The impact of Sichuan Swellfun Co.,Ltd.'s (SHSE: 600779) channel inventory reduction efforts is now being clearly reflected in its financial statements. On the evening of July 14th, the company released its preliminary results for the first half of 2026. It anticipates first-half operating revenue of approximately 1.082 billion yuan, a decrease of 27.78% year-on-year. The net profit attributable to shareholders is expected to show a loss of 6.2221 million yuan, a stark contrast to the profit of 105 million yuan recorded in the same period last year. After excluding non-recurring gains and losses, the attributable net loss is projected to be 4.6721 million yuan, compared to a profit of 48.49 million yuan a year earlier.
Based on first-quarter data, it is estimated that Swellfun's second-quarter revenue was around 266 million yuan, with an attributable net loss of roughly 177 million yuan, indicating significantly increased operational pressure compared to the first quarter. The company primarily attributes the performance decline to its proactive inventory management. It stated that during the first half, it further adjusted its shipment pace and strengthened channel inventory control, resulting in a channel inventory reduction of approximately 50% compared to the same period last year. This initiative led to a decrease in operating revenue of about 300 million yuan and a gross profit reduction of approximately 250 million yuan.
Calculations show that the revenue impact from inventory control measures is close to 30% of Swellfun's actual first-half revenue, making it the most direct cause for the shift from profit to loss. Furthermore, factors such as provisions for inventory and contingent liabilities, a year-on-year decrease in government subsidies, and increased supply chain financing costs have further compressed profits.
Over the past six months, Swellfun's operational focus has shifted from pursuing shipment volume to managing inventory, pricing, and end-market sell-through. Since the beginning of the year, the company has continued to reduce channel inventory and concentrate resources on core retail outlets and banquet scenarios, promoting terminal sales through product tastings, bottle-opening activities, and banquet services. On the product front, it continues to promote its Jing 18, Zhenniang Master, and "First Distillery" series within the 300 to 800 yuan price range, while also experimenting with lower-alcohol products, smaller formats, and e-commerce exclusive items to cover more consumption scenarios.
Channel discipline has also been a recent focus of adjustments. In early July, Swellfun issued a market order notice to distributors and terminal retailers, proposing to strengthen product traceability and curb cross-regional unauthorized sales. The company also aims to optimize product release timing, monitor channel inventory, and increase support for banquets and bottle-opening activities. The preliminary half-year report indicates that the cost of this round of adjustments has now become fully apparent. Moving forward, Swellfun will need to demonstrate whether clearing inventory and improving the price system can translate into increased end-market sales, thereby driving a recovery in shipments and profitability in the second half of the year.
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