Performance declines and negative cash flow combined: Intensified challenges behind Yanghe’s commitment to high dividends

```

The chill of deep adjustment in the baijiu industry is being more directly transmitted to liquor companies’ financial reports.

In 2025, operating revenue reached 19.211 billion yuan, a year-on-year decrease of 33.5%; net profit attributable to shareholders was 2.206 billion yuan, with a decrease of as much as 67% year-on-year.

Cash flow and profits both came under pressure, with cash flow from operating activities turning from 4.629 billion yuan last year to -763 million yuan.

In the first quarter of 2026, the rate of decline in performance narrowed somewhat but has yet to see substantial recovery, with declines in revenue and net profit still at 26% and 32% respectively.

As of the end of the first quarter, the company’s inventory stood at 19.584 billion yuan, a decrease of 791 million yuan compared to the end of 2025, down by 3.89%; the destocking process is still underway.

Behind the decline in performance lies the dual effects of the industry environment and the company’s proactive adjustment.

In 2025, the baijiu industry was in a phase where “policy adjustments, consumption transitions, and stock competition” overlapped, with total volume shrinking and structural differentiation coexisting. Weakness on the demand side, combined with channel inventory pressure, made the pressure on mid-range and sub-premium price segments particularly prominent.

Facing dual pressures of inventory and price systems, Yanghe chose to proactively shrink in 2025. The year’s marketing strategy revolved around “destocking, stabilizing price levels, and boosting momentum,” prioritizing the repair of the price system through delivery controls, optimizing sell-through and channel rectification. The number of distributors dropped by a net 495 over the year, shifting the channel focus from expansion to efficiency.

For core products, the company implemented a combined strategy of “factory price direct supply, terminal price limits, and quota control,” and suspended orders for the sixth generation of Ocean Blue within the province while strictly controlling supply outside the province, essentially giving up part of short-term revenue in exchange for price recovery.

Structurally, Yanghe is still advancing the rebalancing of products and regions.

In 2025, revenue from mid-to-high-end liquors was 16.542 billion yuan, down 32% year-on-year, accounting for 86.11%, indicating the structure’s further tilt toward the high-end segment.

At the regional level, out-of-province revenue was 10.157 billion yuan, accounting for 54.1%, surpassing in-province revenue for the first time.

Against the backdrop of overall industry pressure, structural optimization’s support for short-term performance is limited. In the fourth quarter of 2025 alone, there was a net loss of about 1.8 billion yuan, with operating pressure centrally released at year-end.

Even with profits and cash flow under pressure, the company maintained a high dividend payout. According to the annual report, the proposed cash dividend is 14.7 yuan (tax included) for every 10 shares, amounting to a total payout of 2.214 billion yuan, with a payout ratio of 100.38%.

Meanwhile, the company explicitly stated in the “Cash Dividend Return Plan (2025–2027)” that total annual cash dividends will not be less than 100% of the net profit attributable to shareholders for that year.

However, the sustainability of dividend payments ultimately depends on recovery in profit quality and cash flow.

In 2025, cash flow from operating activities turned negative. By the end of the first quarter, contract liabilities had declined from 6.424 billion yuan at the end of 2025 to 5.41 billion yuan, and with current revenue still showing a double-digit year-on-year decline, the reserves of income available for future recognition have shrunk.

Against this backdrop, if terminal sales recovery and channel destocking do not meet expectations, the balance between high dividends and cash flow remains uncertain.

Overall, Yanghe is currently undergoing a “phase of deceleration” under proactive adjustment. The performance downturn has been essentially realized, but channel and structural reconstruction is ongoing.

For the company, the key issue is not about a short-term stop to the decline, but whether, after inventory levels gradually return to a reasonable range and the pricing system is repaired, channel confidence can genuinely convert to a sustained recovery in sell-through, and whether, after this round of clearing, it can complete another leap from a regional leader to a national brand.

Risk disclosure and disclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it consider the special investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Invest accordingly at your own risk. ```