In the first half of 2025, Shanxi Xinghuacun Fen Wine Factory Co.,Ltd.'s performance growth slowed dramatically year-on-year, with revenue and net profit attributable to shareholders increasing by only 5.35% and 1.13% respectively compared to the same period last year.
Has Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. hit a growth ceiling?
According to the company's recently released interim report, in the first half of 2025, both revenue and net profit attributable to shareholders maintained growth momentum, reaching 23.964 billion yuan and 8.505 billion yuan respectively. However, the year-on-year growth rates have significantly slowed to single digits at 5.35% and 1.13% respectively, contrasting sharply with the double-digit growth of the previous two years.
From an operational perspective, Fenjiu, as the core brand of Shanxi Xinghuacun Fen Wine Factory, contributed 23.391 billion yuan in sales revenue in the first half of 2025, up 5.75% year-on-year, accounting for 97.61% of the company's total revenue during the period. Meanwhile, the other alcoholic beverages segment, representing 2.02% of revenue, performed poorly with sales revenue declining 10.55% year-on-year.
In terms of distribution channels, Shanxi Xinghuacun Fen Wine Factory's structural concentration remains prominent. As of the first half of 2025, the company's dealer channel revenue increased 7.17% year-on-year to 22.519 billion yuan, accounting for 93.97% of total revenue. In comparison, group buying, e-commerce, and direct sales channels accounted for only 5.66% of revenue.
As of the end of the first half of 2025, Shanxi Xinghuacun Fen Wine Factory's dealer count decreased by more than 500 from the beginning of the period. Throughout the first half, whether within the province, outside the province, or for Fenjiu and other alcoholic products, the number of dealers decreased more than increased. This may reflect the pressure the company faces in market expansion and channel management.
Looking at the market environment, China's baijiu industry is currently facing widespread issues of high inventory pressure and price inversions. According to the "2025 China Baijiu Market Mid-term Research Report" released by the China Alcoholic Drinks Association, the industry average inventory turnover days reached 900 days, up 10% year-on-year. Sixty percent of companies face price inversions, with the 800-1500 yuan price segment experiencing particularly severe inversions, while the mid-to-low-end price segment (100-300 yuan) has become the main driver of sales.
The research report also indicated that in the first half of 2025, 58.1% of dealers reported continued inventory increases and intensifying price inversion pressures, highlighting cash flow pressure on dealers. Additionally, the younger demographic of baijiu consumers and increasingly rational consumption concepts have driven the main selling price segment from 300-500 yuan further down to the 100-300 yuan price range.
Focusing on Shanxi Xinghuacun Fen Wine Factory's operations, the company's business scope includes the production and sales of Fenjiu, Zhuyeqing wine, Xinghuacun wine, and series wines. In recent years, mid-to-high-priced alcoholic beverages have been the company's main revenue source. From 2022 to 2024, this segment contributed revenues of 18.933 billion yuan, 23.203 billion yuan, and 26.532 billion yuan respectively, accounting for over 70% of the company's total revenue each year at 72.22%, 72.67%, and 73.68% respectively.
However, behind Fenjiu's multi-billion sales figures, inventory risk has also climbed. Data shows that Shanxi Xinghuacun Fen Wine Factory's inventory increased from 9.650 billion yuan at the end of 2022 to 13.270 billion yuan at the end of 2024. As of the end of the first half of 2025, the company's inventory remained high at 13.198 billion yuan.
To address the persistently high inventory pressure, Shanxi Xinghuacun Fen Wine Factory has implemented a series of measures. According to the resolution of the company's second extraordinary shareholders' meeting in 2022, to enhance base wine production capacity and storage capability, Shanxi Xinghuacun Fen Wine Factory invested in the construction of the Fenjiu 2030 technical transformation base wine production and storage capacity expansion project (Phase I), with a budgeted investment of approximately 9.102 billion yuan. Upon completion, the project is expected to achieve annual base wine production capacity totaling 51,000 tons and base wine storage capacity totaling 134,400 tons.
Overall, facing changes in the industry environment, the potential crises in Shanxi Xinghuacun Fen Wine Factory's current operations cannot be overlooked. On one hand, inventory pressure and declining dealer numbers pose higher requirements for the company's market expansion and channel management. On the other hand, mid-to-high-priced alcoholic beverages serve as an important revenue pillar for Shanxi Xinghuacun Fen Wine Factory. Under the industry trend of price segment downward migration, the company may need to gradually move toward price segments that emphasize more "value-for-money" to adapt to market changes and achieve sustainable development.
Additionally, Shanxi Xinghuacun Fen Wine Factory has continued to distribute substantial dividends in recent years. According to annual distribution plan announcements, in 2023 and 2024, the company's total annual cash dividends were 5.331 billion yuan and 7.393 billion yuan respectively (2024 includes interim cash dividends already distributed), accounting for 51.07% and 60.39% of net profit attributable to shareholders respectively. In the first half of 2024 alone, Shanxi Xinghuacun Fen Wine Factory distributed a total of 3.001 billion yuan in cash dividends, accounting for more than 30% of the company's net profit attributable to shareholders for the period.
As of the first half of 2025, Shanxi Xinghuacun Fen Wine Factory has not planned an interim dividend. With performance growth slowing, will the company continue to maintain its substantial dividend distribution strategy in the future?
Key Investment Focus: Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. (600809.SH)
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