Wuliangye’s third-quarter revenue and profit fall short of Goldman Sachs estimates as shipment controls and inventory reduction weigh on results
Wuliangye’s third-quarter revenue fell 38% year on year, while net profit dropped 48%. Goldman Sachs believes the company may be controlling shipments to distributors and accelerating the reduction of legacy inventory. Although operating cash flow improved, further destocking may be needed before new orders and shipments return to normal.
Original source：Goldman SachsFirst published on Unhidea：Original source date：
Key takeaway
Shipment controls and high selling expenses jointly weighed on Wuliangye’s third-quarter revenue and profit. Cash flow improved, but Goldman Sachs believes channel inventory is still constraining the recovery in shipments.
How far did third-quarter results miss expectations?
Wuliangye reported third-quarter revenue of 4.44 billion yuan in 2026, down 38% year on year and 35% below Goldman Sachs’ estimate of 6.84 billion yuan. Net profit was 958 million yuan, down 48% year on year and below Goldman Sachs’ estimate of 1.53 billion yuan.
Third-quarter revenue was only 26% of its level in the same period of 2024, while second-quarter revenue was 35% of its level in the same period of 2024. Goldman Sachs believes this shows that the recovery in demand remained weak in the third quarter.
How do shipment controls affect revenue and the inventory assessment?
Goldman Sachs believes end-market sales demand is relatively resilient, while the company’s control of shipments to distributors and recognized revenue may indicate that it is accelerating the reduction of legacy inventory this year.
Goldman Sachs estimates adjusted third-quarter sales at 3.1 billion yuan, down 52% year on year, compared with a 64% decline in the second quarter. The third-quarter figure was only 19% of its level in the same period of 2024. Goldman Sachs believes further destocking may be needed before new orders and shipments return to normal.
Customer advances at the end of the third quarter were 8.93 billion yuan, down from 10.44 billion yuan at the end of the second quarter. However, cash received from sales of goods rose 1% year on year to 7.21 billion yuan in the third quarter.
Why did profit still fall sharply despite a higher gross margin?
The third-quarter gross margin rose 8.7 percentage points year on year to 77.3%, but lower revenue meant gross profit still fell 30% year on year to 3.43 billion yuan.
Selling expenses rose 20% year on year to 1.48 billion yuan. As revenue declined, selling expenses as a percentage of revenue rose to 33.2%, up 15.9 percentage points year on year and 5.2 percentage points above Goldman Sachs’ estimate.
Core operating profit therefore fell 58% year on year to 718 million yuan, 45% below Goldman Sachs’ estimate. A lower income tax rate partially offset the effect on net profit.
What signals do cash flow and Goldman Sachs’ rating provide?
Third-quarter operating cash flow rose to 2.2 billion yuan, above the 382 million yuan recorded in the second quarter and better than the net outflow of 2.889 billion yuan in the third quarter of 2025.
Goldman Sachs has a sell rating and a 12-month target price of 64.70 yuan. The target is based on a 2028 forecast price-to-earnings multiple of 16 times, discounted to the end of 2027 at a cost of equity of 7.8%.
