The company's reply to a regulatory inquiry from the Shanghai Stock Exchange, issued on July 6th, provides a detailed look into the operational difficulties faced by this established Anhui-based winemaker during its challenging transformation.
Anhui Golden Seed Winery Co.,Ltd.'s (SHSE: 600199) financial performance has been significantly weaker than that of its industry peers amid ongoing deficits.
Financial data for 2025 shows the company achieved operating revenue of 722 million yuan, a year-on-year decrease of 21.96%, with a net loss of 199 million yuan, marking the fifth consecutive year of losses. The downward trend continued into the first quarter of 2026, with revenue falling another 35.74% year-on-year and a quarterly net loss of 15.24 million yuan.
The company attributed the decline in performance to a deep-seated adjustment in the baijiu industry, weakening terminal sales, and intense regional market competition. Comparative industry data from the inquiry shows that the average revenue decline for listed baijiu companies in 2025 was 18.26%, with the average decline for comparable peers like Yingjia Gongjiu and Kouzi Jiao being 22.90%. In terms of revenue decline alone, the company's performance was largely in line with its peers.
However, the gap in profitability is stark. While peers generally experienced profit declines, Anhui Golden Seed Winery has suffered losses for five straight years, with the magnitude of loss far exceeding the industry's adjustment range. This indicates that the external cycle is merely a catalyst, while structural weaknesses in its own operations are the core reason for the persistent losses.
A severe imbalance in the product mix is the primary internal factor behind weak profitability. Data from the inquiry shows that in 2025, low-end baijiu accounted for a high 85.58% of the company's total sales volume, with mid-to-high-end products making up only 14.42%. In terms of revenue, mid-to-high-end products contributed 195 million yuan, representing only 33.28% of total baijiu revenue. In contrast, comparable companies typically derive over 77% of their revenue from mid-to-high-end products.
This product structure directly depresses gross margin levels. In 2025, the company's gross margin for its baijiu business was 43.56%, while the average gross margin for comparable companies was as high as 70.31%, a gap of over 26 percentage points. The company also admitted that its sub-premium products, such as the Fuhexiang series, are still in a market cultivation phase and have not yet achieved economies of scale, resulting in insufficient gross profit contribution, which is a major reason for the continuous losses.
Persistently High Expense Ratios Devour Profits Amid Shrinking Revenue
While revenue continues to contract, rigid expenses remain stubbornly high, creating a classic 'scissors effect' that acts as another core driver of the ongoing losses.
Inquiry data shows that in 2025, the company's combined selling and administrative expenses reached 327 million yuan, accounting for a significant 45.29% of operating revenue. For comparison, the average expense ratio in the baijiu industry was only 17.68%, and the average for comparable companies was 24.67%, making the company's expense ratio several times the industry average.
A breakdown of the expense structure reveals that personnel compensation is the largest rigid cost. In 2025, employee compensation within selling expenses reached 112 million yuan, accounting for over 50% of total selling expenses. Employee compensation within administrative expenses was 64.85 million yuan, a substantial year-on-year increase, primarily due to internal organizational and functional adjustments.
The company explained that the intense competition in the Anhui baijiu market requires resource investment to maintain existing market share. Simultaneously, cultivating sub-premium products necessitates upfront promotional spending, with a lag in the conversion of this investment. More critically, the company's relatively small revenue base makes it difficult to proportionally compress fixed costs like salaries and basic expenditures. The lack of economies of scale leads to persistently low expense efficiency.
Idle Capacity, High Inventory, and Tight Cash Flow Strain Liquidity
The inquiry disclosed that the company's capacity utilization rate has fallen from 48.99% in 2023 to 27.11% in 2025, indicating that less than one-third of capacity is being used, leaving a significant portion idle. Concurrently, the company has been advancing its strategic reserve of high-quality base liquor. By the end of 2025, this reserve had reached 57,300 tons, with a corresponding book value of 1.387 billion yuan.
Driven by this base liquor reserve, the company's inventory levels remain high. As of the end of 2025, the book value of inventory stood at 1.530 billion yuan, representing a substantial 50.01% of total assets. The inventory turnover ratio further declined from 0.40 in 2024 to 0.29 in 2025.
Even more concerning than asset efficiency is the persistent cash outflow. Data shows that, apart from a brief positive period in 2023, the company's net cash flow from operating activities has been negative for nearly a decade, with a net outflow of 219 million yuan for the full year 2025. Continuously decreasing sales collections, coupled with rigid expenditures for base liquor procurement, personnel salaries, and taxes, are the core reasons for the consistently negative cash flow.
To fill the funding gap, the company has had to increase external financing. By the end of 2025, the balance of short-term loans was 293 million yuan, a 48% year-on-year increase, while new long-term loans of 104 million yuan were added. However, as of the end of 2025, the company's cash balance was only 264 million yuan, down 27.96% year-on-year.
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