Company Reports

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China.

Chinese baijiu sales have deteriorated since the second half of 2024, and the sector has lagged the broader market. An aging population and falling per capita drinking rates point to a shrinking pool of buyers, prompting us to reassess competitive strength across our coverage.

Jiugui's second-quarter performance was soft, with revenue down 2.1% to CNY 213 million and a net loss of CNY 21 million, flat from a year ago.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Jiugui closed 2025 with 22% year on year revenue decline and a net loss of CNY 34 million. First quarter of 2026 brought a modest stabilization, with the revenue drop moderating to 8% and net profit returning to 4.6% growth.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Our channel checks continue to indicate persistent weakness in baijiu demand, with the sector facing double-digit revenue declines ahead of the Lunar New Year holiday. However, performance varies across segments—premium baijiu, led by Moutai, is showing signs of modest demand improvement.

Subpremium baijiu companies' third-quarter results continue to reflect persistent demand weakness and elevated inventory levels. Among them, Swellfun posted a 75% year-on-year decline in net profit, while Yanghe and Jiugui reported net losses.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Our channel checks continue to indicate persistent weakness in China's consumer sentiment and elevated inventory levels for Baijiu. Golden Week sales for the sector declined by 20%-30% year on year, and inventory levels have increased by about one month.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Jiugui continued to witness a sharp earnings decline, with second-quarter revenue falling by 57% year on year and a net loss of CNY 23 million, ranking it among the weakest performers in our baijiu coverage.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Jiugui continued to witness a sharp decline in earnings, with revenue and net profit falling by 50% and 98%, respectively, in 2024. The was followed by a further year-on-year decrease of 30% in revenue and 57% in net profit for the first quarter of 2025.

Amid China's macroeconomic and consumption headwinds, our baijiu coverage trailed the broader market in 2024, falling 19% on average, compared with a 13% rise in the Shanghai Composite Index.

Near-term headwinds in the macroeconomy have weakened baijiu demand and the sector’s profitability, with slower year-over-year sales growth across all segments in the third quarter versus the previous quarter. We expect the cyclical weakness to persist in the next 1-2 quarters, and we remain selective, with a preference on premium and leading brands given their relatively resilient demand.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.

Narrow-moat Jiugui’s second-quarter results were in line with preliminary guidance and continued to reveal greater sales pressure on subpremium baijiu. Revenue fell 13% year over year, and net profit decreased 61%. Although the performance improved slightly on a sequential basis, our channel check indicates that Jiugui’s inventory level remains high, with distributor inventory at three to four months. This suggests demand headwinds persist. We maintain our earnings forecasts and CNY 68 fair value estimate. We think the shares are currently undervalued, but near-term demand recovery remains uncertain amid slower economic growth and soft consumer sentiment in China.

Narrow-moat Jiugui’s 2024 first-half preliminary results were below our expectation, which continued to reflect greater sales pressure of subpremium baijiu, with revenue falling 35% year over year, and net profit declining 69%-74%. Although its second-quarter sales improved slightly on a sequential basis, our channel check indicates Jiugui’s inventory level remains high currently, with distributor inventory of home market Hunan at about two months, and ex-Hunan market at four-to-five months. This suggests destocking challenges will persist before the Mid-Autumn Festival and Chinese National Day holidays in the second half. We cut our fair value estimate to CNY 68 per share from CNY 71 to factor in the weakness. While we expect 2024 net profit to decline 13% year on year, we anticipate a recovery from 2025 onward. As a result, our five-year earnings CAGR estimate is only marginally reduced to 27.2% from 28.5%.

Jiugui Liquor has differentiated itself from China’s other leading baijiu brands by producing Fuyu-flavored baijiu, which enjoys strong cultural links with minority groups in its home in western Hunan province, and has a unique brewing technique and aroma. Its established brand is now synonymous with Fuyu baijiu, providing the group with pricing power, making it one of the key subpremium baijiu brands in China. Expanding its distribution network, and increasing investment in marketing and branding, have also fortressed its competitiveness—which should allow it to generate economic profits well into the future.