Anhui Yingjia Distillery Co.,Ltd. experienced significant declines in both revenue and net profit during the first half of this year, marking the first semi-annual performance decline since entering a period of rapid growth in 2021. The second quarter showed particularly steep drops, with declines exceeding 40% and 60% respectively on a quarter-over-quarter basis. Additionally, the company's net cash flow from operating activities fell nearly 50% year-over-year in the first half.
As one of the "four golden flowers" of Anhui liquor brands, Anhui Yingjia Distillery ranks second in revenue only to Jiannanchun Distillery among Anhui liquor companies, though the gap exceeds 10 billion yuan. Currently, Anhui province has four listed liquor enterprises, creating intense market competition. As a regional liquor enterprise with over 70% of revenue generated within the province, Anhui Yingjia Distillery faces significant challenges in its national expansion efforts. Recently, the company announced plans to divest a hotel subsidiary to optimize its asset structure and focus on core business operations, drawing attention to how this regional liquor enterprise will navigate the current cycle.
**First Semi-Annual Decline in Four Years, Operating Cash Flow Nearly Halved**
In the first half of 2025, Anhui Yingjia Distillery achieved operating revenue of 3.16 billion yuan, down 16.89% year-over-year, while net profit attributable to shareholders reached 1.13 billion yuan, declining 18.19% year-over-year. The company attributed the performance decline primarily to reduced sales.
This marks the first time since 2021 that Anhui Yingjia Distillery has experienced simultaneous declines in both semi-annual revenue and net profit following a period of rapid growth. Data from East Money Choice shows the company maintained continuous growth from 2021 to 2024, with revenue growth rates of 33.36%, 19.59%, and 22.99% respectively from 2021 to 2023, and net profit growth rates of 45.44%, 22.97%, and 33.85%. However, growth momentum clearly slowed in 2024, with revenue and net profit growth rates falling to 8.46% and 13.45% respectively.
From a semi-annual perspective, 2025 represents the first decline since Anhui Yingjia Distillery reversed its downward trend in 2021. That year, the company dramatically reversed its declining performance with revenue growth exceeding 50% and net profit growth exceeding 70%. Over the subsequent three years, semi-annual performance remained impressive, with revenue growth maintaining above 20% for three consecutive years and net profit growth exceeding 30% (except for 29.86% net profit growth in 2024).
The decline actually began to manifest in Q4 2024, when both quarterly revenue and net profit fell approximately 5%. This downward trend continued into 2025, with Q1 showing revenue and net profit declines of 12.35% and 9.54% respectively year-over-year. Q2 2025 saw even steeper declines, with revenue and net profit falling 24.13% and 35.2% year-over-year, and 45.64% and 63.59% quarter-over-quarter respectively.
Net cash flow from operating activities, a core indicator in corporate cash flow statements that directly reflects a company's "cash-generating ability" from core operations and operational health, totaled 317 million yuan in the first half, down 48.30% year-over-year. The company attributed this primarily to reduced cash received from goods sales and service provision. Sales expenses reached 307 million yuan compared to 303 million yuan in the same period last year, up 1.39%, mainly due to increased advertising and rental expenses.
Analysts suggest that the "mismatch between investment and cash flow" phenomenon fundamentally reflects declining "input efficiency" on the sales side or potential cash flow consumption risks within the operational chain.
Additionally, alongside declining performance, Anhui Yingjia Distillery's significant market capitalization drop has drawn attention. Data shows that as of the close on August 29, the company's total market value stood at 36.464 billion yuan, down from a peak of over 48 billion yuan on March 14 this year—a evaporation of nearly 12 billion yuan in less than half a year. Compared to the nearly 58 billion yuan market value on May 6, 2024, the decline approaches 40%.
Regarding the market value decline, Anhui Yingjia Distillery General Manager Qin Hai previously responded that secondary market stock performance is influenced by multiple factors, and the company has consistently focused on improving operational performance while steadfastly advancing "quality improvement, efficiency enhancement, and shareholder return" initiatives to increase dividend payments. In the future, the company will continue to promote valuation improvement through strong operational performance while further enhancing information disclosure levels and strengthening investor communication management to actively convey the company's investment value and improve shareholder returns.
**Mid-to-High-End Products Struggling, Inventory Accounts for Over 40% of Total Assets**
Behind the performance decline, the most direct manifestation is difficulty selling products.
Data shows that in Q2, mid-to-high-end liquor represented by the Dongcang series, Jinxing series, and Yinxing series achieved sales revenue of 817 million yuan, down 23.6% year-over-year, while ordinary liquor primarily consisting of the Centennial Yingjia series and simple packaging series generated sales revenue of 210 million yuan, down 32.90% year-over-year.
Minsheng Securities analysis suggests that while ordinary liquor's decline rate remained flat compared to Q1 2025, mid-to-high-end liquor experienced significantly increased declines (mid-to-high-end liquor fell 8.57% year-over-year in Q1 2025). This relates both to scenario absence and demand contraction, as well as intensified provincial competition, while the continued adjustment in ordinary liquor reflects obstacles in expanding markets outside the province with products priced around 100 yuan, including Jinyin Star and Centennial Yingjia, during the counter-cyclical period.
As of the reporting period end, company inventory reached 5.1 billion yuan, accounting for over 40% of total assets, representing a 1.31% increase from 5.043 billion yuan at the end of 2024. The company provided no explanation for the inventory increase. Over the past two years, many liquor companies in the industry have faced high inventory levels and price inversion phenomena. At a Q1 performance briefing held in June this year, General Manager Qin Hai mentioned that performance declines included the company's proactive volume control and price stabilization efforts to reduce channel pressure.
Anhui Yingjia Distillery has also implemented volume control and price stabilization for inventory reduction, evidenced by the significant decline in contract liabilities data that reflects dealer payment enthusiasm. Data shows that at the end of the first half of this year, the company's contract liabilities totaled 440 million yuan, down 23.81% from 578 million yuan at the end of 2024. The company attributed this primarily to goods payment and delivery settlements. "Contract liabilities" are also considered a "reservoir" for liquor enterprises to some extent, reflecting dealer payment enthusiasm. Increasing contract liabilities typically indicates future revenue growth potential for enterprises, while declining contract liabilities may reflect insufficient dealer confidence.
**Intensified Competition in Core Provincial Markets, Asset Sales to Alleviate Pressure**
"Don't enter Sichuan in the west, don't enter Anhui in the east"—Anhui local liquor brands demonstrate strong performance and leading market share. As one of the four listed Anhui liquor enterprises, Anhui Yingjia Distillery leveraged growth momentum from its Dongcang series to become the "second Anhui liquor brand," replacing Kouzi Distillery, despite a significant performance gap with leading Jiannanchun Distillery. According to 2024 statistics from Caizhi Securities, among listed Anhui liquor enterprises' provincial revenue proportions, Anhui Yingjia Distillery's share has continuously increased since 2018, rising from 16.3% to 20.5%, though it still has room to reach the 2013 level of 23.3%.
The Dongcang series, as one of Anhui Yingjia Distillery's core products, serves as an important growth engine for the provincial market. However, intensified competition in core provincial markets affects market share. From provincial and extra-provincial market shares, in the first half of this year, Anhui Yingjia Distillery achieved revenues of 2.36 billion yuan and 630 million yuan respectively from provincial and extra-provincial markets, declining 12.0% and 33.0% respectively year-over-year. As of the end of Q2 this year, the numbers of provincial and extra-provincial dealers were 761 and 622 respectively.
Pacific Securities analysts noted that Anhui Yingjia Distillery's Q2 performance continued under pressure with declining profitability and slower channel payment rhythms. "Q2 2025 gross margin was 68.3%, down 2.6% year-over-year, mainly due to product structure decline caused by pressure on the Dongcang series in Q2."
Anhui Yingjia Distillery's 2025 annual financial budget report released in May showed main financial budget targets of 7.6 billion yuan in operating revenue, expected to grow 3.49% year-over-year, and net profit of 2.62 billion yuan, expected to grow 1% year-over-year. Among these, the liquor main business targets 7.256 billion yuan, expected to grow 3.46% year-over-year, while other business targets 344 million yuan, expected to grow 0.88% year-over-year.
With semi-annual results released, meeting established growth targets will require significant pressure in the second half for Anhui Yingjia Distillery. The company has also begun selling subsidiary assets to alleviate pressure.
On August 26, Anhui Yingjia Distillery announced plans to transfer 100% equity in wholly-owned subsidiary Anhui Yingjia Business Hotel Co., Ltd. to Yingjia International Travel for a transaction price of 31.7265 million yuan. Upon completion, the company will no longer hold equity in Yingjia Business Hotel, and the hotel will no longer be included in the company's consolidated financial statements. This equity transfer aligns with the company's operational development needs and will help optimize assets and management structure while integrating resources to focus on core business.
Currently, Anhui Yingjia Distillery faces dual challenges of intensified provincial market competition and slow extra-provincial market expansion. The company acknowledges that while the "Yingjia" liquor brand maintains advantageous positions in regional markets like Anhui, compared to national first-tier liquor brands, brand awareness, reputation, and influence still show certain gaps. If the company cannot continuously and effectively enhance "Yingjia" brand value and intensify brand promotion efforts, it may lead to declining consumer brand recognition, subsequently affecting company liquor product sales.
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