Since Gu Yu officially took the helm of Jiangsu Yanghe Distillery Co.,Ltd. (SHE: 002304) in July 2025, a full year has passed. An examination of public information, including financial reports, reveals that while the company has made significant progress in reducing inventory over the past year, its revenue has continued to contract. The share price has also fallen approximately 40% compared to July 2025, and its market capitalization has dropped to a level around 50 billion yuan.
Implementation and Impact of Reform Measures
Following his appointment as Chairman in July 2025, Gu Yu has rolled out a series of reform initiatives. In terms of organizational structure, Gu Yu consolidated the roles of Party Committee Secretary, Chairman, and President, ending the company's nearly two-decade practice of separating the chairman and president roles, aiming to enhance decision-making and execution efficiency.
For product renewal and upgrades, the company launched premium bottled spirits, Blue Yanghe and Gold Yanghe, targeting the mass consumer market. It also completed the iterative upgrade of the seventh-generation Haizhilang, upgrading the primary base liquor to premium-grade original liquor aged over three years in pottery jars, aiming to solidify the quality competitiveness of its core flagship product.
Regarding channel ecosystem restructuring, the company focused on "inventory reduction, price stabilization, and momentum building." It introduced a major distributor cultivation plan and supporting service management measures, aiming to improve the efficiency of expense allocation to address narrowing channel profits and insufficient distributor motivation.
Financial Performance Amidst Reforms
The impact of these combined measures on financial reports has not been impressive. According to its financials, revenue from Yanghe's mid-to-high-end products, which represent brand prestige and core profitability, fell 31.97% year-over-year to 16.542 billion yuan for the full year. Revenue from standard products also contracted sharply to 2.234 billion yuan, down 43.17%.
In terms of sales models, revenue from the dominant wholesale distribution channel in 2025 was 18.459 billion yuan, a decrease of 33.73%. Revenue from the online sales channel, seen as a growth area, was only 318 million yuan, down 19.38%.
Geographically, revenue from its home market of Jiangsu Province was 8.619 billion yuan, a decline of 32.39%. Revenue from markets outside the province was 10.157 billion yuan, down 34.47%.
During the reporting period, the number of Yanghe's distributors decreased by 495, with 66 fewer within the province and 429 fewer outside. Furthermore, the company's cash flow situation deteriorated. In 2025, net cash flow from operating activities plummeted to -763 million yuan, compared to a net inflow of 4.629 billion yuan in the same period last year. In the first quarter of this year, alongside declines in both revenue and profit, net cash flow from operating activities was 1.939 billion yuan, continuing to fall by 23.54% compared to the same period last year.
Notable Progress in Inventory Reduction
However, significant strides have been made in inventory reduction within Yanghe's core channels. By the end of the first quarter of 2026, channel inventory for the sixth-generation Haizhilang in key provincial markets had been compressed from a high of 4-6 months to 2-2.5 months. Distributor inventory turnover days dropped to 45 days, reaching the healthy level of industry leaders. The company's total inventory at the end of 2025 was 31,100 tons, a substantial year-over-year decrease of 31.74%, indicating systematic relief from channel overstocking pressure. In Q1 2026, Yanghe's quarterly net profit attributable to shareholders reached 2.447 billion yuan, already exceeding the full-year 2025 net profit. Net operating cash flow turned positive from negative, signaling a shift from the "channel stuffing" model to genuine sell-through, demonstrating the effectiveness of inventory reduction efforts.
Sustained Revenue Contraction
Examining the timeline, financial reports show that in Gu Yu's first quarter at the helm—Q3 2025—Yanghe's operating revenue was 3.295 billion yuan, a sharp year-over-year decline of 29.01%. Net profit was a loss of 369 million yuan (compared to a profit of 628 million yuan in the same period last year), turning from profit to loss. Earnings per share were a loss of 0.24 yuan, down 158.38% year-over-year.
In Q4 2025, performance continued to deteriorate. Operating revenue was 1.121 billion yuan, net profit attributable to shareholders was -1.769 billion yuan, and adjusted net profit was -1.622 billion yuan, with all three core profitability metrics negative. In Q4 2024, operating revenue was 1.360 billion yuan, with net profit attributable to shareholders at -1.905 billion yuan and adjusted net profit at -1.724 billion yuan.
For the first quarter of this year, Yanghe's operating revenue was 8.186 billion yuan, down 26.03% year-over-year. Net profit attributable to shareholders was 2.447 billion yuan, a decrease of 32.73%. Adjusted net profit attributable to shareholders was 2.428 billion yuan, down 32.88%.
Second-quarter results for this year are not yet available. For the full year 2025, Yanghe achieved operating revenue of 19.211 billion yuan, a decrease of 33.47% compared to 2024 revenue of 28.876 billion yuan—a drop of nearly 10 billion yuan. This revenue level is comparable to that of 2017 (19.92 billion yuan), nine years prior. Net profit attributable to shareholders was 2.206 billion yuan, down 66.94%.
Share Price Decline and Market Cap Erosion
Accompanying the weak performance has been a negative reaction from the capital market. When Gu Yu took over in July 2025, Yanghe had already lost its position among the "top three" in the industry. At that time, the share price was around 68 yuan per share, with a market capitalization around 100 billion yuan. By June 2026, the share price had fallen to hover around 40 yuan per share, representing a 40% drop over the year. Correspondingly, Yanghe's market capitalization has evaporated and now stands below 60 billion yuan.
On June 30, Yanghe's shares closed at 38.15 yuan per share, with a total market capitalization of 57.471 billion yuan.
This compares to the subscription price of 103.73 yuan per share for the company's core employee share plan in August 2021, representing a 60% decline from that level. Compared to the peak share price of 268.60 yuan on January 6, 2021, the current price is less than a fraction of that high.
A significant event impacting the share price and market cap this year was the "Yanghe dividend controversy." In August 2024, Yanghe announced its 2024-2026 dividend plan, committing to an annual cash dividend of no less than 70% of net profit attributable to shareholders and a minimum amount of 7 billion yuan. However, in January 2026, Yanghe released a new plan (2025-2027), changing the clause to "dividend no less than 100% of net profit attributable to shareholders" and removing the "7 billion yuan floor" constraint.
The difference is significant. Taking 2025 as an example, with net profit attributable to shareholders around 2.2 billion yuan, the actual dividend under the new rule would plummet to approximately 2.2 billion yuan, a reduction of over 4.5 billion yuan compared to the original commitment. The result was several consecutive days of sharp share price declines for Yanghe.
Comparative Industry Standing
In a horizontal comparison, following the end of the "Mao-Wu-Yang" era, Yanghe's current market capitalization is not only incomparable to Kweichow Moutai's trillion-yuan valuation but also no longer in the same league as former competitors for the "third place" position in the baijiu sector, Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. (SHA: 600809) and Luzhou Laojiao Co.,Ltd. (SHE: 000568). Currently, Shanxi Fenjiu's share price is around 109 yuan, with a market cap exceeding 130 billion yuan. Luzhou Laojiao's share price is around 76 yuan, with a market cap exceeding 110 billion yuan.
Future Outlook and Challenges
Whether Yanghe can restore its past glory and when a performance inflection point will arrive remains uncertain. There is a widespread external view that, against the backdrop of a "contracting market," Yanghe is still in a period of adjustment. The effectiveness of Gu Yu's leadership as the "helmsman" will require further observation over a longer timeframe.
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