Bernstein: Wuliangye’s third-quarter revenue falls another 38% as channel destocking remains slow

Why did the low base not improve results?

Wuliangye’s total revenue in the third quarter of 2026 was 4.442 billion yuan, down 37.7% year on year; Bernstein said the market had previously expected mid-to-high single-digit growth. The company had previously substantially restated its results for the same period a year earlier downward, so the decline came against an already very low comparison base.
The decline in profit was steeper: third-quarter net profit was 958 million yuan, down 48.3% year on year. Calculated using net revenue after consumption tax and other items, gross margin rose from 61.9% to 73.4%, but selling expenses as a share of revenue rose from 21.0% to 38.9%, and operating margin fell from 29.0% to 18.9%.

Bernstein places greater weight on balance sheet and cash flow indicators: other current liabilities associated with inventory returned by distributors and the restatement were approximately 24 billion yuan, down just 2% quarter on quarter in the third quarter and 15% from their peak, indicating limited progress in working through inventory.
Cash received from the sale of goods and provision of services in the third quarter was approximately 7.21 billion yuan, up just 0.9% year on year; the cumulative figure for the first three quarters of 2026 was still down 57% year on year. Bernstein therefore judged end-market sales to remain weak, with distributors’ cash flow and channel margins potentially facing further pressure.
Channel checks show that the wholesale price of standard Wuliangye has begun to recover, but Bernstein believes inventory needs to tighten further before channel margins can fully recover.

Given the third-quarter earnings miss, Bernstein cut its earnings per share forecasts for 2026–2028 by 6%, 7% and 8%, respectively. It maintained its target price-to-earnings multiple at 16 times, lowered its target price from 58 yuan to 56 yuan, and maintained its underperform rating.
The firm’s target price implies approximately 26% downside from the closing price of 75.38 yuan on 27 October 2026. Bernstein believes the share price could receive upside support if channel destocking is materially faster than expected or improved consumer confidence drives demand for premium baijiu.

In May, the company proposed buying back 8 billion to 10 billion yuan of shares; the report says it has repurchased 1.2 billion yuan. Based on the midpoint of the plan, approximately 7.8 billion yuan remains to be repurchased over the next approximately 6 months, equivalent to approximately 103 million shares, or about 3% of total shares outstanding.
The controlling group also proposed increasing its holdings of the listed company’s shares by 3 billion to 5 billion yuan between May and November of the same year. Bernstein believes the buybacks and increased holdings could temporarily support the share price.