The annual report from Wuliangye Yibin Co.,Ltd. has caused a major shock following its release on the final evening for such disclosures.
1. Previously, Wuliangye announced that its annual report and Q1 report, originally scheduled for the 29th, would be delayed by one day for "completion of compilation and review." It now appears the company was aware this year's report would create an uproar, employing a minor tactic to manipulate the timing, essentially toying with stakeholders.
2. Law firms were already circulating notices late last night indicating potential for investor compensation claims. The provisional claim period is for those who purchased Wuliangye stock between April 28, 2025, and May 1, 2026. Eligibility requires selling the shares after May 1, 2026, or still holding them currently. The core premise is that investors who incurred losses due to stock price fluctuations resulting from this accounting error correction can register for claims. Final eligibility will be determined by the courts. More law firms are expected to join this effort.
3. An examination of Wuliangye's data revisions reveals what even the company terms an "accounting error" amounts to a self-destructive form of shock therapy. The move appears designed to clear historical burdens in one sweep, making the Q1 2026 report—which shows a staggering 82% year-on-year surge—and subsequent financial statements appear exceptionally strong, thereby paving the way for the new management team.
4. However, taking such significant risks to curry favor with new leadership is a grave miscalculation. The individuals responsible for the report's release, from Vice Chairman Hua Tao, who signed on behalf of the absent chairman, to Board Secretary and CEO Zhang Xin, along with the auditing firm Tianzhi International Accounting Firm, have underestimated both the analytical capabilities of investors and the regulatory power of the exchange and securities regulators. The exchange is likely working overtime on an inquiry letter.
5. The fundamental issue with these revisions is a lack of consistency and logical coherence. The most basic logic dictates that if an accounting adjustment is necessary, it cannot be applied solely to the year 2025. The fact that this passed through multiple review stages unchecked highlights serious corporate governance failures at Wuliangye that require deep reflection. Former Chairman Zeng Congqin has been under investigation for two months with no updates, the first chairman Li Shuguang was expelled from the Party and dismissed from public office, and Board Secretary Zhang Xin, who also serves as CFO, may need to be replaced or step down from the CFO role per new CSRC regulations for board secretaries.
6. Alarmingly, this is the same company whose board report commits to "strictly adhering to the Company Law, Securities Law, and other laws and regulations, as well as the company's articles of association." Furthermore, it has been recognized for three consecutive years by the China Association for Public Companies as a "Best Practice Case for Listed Company Boards"; for three consecutive years as a "Best Practice Case for Sustainable Development of Listed Companies"; and for four consecutive years ranked among the "Top 100 Health Index of Chinese Listed Companies," being the only baijiu producer selected. This suggests the problem is not confined to Wuliangye's governance but points to broader issues within the listed company environment. Previously, similar evaluations in media would have placed a company with successive chairman scandals like Wuliangye on a blacklist immediately.
Adjustment, Bath-taking, or Self-Destruction? Wuliangye has restated its financial data for the first three quarters of 2025, involving significant downward revisions to both revenue and net profit.
The specific adjustments are as follows:
- Revenue for the first three quarters of 2025: Revised down from approximately 609.45 billion yuan to 306.38 billion yuan, a reduction of about 50%. - Net profit attributable to shareholders for the first three quarters of 2025: Revised down from approximately 215.11 billion yuan to 64.75 billion yuan, a decrease of nearly 70%. - Full-year 2025 revenue: Adjusted to 405.29 billion yuan, representing a year-on-year decline of 54.55%; net profit attributable to shareholders was 89.54 billion yuan, a year-on-year plunge of 71.89%.
The company stated that these adjustments resulted from a review of its 2025 business model. Based on the principle of prudence, it conducted a correction of prior period accounting errors related to the recognition of revenue for certain businesses. Following the adjustment, the significantly lower base in Q1 2026 resulted in substantial year-on-year growth in revenue and profit (revenue of 228.38 billion yuan, up 33.67%; net profit of 80.63 billion yuan, up 82.57%). The annual report was signed and released by Hua Tao on behalf of the chairman.
Board Report
Legal Action Underway
Who is Responsible? This adjustment is not the responsibility of a single department but a collective action led by management, decided by the board of directors, and endorsed by the auditing firm.
Core Decision-Makers and Executors (Management):
- Acting Signatory (Vice Chairman and General Manager Hua Tao): As the original Chairman Zeng Congqin is under investigation, Hua Tao is acting on behalf of the chairman and legal representative. He is the final signatory confirming the annual report and the correction announcement (signed as "Hua Tao (acting)"). - CFO and Board Secretary (Zhang Xin): As the financial officer, he is directly responsible for financial data accounting and statement preparation. This adjustment involves a major change in the timing of revenue recognition (from "upon shipment" to "upon distributor receipt/acceptance or actual sell-through/payment"). The finance department was the specific executor and proposer of the plan. - Former Management (Zeng Congqin, etc.): Although Zeng Congqin is already under investigation, the market widely perceives this adjustment as an attempt to "squeeze out" financial水分 (water content) accumulated in the past, particularly in 2025, due to aggressive sales policies (such as pushing inventory into channels). Therefore, the former management bears historical responsibility for creating the "prior period accounting errors."
Ultimate Responsible Party (Board of Directors):
- All Directors: The announcement indicates that the board of directors reviewed and passed the "Proposal on the Correction of Prior Period Accounting Errors." Except for the absent Zeng Congqin, all other directors (including independent directors) voted in favor. Legally, the board bears ultimate responsibility for the authenticity and accuracy of the financial reports.
Oversight and Attestation Party (Auditing Firm):
- Tianzhi International Accounting Firm: As the auditing firm, they issued a standard unqualified audit opinion on the adjusted financial statements. This means the accountants endorsed the company's approach of adjusting the revenue recognition benchmark "based on the principle of prudence," deeming the adjusted data a fair reflection of the company's condition.
What Was the Adjustment Process? This was not an arbitrary modification but followed the statutory procedures for correcting accounting errors in listed companies. The specific steps were:
Internal Review and Discovery (Trigger Phase):
- During the preparation of the 2025 annual report, the company conducted a review of its business model. - It determined that the original revenue recognition method (recognition upon shipment) was not sufficiently prudent given the current high channel inventory levels and decided to adopt a stricter standard (recognition only after distributor receipt, acceptance, or actual sell-through/payment).
Audit Communication (Key Negotiation Phase):
- Management communicated with the auditing firm (Tianzhi International). - Both parties reached an agreement on the reasonableness of the adjustment and its monetary impact. The auditing firm agreed to the retrospective restatement of the previously disclosed Q1, interim, and Q3 2025 report data to ensure consistency in the annual reporting benchmark.
Board of Directors Review (Decision Phase):
- Audit Committee Review: The board's audit committee first reviewed the accounting error correction matter and found it compliant with accounting standards. - Board Vote: A board meeting was convened to formally pass the "Proposal on the Correction of Prior Period Accounting Errors."
Announcement and Disclosure (Execution Phase):
- Delay Announcement: On the evening of April 28, an announcement was made delaying the annual report disclosure by one day, citing the need to "complete compilation and review." - Formal Disclosure: On April 30 (the statutory deadline), the "2025 Annual Report," "2026 First Quarter Report," and the "Announcement on the Correction of Prior Period Accounting Errors" were disclosed simultaneously. - Data Restatement: The annual report directly下调 (revised downward) the core data for the first three quarters of 2025, such as revenue and net profit.
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