Company Coverage
Wuliangye Yibin (000858 CH): 3Q26: Net Profit Declines Sharply Declines Despite A Revised Base; Downgrade To SELL
SELL (Downgrade)
Current price:
Target price:
Upside:
Previous TP :
Rmb75.38
Rmb64.20
-14.8%
Rmb78.50
Analyst
Analyst
Highlights
- Wuliangye’s 3Q26 revenue fell 38% yoy and net profit dropped 48% yoy, despite a revised base, primarily due to weaker-than-expected demand and elevated selling expenses.
- Cash inflow from sales of goods also worsened, reaching Rmb7.2b, up 1% yoy but down 41% qoq, and contract liabilities fell 4% yoy to Rmb8.9b.
- Cut target price by 18% to Rmb64.20; downgrade to SELL.
Analysis
- 3Q26 net profit declined sharply a revised base. Wuliangye Yibin (Wuliangye) reported its 9M26 results. In 9M26, revenue was Rmb32,858m (+7% yoy). Gross profit was Rmb26,252m (+13% yoy), with gross margin of 79.9% (+4.2ppt yoy). EBIT was Rmb11,301m (+68% yoy), with EBIT margin of 34.4% (+12.4ppt yoy). Net profit was Rmb9,711m (+50% yoy), with net margin of 29.6% (+8.4ppt yoy). This implies that in 3Q26, revenue was Rmb4,442m (-38% yoy). Gross profit was Rmb3,434m (-30% yoy), with gross margin of 77.3% (+8.7ppt yoy). EBIT was Rmb718m (-58% yoy), with EBIT margin of 16.2% (-7.7ppt yoy). The decline in EBIT margin was primarily due to higher selling and marketing expenses (+15.9ppt yoy) and higher administrative expenses (+3.0ppt yoy), partially offset by a higher gross margin (+8.7ppt yoy) and lower sales tax (-3.1ppt yoy). Net profit was Rmb958m (-48% yoy), with net margin of 21.6% (-4.4ppt yoy). The narrow drop in net margin vs EBIT margin was primarily driven by lower effective tax rate (19.7% in 3Q26 vs 23.4% in 3Q25).
Highlights
- Wuliangye’s 3Q26 revenue fell 38% yoy and net profit dropped 48% yoy, despite a revised base, primarily due to weaker-than-expected demand and elevated selling expenses.
- Cash inflow from sales of goods also worsened, reaching Rmb7.2b, up 1% yoy but down 41% qoq, and contract liabilities fell 4% yoy to Rmb8.9b.
- Cut target price by 18% to Rmb64.20; downgrade to SELL.
Analysis
- 3Q26 net profit declined sharply a revised base. Wuliangye Yibin (Wuliangye) reported its 9M26 results. In 9M26, revenue was Rmb32,858m (+7% yoy). Gross profit was Rmb26,252m (+13% yoy), with gross margin of 79.9% (+4.2ppt yoy). EBIT was Rmb11,301m (+68% yoy), with EBIT margin of 34.4% (+12.4ppt yoy). Net profit was Rmb9,711m (+50% yoy), with net margin of 29.6% (+8.4ppt yoy). This implies that in 3Q26, revenue was Rmb4,442m (-38% yoy). Gross profit was Rmb3,434m (-30% yoy), with gross margin of 77.3% (+8.7ppt yoy). EBIT was Rmb718m (-58% yoy), with EBIT margin of 16.2% (-7.7ppt yoy). The decline in EBIT margin was primarily due to higher selling and marketing expenses (+15.9ppt yoy) and higher administrative expenses (+3.0ppt yoy), partially offset by a higher gross margin (+8.7ppt yoy) and lower sales tax (-3.1ppt yoy). Net profit was Rmb958m (-48% yoy), with net margin of 21.6% (-4.4ppt yoy). The narrow drop in net margin vs EBIT margin was primarily driven by lower effective tax rate (19.7% in 3Q26 vs 23.4% in 3Q25).
SELL (Downgrade)
Current price:
Target price:
Upside:
Previous TP :
Rmb75.38
Rmb64.20
-14.8%
Rmb78.50
Analyst
Analyst
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