In Wuliangye's cellars, time was originally an asset; but in the spring of 2026, it became the most dangerous witness. On May 6, the Chinese stock market saw a post-holiday rebound as expected after the Labor Day holiday, with both the Shanghai and Shenzhen exchanges showing positive momentum. However, Wuliangye Yibin Co., Ltd., a high-end sub-leader in the baijiu industry with a total market capitalization exceeding 350 billion yuan, bucked the trend and weakened, like a weightless idol falling heavily on the red carpet. Wuliangye opened 6% lower, and after fierce battles between bulls and bears, it closed at 92.26 yuan, down 4.96%, touching a six-year low of 92.43 yuan, with its market value evaporating approximately 18.7 billion yuan. That same evening, Wuliangye Group urgently announced measures to stabilize the stock price: Wuliangye will use 3 to 5 billion yuan of its own funds to increase its shareholding over the next six months. The notice emphasized that this was "based on confidence in the company's future sustainable and stable development and recognition of its long-term value," but market recognition was limited. Accompanying the shareholding increase plan was a share repurchase scheme. Before the Labor Day holiday, on April 30, Wuliangye also announced its first-ever share repurchase plan since listing, intending to use 8 to 10 billion yuan to repurchase shares at a price not exceeding 153.59 yuan per share. In normal business logic, a major shareholder investing tens of billions in real money when the stock price is low is usually seen as a strong signal that the bottom has been reached. However, Wuliangye's investors did not choose to follow suit this time; instead, they voted with their feet. Because these so-called tens-of-billions-level positive developments appeared pale in the face of the financial report Wuliangye released on April 30. A rare performance restatement and accounting adjustment triggered a trust crisis in the capital market toward Wuliangye. Unexpectedly, over the past year, this state-owned commercial giant had been maintaining a precarious illusion of prosperity by adjusting revenue recognition standards and recognizing revenue in advance. 01/ Financial Report "Big Bath" Wuliangye was originally scheduled to disclose its 2025 annual report and 2026 first-quarter report on April 29. However, late on the night of April 28, it suddenly announced a postponement until after the market closed on April 30, citing the need to "improve the preparation and review of periodic reports." This seemingly ordinary "technical delay" was actually an omen—typically, it means the financial report contains hidden risks that are not easily revealed. Choosing to release it after the market closed on the trading day before the Labor Day holiday was a thought-provoking timing decision, but it minimized the immediate impact on the stock price. Two days later, this hidden risk was detonated on schedule, with a magnitude far exceeding investors' expectations. Wuliangye's 2025 annual report drew significant market attention: the company's full-year operating revenue for 2025 was only 40.529 billion yuan, a sharp decline of 54.55% year-on-year; net profit attributable to shareholders of the listed company was 8.954 billion yuan, a steep drop of 71.89% year-on-year. This was not because Chinese people's alcohol consumption halved overnight, but because Wuliangye admitted that the main reason for this massive decline was "adjustments to revenue recognition standards and retrospective restatement of historical data." Correspondingly, Wuliangye delivered growth in its 2026 first-quarter report that would impress any analyst: revenue growth of 33.67% and net profit growth of 82.57%. But this was not due to any operational miracle created by the company. To explain this, Wuliangye released seven announcements in one go, the core of which was an "Announcement on Correction of Prior Accounting Errors" and the significantly revised 2025 performance report. The announcement calmly admitted in accounting terms that the company had adjusted the revenue recognition standards for some of its distribution business in 2025. In layman's terms, the previous practice of recognizing revenue when products were shipped to distributors (commonly known in the industry as "inventory loading" or "channel stocking") was revised to require confirmation only after actual sales were achieved at the terminal. This major revision in accounting policy led to a rare large-scale performance "restatement" for a leading A-share consumer company. The real shock came from the retrospective adjustment of previously disclosed historical data. According to the announcement, for the first three quarters of 2025, Wuliangye's operating revenue was revised downward from the originally reported 60.945 billion yuan to 30.638 billion yuan, evaporating 30.307 billion yuan out of thin air; net profit was revised downward from 21.511 billion yuan to 6.475 billion yuan, a reduction of 15.036 billion yuan. Among these, for the first quarter alone, the reductions in revenue and net profit were as high as 19.854 billion yuan and 10.444 billion yuan, respectively. This means that last year's financial report, which supported a market capitalization of hundreds of billions of yuan, had nearly half of its revenue recognized in advance, drawn from future sales, and was not based on actual terminal sales. In other words, for most of 2025, Wuliangye presented the market with an "inaccurate performance report." Wuliangye's explanation was "based on the principle of prudence and a review of business models." But in the professional language of the capital market, this is also called a "financial big bath." 02/ Exposure of Channel Unspoken Rules A so-called "financial big bath" typically refers to a situation where a company, facing management changes, industry difficulties, or regulatory pressure, chooses to make large one-time provisions for expenses, impairments, or adjustments to accounting estimates, exposing historical issues all at once, thereby cleaning up the balance sheet and paving the way for future performance growth on a lower base. By adjusting the timing of revenue recognition, Wuliangye removed the corresponding revenue and profits from past inventory that may have accumulated in distributor channels and had not been truly consumed by end customers from its financial statements in one go. This move exposed a long-standing unspoken rule in China's baijiu industry: to maintain superficial high growth and attractive financial data, liquor companies often engage in high-intensity inventory loading to distributors, recognizing revenue as soon as products are transferred from factory warehouses to distributor warehouses. This model can hide problems during industry upswings, but when the consumer market cools and channel inventory is high, it becomes unsustainable. So why did Wuliangye choose this moment to "self-expose"? The epicenter of this financial earthquake points to that black Saturday, February 28, of this year, which the market widely interprets as a collateral result of the investigation into former Chairman Zeng Congqin. On the evening of February 28, "Clean Sichuan" released a brief announcement: Zeng Congqin, former Party Secretary and Chairman of Wuliangye Group, is suspected of serious violations of discipline and law and is under investigation. In the baijiu circle, Zeng Congqin was known for his strong marketing efforts. During his tenure, Wuliangye's financial reports consistently maintained high performance. With the instantaneous evaporation of this 30.3 billion yuan in revenue, the logical chain seems to close: last year's false prosperity was maintained by "paper growth" from recognizing revenue in advance. With Zeng Congqin under investigation, the real situation and industry unspoken rules came to light. The new management concentrated on clearing out historically inflated channel revenue from 2025 in one go, artificially lowering the base, which objectively made the 2026 first-quarter data appear more "impressive." It may seem like a win-win situation, but this extreme use of accounting standards has already significantly impacted investor expectations and decision-making. 03/ Where Is Market Trust? The market's reaction was swift and intense, with waves of skepticism sweeping the internet: "Can financial reports be revised so casually?" "Is this systematic financial fraud or an accounting error?" "Our investment decisions were based on false information!" Investor confidence was shaken. Panic also spread to the entire baijiu sector, triggering a re-evaluation of the industry's valuation system. On the first trading day after the Labor Day holiday, the three major A-share indices collectively closed higher, but the baijiu sector fell broadly. The baijiu index reported by Tonghuashun closed at 53,188.91 points, down 1.41%. Legal professionals stated that if regulators determine this to be a violation of information disclosure rules, the company or related parties would need to bear corresponding responsibilities. In today's increasingly stringent regulatory environment, how could a trillion-yuan state-owned enterprise create a tens-of-billions-yuan "illusion" for three consecutive quarters without being detected? An "adjustment" of this scale is hard to believe was accomplished by a few people in an office; it more likely involves systemic failures in finance, internal controls, and audit oversight, requiring further regulatory review. Wuliangye's new management is eager to break with the past through a "financial big bath." They seem to believe that by thoroughly squeezing out the abscess left by their predecessors, they can create room for upward development in the coming years. But facing a bottomless compliance black hole, what awaits them may be severe regulatory penalties at any time. Meanwhile, this "adjustment" has already caused significant losses for investors. Who will compensate those investors who purchased shares in 2025 based on their trust in the financial reports?
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