Anhui Kouzi Distillery Co.,Ltd. recently issued its 2025 annual performance pre-reduction announcement, forecasting net profit attributable to shareholders of 662.10 million yuan to 827.60 million yuan, representing a year-on-year decrease of 50% to 60%. Based on performance data from the first three quarters of 2025, the fourth-quarter net profit is estimated to be between -79.9116 million yuan and 85.5884 million yuan, indicating a potential loss.
Amidst shifting industry dynamics and declining demand, Kouzi Distillery's core products have been significantly impacted; revenue from its primary income source, high-end baijiu, plummeted by 27.98% in the first three quarters of last year, while its net operating cash flow turned negative for the first time.
Kouzi Distillery's net profit for last year decreased by 50% to 60% year-on-year, with the fourth quarter potentially falling into loss. On January 7th, Kouzi Distillery released its 2025 annual performance pre-reduction announcement, projecting an annual net profit attributable to shareholders of 662.10 million yuan to 827.60 million yuan, a decrease of 50% to 60% compared to the previous year. The adjusted net profit is expected to be between 645.27 million yuan and 810.77 million yuan, a decline of 49.65% to 59.93% year-on-year.
With Kouzi Distillery achieving a net profit of 742.0116 million yuan in the first three quarters of 2025, this implies a fourth-quarter net profit ranging from -79.9116 million yuan to 85.5884 million yuan, raising the possibility of a quarterly loss.
Examining performance by quarter, Kouzi Distillery's net profit has experienced consecutive sharp declines since the first quarter of 2025, with the third-quarter figure amounting to a mere 26.9651 million yuan, a staggering 92.55% drop year-on-year. Even if the fourth-quarter profit reaches the upper estimate of 85.5884 million yuan, it would still represent a severe 75% decline compared to the same period last year.
Kouzi Distillery attributed the decline primarily to intensified market fragmentation and channel transformation within the baijiu industry during the reporting period, compounded by weakening demand and policy changes. This led to a substantial decrease in sales volume of its core profit driver, high-end cellar-aged products, resulting in reduced operating revenue. Furthermore, to maintain company operations and continued market investment, the decreases in management and sales expenses were smaller than the decline in operating revenue, leading to a significant contraction in total profit.
Kouzi Distillery's main revenue source is the Anhui provincial market, and its core products are the Kouzi Vintage series, priced between 100 yuan and 400 yuan. This price bracket falls into the mid-range and sub-premium segments, primarily catering to wedding banquets and business entertainment consumption, which have been notably affected by the current market environment.
According to disclosed data, revenue from high-end baijiu, the primary income source, fell sharply by 27.98% in the first three quarters, while mid-range baijiu revenue decreased by 15.38%. Only low-end baijiu recorded growth, at 25.09%. Both intra-provincial and extra-provincial markets experienced synchronous declines. Notably, despite an increase in the number of distributors both inside and outside Anhui province, this failed to stimulate revenue growth.
In June 2025, management indicated that terminal sales momentum had relatively slowed in the second quarter, particularly following the implementation of alcohol restriction policies. These policies significantly impacted mid-to-high-end baijiu sales; observations from banquet venues and terminal bookings for graduation banquets indicated a marked decline in both the number of such events and associated alcohol demand compared to the previous year.
Net operating cash flow turns negative for the first time as capacity utilization declines. Concurrent with the sales downturn, Kouzi Distillery's cash collection ratio for the first three quarters of 2025 also saw a significant drop, falling to just 93.95%. Cash received from selling goods and providing services decreased by 29.38%, exceeding the rate of revenue decline. Notably, the net cash flow from operating activities turned negative for the first time, recording a net outflow of 390 million yuan.
Simultaneously, inventory increased substantially, and fixed assets grew by 4.82%, reaching a new high of 3.239 billion yuan. As of the first half of 2025, progress on its "20,000-ton Daqu Liquor Brewing Quality and Efficiency Improvement Project" stood at 78%, with a planned investment of 1.36 billion yuan.
Kouzi Distillery's production capacity layout encompasses the "Three Parks in One Enterprise": Kouzi Industrial Park, Kouzi Industrial Zone, and Kouzi Liquor Culture Expo Park. As of 2024, the company's designed production capacity was 80,000 kiloliters, with actual output at 39,500 kiloliters, resulting in a capacity utilization rate of only 49%. With production volume shrinking this year, capacity utilization is expected to decline further.
The baijiu industry currently faces overall pressure, with declining demand, sluggish sales momentum, and high inventory levels becoming the norm. Many listed baijiu companies continue to expand production capacity, making the digestion of high inventories and excess capacity a pressing practical challenge for the sector.
Controlling shareholder cashes out 3.29 billion yuan amid substantial share pledges. Alongside the deteriorating performance, the controlling shareholder initiated share reductions. On July 20, 2025, Kouzi Distillery disclosed Liu Ansheng's reduction plan. Liu Ansheng planned to reduce his holdings by no more than 10 million shares via block trades within the following three months, representing 1.67% of the company's total shares. Liu Ansheng and his parties acting in concert collectively held 42.01% of the shares.
In August 2025, Liu Ansheng sold 1.67% of the shares at a price of 32.92 yuan per share, cashing out 329 million yuan. Following this reduction, his personal shareholding ratio decreased to 8.94%.
Furthermore, Liu Ansheng maintains a high proportion of pledged shares. According to the latest disclosure on September 3, 2025, Liu Ansheng pledged 6.09 million shares to Guotai Haitong Securities on September 4, 2023. This pledge underwent its first extension on September 3, 2024, and was extended again on September 3, 2025. Since September 3, 2023, Kouzi Distillery's stock price has fallen by 43%.
To date, Liu Ansheng has cumulatively pledged 21.7539 million shares, accounting for 40.68% of his personal holdings. According to Wind data, several of these pledge transactions have already reached their liquidation line thresholds.
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