Once the second-largest Anhui-based liquor producer, Anhui Kouzi Distillery Co.,Ltd. also harbored a billion-yuan dream.
Just a few years ago, to achieve this goal, the company spent a significant sum hiring McKinsey for strategic consulting, leading to annual consulting service expenses in the tens of millions in recent years.
However, dreams are often grander than reality. The recently disclosed 2025 annual report and 2026 first-quarter report have revealed a difficult situation for the company.
Key Financial Performance
At the close of 2025, the Anhui-based liquor brand delivered results that disappointed both the market and investors. Its 2025 annual report showed full-year operating revenue of 3.991 billion yuan, a year-on-year decrease of 33.65%, and net profit attributable to shareholders of 673 million yuan, plummeting 59.32% year-on-year.
This represents not just a significant drop in both revenue and profit, but the company's worst performance since its 2015 listing. Reviewing historical data, the 2025 revenue of 3.991 billion yuan is the lowest since 2018, while the net profit attributable to shareholders has fallen back to levels seen nine years ago. Despite a challenging macroeconomic environment and weak consumption in the broader liquor industry in 2025, the magnitude of this decline was still beyond expectations.
More embarrassing than the performance decline is the company's significant failure to meet its own previous forecasts. According to its previously disclosed "2025 Financial Budget Plan," the company aimed to achieve revenue of 6.616 billion yuan, representing 10% growth. The actual revenue achieved, however, was only about 60% of the budget target.
When formulating the 2026 financial budget, the company again set a high target of 4.3 billion yuan in revenue, representing 8% growth. Given the heavy blow delivered by the first-quarter results, can the full-year budget target still be achieved?
More concerning is the continuity and acceleration of the performance collapse. Financial report data shows that starting from the second quarter of 2025, the company has experienced significant declines in both revenue and profit for four consecutive fiscal quarters (2025Q2 to 2026Q1). By the fourth quarter of 2025, the situation rapidly deteriorated, with single-quarter revenue of only 817 million yuan, a sharp year-on-year decline of 50.6%, and a net loss attributable to shareholders of -68.6845 million yuan, a staggering year-on-year drop of 119.93%. This rare loss has tarnished the company's reputation in its over-decade-long history as a listed firm.
Entering 2026, the downward trend shows no signs of stopping. The 2026 first-quarter report shows the company achieved revenue of 1.375 billion yuan, down 24.02% year-on-year, and net profit attributable to shareholders of 329 million yuan, down another 46.16% year-on-year. Not only has revenue continuously "shrunk," but profit margins have also been severely squeezed as the declines in sales and administrative expenses were smaller than the revenue decline.
Accompanying the sharp profit drop, the company's profitability has severely deteriorated. Its gross profit margin plunged from 74.59% in 2024 to 69.11% in 2025, while the net profit margin significantly dropped from 27.52% to 16.87%. In the first quarter of 2026, these key metrics slid further, with the gross margin falling to 67.61% and the net margin to 23.90%. This undoubtedly sends a dangerous signal to the market: the former Anhui liquor "profit cow" is becoming a heavy burden.
Operational and Financial Health Concerns
Beyond the dismal reported profits, the company's operational quality and financial safety are also extremely concerning. The most glaring issue is the continuously rising inventory.
As of the end of 2025, the book value of the company's inventory reached a high of 6.455 billion yuan, a year-on-year increase of 10.28%. This figure was already elevated at 5.854 billion yuan at the end of 2024. Compared to the full-year 2025 revenue of 3.991 billion yuan, inventory turnover days have been drastically extended, requiring over a year and a half to digest this inventory. This strongly suggests that weak terminal sales and channel blockages are not short-term problems. Notably, inventory in 2024 had already increased by 15.53% year-on-year. The consecutive high growth in inventory means a large amount of previously invested capital is tied up in warehouses.
If high inventory is a common chronic issue for liquor companies, the cash flow problem is perhaps even more worthy of scrutiny. In 2025, the net cash flow from operating activities surprisingly turned negative, at -216 million yuan, a significant year-on-year decline of 114.81%. For comparison, this figure was 1.459 billion yuan in 2024. By the first quarter of 2026, operating cash flow still showed no sign of recovery, with a net outflow of 135 million yuan, indicating the main business has fallen into a situation of "only out, no in," with its cash-generating ability nearly stalled.
The most direct consequence of this chain reaction is a severe shrinkage of the "money bag." At the end of 2024, the company had 1.923 billion yuan in monetary funds on its books, but by the end of 2025, this figure had sharply reduced to only 911 million yuan, a drop of 52.66%. Even with this already stretched reserve, by the end of the first quarter of 2026, cash on hand was further halved to just 474 million yuan. Meanwhile, inventory in the same period climbed further to a new high of 6.481 billion yuan. If converting this massive inventory into cash flow will take time, the liquidity pressure the company faces is likely to become even tighter.
Another forward-looking indicator that warrants caution is contract liabilities. Contract liabilities reflect distributors' willingness to prepay and serve as a "reservoir" for future revenue for liquor companies. At the end of 2024, the company's contract liabilities stood at 560 million yuan. By the end of 2025, this had dropped 40.26% to 334 million yuan. By the end of the first quarter of 2026, this figure further plummeted to 200 million yuan. Distributor confidence in taking stock has nearly frozen, with channel partners unwilling to stock up heavily at this time, indicating a lack of effective support for future revenue.
Governance Challenges and Insider Selling
While the company's operations are under comprehensive pressure, shortcomings in its corporate governance are also becoming apparent. For many years, the company's management has maintained an exceptionally stable structure, but this "stability" is gradually evolving into a risk of rigidity. According to data, the average age of the 14 current directors, supervisors, and senior executives is as high as 56, with an average tenure of 7.57 years.
At a time when the liquor consumer base is gradually becoming younger and industry digital transformation is sweeping through, the aging management undoubtedly puts the company half a step behind in telling a brand rejuvenation story and marketing innovation. More awkwardly, faced with a cliff-like drop in performance, this leadership team appears powerless in both strategic adjustment and channel reform. In 2022, the company hired McKinsey as a "strategic partner," proposing a "five-year plan" to strive for a leading position among Anhui liquor producers and attempting to break the 10-billion-yuan barrier. Over several years, various consulting service fees have accumulated to over 100 million yuan, but the company has ultimately drifted further from its target.
More alarming for secondary market investors than internal management aging is the accelerated exit of major shareholders. According to public information, Liu Ansheng, a co-founder and one of the actual controllers, has been extremely active in reducing his holdings in recent years. The company's 2024 annual report showed that Liu Ansheng has been conducting share reduction operations for several consecutive years, with the pace noticeably accelerating before the sensitive period of the 2025 performance release.
On August 25, 2025, during a period when expectations of a significant year-on-year performance decline in 2025 were widespread, Liu Ansheng sold 10 million company shares in one go through a block trade, cashing out approximately 329 million yuan. Extending the timeline, including previous operations, the total amount cashed out from Liu Ansheng's various reductions has exceeded 1.07 billion yuan. Frequently cashing out at high levels during the window before a clear deterioration in the company's fundamentals is akin to stabbing market confidence once more.
To raise funds, besides share reductions, Liu Ansheng has also been advancing large-scale equity pledges. As of the end of the reporting period, his cumulative pledged shares accounted for over 40% of his personal holdings, with pledge extensions processed multiple times. The actual controller continuously cashing out equity while heavily pledging for financing raises market doubts about the tightness of his personal funding chain during the company's worst performance year.
Under pressure from both internal and external difficulties, the company's stock price has fallen into an abyss. As of the latest closing data, the company's total market capitalization is only 14.1 billion yuan. Compared to the historical high of 80.69 yuan per share reached in 2021, the stock price has been nearly "knee-capped," with market value evaporating over 33 billion yuan, almost hitting a new low in the past decade.
As investors watch the departing figures of the bosses cashing out and distancing themselves, they are left with financial statements showing no signs of a fundamental turnaround. From missed financial budget targets to depleted operational cash-generating ability, from an aging senior management structure to major reductions by core shareholders, on this high-stakes liquor industry stage, the company that once loudly proclaimed its "billion-yuan dream" now finds it difficult not only to realize that dream but even to maintain basic dignity.
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