained steady growth after the pandemic; however, the growth was largely driven by channel inventory buildup rather than a genuine recovery in consumption. In 2025, as the economy weakened and distributors’ stocking appetite declined, the sector entered a destocking cycle. Demand remains soft as the business practices in the tech-driven economy involve significantly lower baijiu consumption than before.
Following structural change on the supply side due to Wuliangye’s channel reforms, the industry is now seeing demand stabilize alongside improved price transparency.
Current market consensus estimates net profit of around RMB20bn a year over the next two to three years, broadly in line with 2020 level. We believe this more conservative outlook reflects a lack of confidence in earnings quality after significant restatement. However, given the new management’s direction at Wuliangye, there may be room for upward revisions as the company delivers one or two quarterly results subsequently. It is estimated that dividend return to be around 7% and the positive effect from share buy-backs, with net cash of about RMB80bn and a strong balance sheet, the company offers attractive returns in a low rate environment. The counter is trading at 15x FY26E P/E. (Research Department)