Anhui Golden Seed Winery Co., Ltd. has made substantial progress in its asset divestment plan. On November 7, the company announced the signing of a property transaction contract with Shenzhen Juncheng Pharmaceutical Co., Ltd. (Juncheng Pharma) to transfer 92% equity of Anhui Golden Sun Biochemical Pharmaceutical Co., Ltd. (Golden Sun Pharma) for approximately RMB 126 million.
Notably, Juncheng Pharma was established merely 25 days before the announcement, with a registered capital of only RMB 1 million.
Golden Seed Winery remains trapped in a vicious cycle of declining sales, high expense ratios, and insufficient gross margins to cover costs, resulting in continued losses three years after Huarun's acquisition. With two Huarun-affiliated executives recently resigning, questions arise about the company's future direction.
Golden Seed Winery initially planned to divest Golden Sun Pharma in April 2024. The first public listing for the 92% stake occurred from August 28 to September 24, 2025, at an initial asking price of RMB 139.96 million. After failing to attract qualified buyers, the company reduced the price by 10% for relisting.
Once a significant revenue contributor (42% in 2020), Golden Sun Pharma has become a burden. Its revenue plummeted 62% to RMB 161 million in 2024, with net profit at just RMB 6.19 million. In the first three quarters of 2025, revenue fell further to RMB 103 million, turning to a RMB 2.5 million loss.
Curiously, the transaction values Golden Sun Pharma at only 4.6 times its 2023 earnings (RMB 29.51 million net profit), raising questions about the timing and pricing of this divestment during the subsidiary's sharp decline.
Meanwhile, Golden Seed Winery's core liquor business faces mounting challenges. Liquor sales dropped 24.33% to RMB 744 million in 2024, regressing to 2021 levels, with another 22% decline in the first three quarters of 2025. This suggests Huarun's three-year restructuring efforts have yielded limited results.
The company's product upgrade strategy—centered on "Fuxiang aroma as the core, with Seed brand and Zuisanqiu as supporting lines"—has failed to reverse the downturn. Despite establishing high-, mid-, and low-end product lines and leveraging Huarun's distribution network, 2024 saw liquor revenue fall 24.23% with gross margin contracting 10.44 percentage points to 38.4%. All product segments recorded declining sales and shrinking margins.
A March 2024 decision to raise prices on core products while reducing promotions backfired, depressing sales and distributor willingness. Concurrently, increased marketing and channel development expenses pushed the sales expense ratio up 15.87 percentage points to 31.84%, with total operating expenses reaching 44.31%—far exceeding the 34.94% gross margin.
As of Q3 2025, low-end products still dominate (64% of liquor sales), with mid-range at 26% and premium products merely 10%. The company's 43.26% gross margin ranks second-lowest among listed liquor firms, with losses widening to RMB 100 million. Operating cash flow remains negative, and interest-bearing debt (RMB 375 million) now exceeds cash reserves (RMB 367 million).
In China's fiercely competitive Anhui liquor market, Golden Seed Winery's small scale and unsuccessful premiumization efforts leave it particularly vulnerable to industry-wide challenges. With only two of 19 listed liquor companies reporting revenue growth in 2025, inventory reduction has become an industry-wide priority.
The company now faces the urgent task of breaking its downward spiral—where sales declines lead to high expense ratios that low margins cannot cover, perpetuating losses. After its failed product upgrade, finding a path to profitability has become management's most pressing challenge.
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