Sichuan Swellfun Co Ltd

Swellfun released its 2026 interim report, showing the company swung from profit to loss, with net profit attributable to the parent company at negative 6.2225 million yuan, a decrease of 112 million yuan compared with the same period last year, down 105.90 percent year on year. Total operating revenue was 1.082 billion yuan, down 27.78 percent year on year. Net cash flow from operating activities was negative 73.2514 million yuan. The company's gross margin was 76.13 percent, down 3.12 percentage points year on year. Return on equity was negative 0.12 percent, down 2.31 percentage points year on year. Diluted earnings per share was negative 0.01 yuan, down 105.89 percent year on year.

Swellfun released its 2026 interim report, showing first-half operating revenue of 1.082 billion yuan, down 27.8% year on year, and a loss of 6.22 million yuan, down 105.9% year on year. Second-quarter operating revenue was 266 million yuan, down 50.7% year on year, while the net loss attributable to the parent widened to 177 million yuan. The company said the baijiu industry remains in a period of deep adjustment, and that it proactively adjusted shipment pace, cutting channel inventory by about 50% year on year, but this reduced operating revenue by about 300 million yuan and gross profit by about 250 million yuan. As of the end of the second quarter, total assets stood at 8.213 billion yuan and net assets attributable to the parent at 4.984 billion yuan.

Swellfun disclosed its 2026 semi-annual report on the evening of August 28. First-half revenue was 1.082 billion yuan, down 27.78 percent year on year, and net profit was a loss of 6.2225 million yuan, swinging from profit to loss compared with the same period last year. This is the company's first half-year loss in 12 years, since the first half of 2014. First-quarter revenue was 816 million yuan, with net profit attributable to the parent company of 171 million yuan. Second-quarter revenue was about 266 million yuan, with a net loss attributable to the parent company of about 177 million yuan. The overall first-half loss was mainly dragged down by the second quarter. The company said performance was affected by the proactive optimization of channel inventory structure and related phased factors. Channel inventory fell by about 50 percent year on year, but inventory still reached 4.082 billion yuan, accounting for nearly half of total assets, and inventory turnover days extended to about 2,785 days. On the personnel side, a round of streamlining was completed in 2025, with the total workforce reduced by a net 282 employees and one-off severance compensation of about 44 million yuan incurred. In 2026, the company is still continuing to shrink its headcount, and the core senior management team has been almost entirely replaced. Controlling shareholder Diageo is simultaneously advancing workforce reductions and has launched a restructuring plan totaling 1.2 billion US dollars, including 514 million US dollars in severance costs for Europe, corporate and other regions, an increase of more than seven times compared with the previous fiscal year. It also recorded asset impairments of 263 million US dollars for North America and Mexico and brand impairments of 1.5 billion US dollars. The final number of global layoffs has not yet been announced.

The liquor sector staged a strong rebound on July 20, with Kweichow Moutai closing up nearly 6% and its share price reclaiming the 1,320 yuan level. Gujing Gongjiu hit the daily limit up, Luzhou Laojiao rose over 6%, Jinhui Liquor and Shanxi Xinghuacun Fenjiu gained over 5%, and Wuliangye, Yingjia Gongjiu, and Jinshiyuan all closed higher across the board. On the news front, Kweichow Moutai recently announced another price increase for its core blockbuster product, Feitian Moutai, and its non-standard product, the kilogram Moutai. Effective July 18, the retail price of Feitian 53% vol 500ml Kweichow Moutai on the iMoutai platform was raised from 1,539 yuan per bottle to 1,639 yuan per bottle, and the sales contract price was raised from 1,269 yuan per bottle to 1,369 yuan per bottle. The retail price of the kilogram Moutai was raised from 3,119 yuan per bottle to 3,269 yuan per bottle. Institutions believe the price hikes will help boost earnings. Huachuang Securities estimates that, after deducting value-added tax, the corresponding increase in reported revenue will be approximately 5.6 billion yuan, contributing an estimated profit of around 3.6 billion yuan. Recent semi-annual earnings forecasts from several liquor companies indicate the industry remains broadly under pressure, with Shede Spirits, Swellfun, Golden Seed Winery, and Huangtai Liquor posting losses or profit declines in the first half. Zheshang Securities believes the fundamentals have clearly bottomed out, and Kaiyuan Securities expects the sector to likely recover in the second half of the year. At the close, Kweichow Moutai traded at 1,327.5 yuan per share, up 5.95%, with a total market capitalization of 1.66 trillion yuan.

Swellfun announced that Director, Strategy Committee Member, Deputy General Manager, and Chief Financial Officer Jiang Leifeng has submitted a written resignation for personal reasons. He will step down from all the above positions effective July 17, 2026, and will no longer hold any role at the company.

Shuijingfang announced that Director, Strategy Committee member, Deputy General Manager, and Chief Financial Officer Jiang Leifeng has resigned from all positions effective July 17 for personal reasons, and will no longer hold any role at the company. In the first quarter of 2026, the company achieved revenue of 816 million yuan and net profit attributable to the parent company of 171 million yuan.

Data released by the National Bureau of Statistics on July 15 showed that in the first half of the year, the absolute retail sales of cigarette and alcohol products nationwide reached 354.7 billion yuan, up 13.2 percent year-on-year. In June alone, the absolute figure was 53.7 billion yuan, up 12.1 percent year-on-year. Boosted by this news, the A-share baijiu sector rose across the board that day. Gujing Gongjiu, Jinzhongzi Liquor, and Dahu Aquaculture hit the daily limit up. Luzhou Laojiao, Shanxi Xinghuacun Fenjiu, Shunxin Agriculture, and Jinshiyuan gained more than 5 percent. The sector's overall index rose 3.06 percent. However, the industry remains in a period of deep adjustment. As of July 15, about eight A-share listed baijiu companies had disclosed their first-half earnings forecasts. Except for Wuliangye, which is expected to report growth, the rest generally saw profit declines or losses. Tianyoude Liquor's net profit fell 76 to 84 percent year-on-year. Shunxin Agriculture's net profit fell 69.34 to 79.18 percent year-on-year. Jinzhongzi Liquor, Huangtai Liquor, Shuijingfang, and ST Spring are expected to report losses. Proactive destocking has become a common choice for liquor companies. Shuijingfang's channel inventory fell about 50 percent year-on-year. Shede Spirits controlled shipments to stabilize prices. Jiugui Liquor raised the strategic price of its 52-degree 500ml Neican liquor by 30 yuan per bottle and suspended shipments until August 15. Xiao Zhuqing, a Chinese liquor industry analyst, said consumers are shifting to affordable daily-drinking liquors priced under 100 yuan, and the premium on high-end famous brands is shrinking. Liquor companies need to face consumers directly to digest inventory.

Shuijingfang issued an announcement forecasting a net loss attributable to the parent company of 6.22 million yuan for the first half of 2026, compared with a profit of 105 million yuan in the same period last year. The company expects operating revenue of 1.08 billion yuan for the period, down 27.78 percent year on year, mainly because during a deep adjustment phase in the baijiu industry, the company proactively optimized its channel inventory structure, with channel inventory falling about 50 percent year on year, leading to a revenue decline of about 300 million yuan and a gross profit decline of about 250 million yuan. In addition, factors such as provisions made, a reduction in government grants, and higher supply chain financing costs also exacerbated the loss. For the full year 2025, the company reported revenue of 3.038 billion yuan, down 41.77 percent year on year, and net profit attributable to the parent of 406 million yuan, down 69.73 percent, while its share price has evaporated more than 60 billion yuan from its all-time high. Over the past five years, Shuijingfang has seen six changes of general manager, with Zhou Zhiming serving in an acting capacity since May 2026.

First-half earnings previews from liquor companies have been released in a concentrated batch. Sub-premium and regional players such as Tianyoude, Swellfun, Golden Seed Winery, Shede Spirits, Shunxin Agriculture, and Huangtai Liquor broadly reported steep profit declines or outright losses. Tianyoude expects first-half revenue to fall about 14 percent year on year, with net profit attributable to the parent down 76 to 84 percent. Shunxin Agriculture sees attributable net profit dropping 69.34 to 79.18 percent. Swellfun delivered its first loss-making half-year report in recent years, with attributable net profit at negative 6.2221 million yuan, swinging from profit to loss. Golden Seed Winery expects an attributable net loss of 60 to 72 million yuan. Huangtai Liquor projects a loss of 10 to 18 million yuan, widening its year-on-year deficit. Shede Spirits earlier disclosed that attributable net profit fell 60.52 to 69.55 percent. Wuliangye, benefiting from a low base a year earlier, expects attributable net profit to rise 88.80 to 98.97 percent. Xiao Zhuqing, an independent commentator on China's liquor industry, said the sector is in a phase of deep adjustment in the first half, marked by shrinking demand, intense channel competition, and structural optimization, putting revenue and gross margins at sub-premium distillers under pressure.