Multiple brokerages have successively lowered their profit expectations, reflecting the capital market's continued cautious attitude toward the company's short-term performance recovery capabilities.
On the evening of August 29, Luzhou Laojiao Co.,Ltd. disclosed its 2025 interim performance report. Data shows that the company achieved operating revenue of 16.454 billion yuan during the reporting period, down 2.67% year-on-year; net profit reached 7.663 billion yuan, declining 4.54% year-on-year.
Beyond the slight decline in revenue and profit, more notably, the company's net cash flow from operating activities was 6.064 billion yuan, down 26.27% year-on-year, representing the most significant decline among all financial indicators. Meanwhile, the company's basic earnings per share, diluted earnings per share, and weighted average return on equity all showed year-on-year declines.
However, not all data contracted. As of the end of the reporting period, the company's total assets continued to grow to 70.19 billion yuan, up 2.72% year-on-year, becoming a rare bright spot in current performance. Overall, Luzhou Laojiao Co.,Ltd.'s multiple core performance indicators showed varying degrees of decline. What are the underlying reasons for this performance?
**Obstacles in Returning to Industry Top Three, Sales Investment Contraction**
Regarding the performance decline, Luzhou Laojiao Co.,Ltd. mentioned in its performance announcement that it closely follows the development theme of "building momentum for breakthrough, intensive cultivation for stable growth; following trends, reform and innovation for development," pushing marketing focus toward "precise targeting" and "user operations" to strive for long-cycle industrial value returns and sustainable corporate development.
Luzhou Laojiao Co.,Ltd. established a development goal of "steady progress in annual operating revenue" for 2025 at the beginning of the year. However, the actual performance of a 2.67% year-on-year decline in revenue for the first half and a 7.97% single-quarter decline in Q2 clearly failed to meet this expectation. Reviewing its recent performance, the company had maintained continuous growth since 2015, making this interim revenue decline possibly signal that its growth has entered an adjustment phase.
In 2024, Luzhou Laojiao Co.,Ltd. ranked fourth in the baijiu industry with revenue of 31.2 billion yuan. However, compared to the top three giants ahead, its growth momentum now shows obvious pressure. Looking at the industry's top three - Kweichow Moutai, Wuliangye, and Shanxi Fenjiu - all achieved positive growth in the first half of this year. Kweichow Moutai achieved high revenue of 91.09 billion yuan, up 9.16% year-on-year; Wuliangye reached 52.77 billion yuan, up 4.19%; Shanxi Fenjiu achieved 23.96 billion yuan in first-half performance, up 5.35% year-on-year. Based on first-half performance alone, Shanxi Fenjiu leads Luzhou Laojiao Co.,Ltd. by approximately 7.5 billion yuan.
Under this competitive landscape, Luzhou Laojiao Co.,Ltd. not only maintains a significant gap with Moutai and Wuliangye but will also see the gap with third-place Shanxi Fenjiu widen further. If development trends continue, its goal of returning to the industry's top three will become increasingly difficult.
Luzhou Laojiao Co.,Ltd.'s performance reflects that the company has adopted more conservative strategies when facing current market conditions, with weakened expansion momentum. After the implementation of "alcohol prohibition" policies in May 2025, some original official consumption scenarios withdrew from the market, and some business reception activities also adjusted, making short-term expectations in the baijiu industry more cautious.
From a financial strategy perspective, the company seems reserved in market promotion. Advertising expenses decreased 20.31% year-on-year to 614 million yuan. Although officially explained as "more focused," simultaneously reducing online and offline advertising expenses objectively shows the company's reduced investment intensity. Meanwhile, other expenses in sales costs also decreased to 69 million yuan due to reduced conference fees, leading to an overall 6.86% reduction in sales expenses. These "cost-cutting" measures reflect the company's current conservative market stance to some extent.
Notably, the company's promotional expenses increased 11.2% against the trend, diverging from overall sales expense trends. Without increased promotional investment, Luzhou Laojiao Co.,Ltd.'s performance decline might have been more significant. However, this "price-for-volume" strategy also squeezed profitability, causing gross margin and net margin to decline 1.67% and 1.89% year-on-year respectively.
Additionally, puzzlingly, while marketing expenses were generally controlled and reduced, the company's total operating costs increased 9.94% year-on-year to 2.124 billion yuan. This contrast may indicate changing cost structures with rising non-sales operational expenses. R&D investment increased 11.65% year-on-year, exceeding 100 million yuan.
Luzhou Laojiao Co.,Ltd.'s counter-trend increase in R&D investment may relate to its strategy of strengthening new product portfolio layout. At the 2024 annual shareholders' meeting held mid-year, the company announced successful development of 28-proof Guojiao 1573 and stated it would launch to market at an appropriate time; it also revealed consideration of developing more low-proof products to expand young consumer groups.
Notably, competition in the low-proof baijiu segment is becoming increasingly fierce. This year, Wuliangye, Jiannanchun, Yanghe, Shede and other liquor companies have successively launched similar new products. Whether Luzhou Laojiao Co.,Ltd. can build differentiated advantages in this red ocean market still faces significant challenges.
**Mid-to-High-End Liquor Uses Price-for-Volume Strategy, Terminal Discounting Obvious**
Luzhou Laojiao Co.,Ltd.'s 2025 interim report shows the company's products are divided into two major segments: mid-to-high-end liquor and other liquor categories. Its core mid-to-high-end liquor category was not significantly impacted by "alcohol prohibition" policies, with production and sales achieving 24.14% and 13.33% year-on-year growth respectively during the reporting period.
However, while sales volume increased significantly, sales revenue for this category declined 1.09% year-on-year, reflecting some degree of terminal average price reduction. Based on mid-to-high-end liquor sales revenue of 15.048 billion yuan, the first-half corresponding ton price was approximately 623,900 yuan/ton, down 12.72% from the previous year's 714,800 yuan/ton level. Although inventory for this category decreased during the reporting period, whether the growth model relying on "price-for-volume" is sustainable requires further observation.
On the other hand, other liquor categories targeting mass markets showed relatively weak performance, with sales volume declining 6.89% year-on-year. The company actively compressed production for this category, down 11.53% year-on-year, but end-period inventory still increased 55.28% year-on-year, indicating this segment still faces certain destocking pressure.
Public information shows Luzhou Laojiao Co.,Ltd.'s core mid-to-high-end product matrix mainly consists of Guojiao 1573, Luzhou Laojiao Tequ, and Cellaring Age liquors. Guojiao 1573 is positioned as high-end and represents the company's most representative strategic flagship product; the Tequ series bears core responsibilities in the sub-premium price segment, serving as important components for brand continuity and market positioning.
Latest batch price monitoring shows that as of September 1, Guojiao 1573 batch price was approximately 835 yuan/bottle, Tequ Laozihao was 240 yuan, and Tequ 60 Edition was 410 yuan. Compared to early 2025, overall trends show slight declines, with Guojiao 1573 down 25 yuan, Tequ Laozihao down slightly by 5 yuan, and Tequ 60 Edition batch price maintaining 410 yuan unchanged.
Terminal market price dynamics are more complex. Taking Guojiao 1573 as an example, offline store prices generally maintain around 900 yuan, while online platforms show obvious price loosening. For instance, on a major e-commerce platform, a two-bottle set with stacked discounts is as low as 1,469 yuan, with actual single-bottle prices of only about 734.5 yuan, creating "inversion" with batch prices. This phenomenon clearly indicates the company is implementing "price-reduction-for-volume" promotional strategies through online channels.
Notably, although Tequ 60 Edition batch prices remain relatively stable, huge gaps exist between official suggested retail prices and actual transaction prices. In some platform official stores, this product is priced near 800 yuan/bottle, but actual selling prices can be as low as about 478 yuan/bottle after using discount coupons; in other e-commerce channels, prices as low as 413 yuan/bottle have appeared. This multi-channel, multi-price parallel situation reflects the company's practical challenges in balancing sales volume and brand value across different sales venues.
Price declines may relate to the company actively expanding emerging channels. Data shows this channel's gross margin is 83.52%, slightly lower than traditional channels' 87.40%. In the first half of 2025, this channel achieved operating revenue of 932 million yuan, up 27.55% year-on-year.
Additionally, in channel layout, the company's sales revenue to top five distributor customers reached 11.923 billion yuan in the first half of 2025, accounting for 72.47% of total sales during the reporting period. This proportion further increased from 67.28% in the same period of 2024, showing continued rising customer concentration. During the reporting period, the largest customer alone contributed 48.73% of sales.
This means while expanding new channels, Luzhou Laojiao Co.,Ltd. still highly depends on a few core major customers, highlighting traditional channel concentration risks. In the future, as the company advances channel diversification, it may need to optimize customer structure to enhance overall risk resistance capabilities.
From distributor numbers, at the end of the reporting period, Luzhou Laojiao Co.,Ltd. had 1,703 domestic distributors, with 88 new additions and 86 reductions during the period, a net increase of 2, but still down 3.73% year-on-year, reflecting that its channel system remains in dynamic adjustment.
**Institutional Expectations Reversed, Annual Performance Forecasts Turn from Growth to Decline**
According to latest forecasts from multiple institutions, Luzhou Laojiao Co.,Ltd.'s 2025 performance expectations generally show downward adjustment trends. Data shows 36 institutions' average forecast for annual revenue is 30.84 billion yuan, down approximately 1.13% from 2024's actual revenue of 31.2 billion yuan. For profitability, institutions average forecast the company's attributable net profit at 17.62 billion yuan, down 2.27% year-on-year, with decline margin slightly higher than revenue.
Notably, while forecasts among different institutions show some divergence, overall expectations have been lowered. For example, SW Research predicts the company's attributable net profit at 11.79 billion yuan, with basic earnings per share of 8.01 yuan, both down 12.47% from 2024. Among institutions publishing forecasts after August 30, except for Nomura Orient International Securities predicting net profit growth year-on-year, all others forecast varying degrees of decline. This cautious expectation contrasts markedly with multiple brokerages' growth predictions during Q1 report disclosure, reflecting significant changes in institutional views of the company's short-term operating conditions.
From capital market performance, on the first trading day after interim report release, Luzhou Laojiao Co.,Ltd. closed at 135.85 yuan/share, down 0.98% that day, performing relatively poorly within the baijiu sector. However, extending the timeframe to the full year, its current stock price still accumulated 13.92% growth from early 2025's 119.25 yuan. Stock price volatility during the period was significant, reaching a high of 143 yuan and touching a low of 102.16 yuan, with amplitude of 39.98%, showing multiple oscillation characteristics.
Luzhou Laojiao Co.,Ltd.'s first-half performance faced pressure, partly affected by objective factors including baijiu industry policies and intensified market competition, and partly closely related to actual effectiveness of strategic measures including actively advancing channel adjustments, contracting marketing investment, and cultivating new growth engines. Looking ahead, whether the company's current "price-for-volume" strategy can truly transform into sustainable growth momentum awaits further market verification. Multiple brokerages have successively lowered profit expectations, reflecting to some extent the capital market's continued cautious attitude toward its short-term performance recovery capabilities.