After accounting overhaul, can Wuliangye share purchase restore investor confidence?

The majority shareholder of Shenzhen-listed Wuliangye Yibin (Wuliangye) – China’s iconic premium baijiu producer – plans to increase its equity stake in the listed unit by purchasing between 3 billion yuan (US$441 million) and 5 billion yuan worth of shares over the next six months, in a move aimed at bolstering investor confidence after the stock slid to a six-year low. Analysts said the stake increase followed a prolonged downturn in China’s baijiu sector and growing unease among investors after the company overhauled its accounting treatment, which sharply reduced reported earnings. The Sichuan-based distiller, the country’s second-largest baijiu maker by revenue and brand value behind Kweichow Moutai, said in a statement on Wednesday that its parent company remained confident in Wuliangye’s long-term prospects and intrinsic value. State-owned Yibin Development Holding owns 34.43 per cent of Wuliangye’s shares, while its wholly owned subsidiary, Sichuan Yibin Wuliangye Group, holds a 20.65 per cent stake in the listed unit. Under the plan, Sichuan Yibin Wuliangye Group will increase its stake over the next six months using internal funds. The company had not set a purchase price and will gradually acquire shares on the open market, according to the filing. Shares in Shenzhen-listed Wuliangye rose 0.37 per cent to 92.60 yuan on Thursday. However, the stock has still fallen 12.6 per cent so far this year, lagging many of its baijiu peers and the broader market. “Premium baijiu has become more affordable for the mass market after product prices fell significantly,” said Jennifer Song, senior equity analyst at Morningstar. “We are seeing demand stabilise and expect a modest improvement in premium baijiu demand in the second half of the year.” Song said Wuliangye remained firmly positioned within China’s top tier of premium baijiu brands, although demand for Moutai was expected to remain stronger, followed by Luzhou Laojiao. She added that sub-premium baijiu brands were still facing pressure because their performance was more closely tied to broader economic activity, while competition in the mass-market segment remained intense despite signs of stabilising demand. China’s baijiu industry has been undergoing a period of destocking and structural adjustment since last year amid slowing consumption and industry consolidation. Of the 20 listed baijiu companies on the mainland, 18 reported year-on-year declines in both revenue and net profit in their 2025 annual results. Wuliangye reported revenue of 40.53 billion yuan for 2025, down 54.55 per cent from a year earlier, while net profit plunged 71.89 per cent to 8.95 billion yuan, according to its annual report released on April 30. The steep declines were largely attributed to changes in accounting policy that resulted in a restatement of its 2025 financial results. On the same day, it released the first-quarter earnings, and on this lowered base, its first-quarter revenue and net profit rebounded strongly, jumping 34 per cent and 83 per cent year on year, respectively. On April 30, Wuliangye outlined a larger repurchase proposal of between 8 billion yuan and 10 billion yuan, equivalent to about 2.2 per cent to 2.8 per cent of the company’s market capitalisation. “The accounting overhaul has undoubtedly hurt investor confidence,” Song said. “But the reset changed the financial presentation rather than the company’s competitive advantages.” She added that Wuliangye continued to maintain robust gross margins and strong returns on invested capital despite the sharp reduction in reported 2025 earnings, reflecting the resilience of its brand and product quality. “From our channel checks, Wuliangye’s sell-through this year has remained relatively healthy,” Song said. “Distributors generally reported 5 per cent to 10 per cent year-on-year sales growth during the peak Lunar New Year period, with inventory levels currently at around 1 to 1.5 months.” She said those trends pointed to a gradual recovery in demand from 2026. The China Alcoholic Drinks Association said in a post on Monday that the baijiu industry had shifted from a phase of rapid expansion to one focused on optimising inventory levels amid changing consumption patterns, fierce competition and elevated channel inventories. “Amid the industry’s profound transformation, Wuliangye has maintained sound fundamentals and adopted proactive adjustment measures, helping stabilise industry expectations and strengthen market confidence,” the association said.

After accounting overhaul, can Wuliangye share purchase restore investor confidence?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Investors welcome Wuliangye’s multibillion-yuan share purchase plan after weak earnings and industry destocking hit sentiment

Investors welcome Wuliangye’s multibillion-yuan share purchase plan after weak earnings and industry destocking hit sentiment