Bairun’s third-quarter profit growth outpaces revenue as gross margin improvement offsets some sales spending
Goldman Sachs says Bairun’s third-quarter results were broadly in line with its expectations: revenue rose 8.3% year on year and net profit rose 14%. A higher gross margin and a lower administrative expense ratio provided support, while the selling expense ratio increased.
Original source：Goldman SachsFirst published on Unhidea：Original source date：
Key takeaway
Bairun maintained profit growth ahead of revenue in the third quarter through an improved gross margin, but investment in brands and channels pushed up its selling expense ratio.
How did third-quarter results compare with Goldman Sachs’ expectations?
Bairun’s revenue in the third quarter of 2026 was 846 million yuan, up 8.3% year on year and slightly below Goldman Sachs’ earlier forecast of 859 million yuan. Goldman said the ready-to-drink cocktail and flavoring businesses performed steadily.
Net profit was 183 million yuan, up 14% year on year and growing faster than revenue, but below Goldman’s forecast of 193 million yuan. Net profit excluding non-recurring items was 179 million yuan, up 11.7% year on year.
Why did profit grow faster than revenue?
The third-quarter gross margin was 71.6%, up 1.4 percentage points year on year and 0.6 percentage points quarter on quarter; more gross profit was retained from each yuan of revenue, supporting profit growth. However, the margin remained below Goldman’s forecast of 72.0%.
The administrative expense ratio was 9.8%, below Goldman’s forecast of 10.5%; the effective tax rate was 20.6%, also below the bank’s forecast of 22.0%. Together, the two supported net profit performance.
What pressure did sales spending create?
The third-quarter selling expense ratio rose 0.9 percentage points year on year to 27.6%, also above Goldman’s forecast of 27.4%. Goldman believes this may reflect the company’s continued investment in brand promotion and channel development and adjustment.
The higher selling expense ratio absorbed some of the room created by the gross margin improvement: the third-quarter net margin was 21.6%, above 20.5% a year earlier but below Goldman’s forecast of 22.5%.
How do the company and Goldman view subsequent performance?
The company expects profit to maintain steady growth for the full year of 2026. Goldman’s model forecasts full-year revenue of 3.236 billion yuan and earnings per share of 0.74 yuan; actual revenue in 2025 was 2.944 billion yuan and earnings per share were 0.61 yuan.
Goldman rates Bairun neutral, with a 12-month price target of 19 yuan; the target is based on a forecast price-to-earnings multiple of 23 for 2027 and discounted at a cost of equity of 9.9%. The bank identifies demand growth, competitive intensity, selling expenses and raw material prices as variables affecting the valuation.
