将五粮液评级下调至跑输大盘：尽管进行了表面调整，深层次渠道问题依然存在

Euan McLeish+81 3 5962 9611euan.mcleish@bernsteinsg.com Hao Wang, CFA+852 2123 2627hao.wang@bernsteinsg.com Mufei Gao+81 3 6777 6995mufei.gao@bernsteinsg.com Price Target 000858.CH Downgrading Wuliangye to Underperform: Deep channel issueremains despite the cosmetic surgery Following Wuliangye’s -50% restatement to 9mth 2025 revenues (link), we have doubledowngraded the stock toUnderperformwith a 54% Target Price cut to RMB65, reflecting33% downside vs the pre-holiday close. While clearing the channel of inventory was clearlynecessary, and a base reset desirable for Wuliangye, we are concerned about the manner inwhich this has been achieved, and the solvency of Wuliangye’s top 5 customers in particular.Rather than repurchasing the inventory from distributors, Wuliangye has taken back stockand has created a significant balance sheet liability leaving the channel in a precarious cashposition. The lack of Wholesale price improvement for the Regular Wuliangye brand suggeststhat channel health has not fundamentally improved, and we will be looking for materialreduction in Wuliangye’s newly created RMB26b Other Current Liability, followed by recoveryofCash received from sales of goods,for evidence that the channel is really stabilizing. The scale of this restatement lays bare poor sales governance and the failure of Wuliangye’sWujun-1(五钧)and Wujun-2(五浚)distributor platform company initiative. We nowexpect Wuliangye revenue growth to settle into a MSD-HSD trajectory following anotherrestatement related bounce in Q2 (Q1 was +34%). We also expect a c. 10% pt downwardreset in Wuliangye’s EBIT margin from the mid 50s% level to mid 40s% on the back ofreduced operational leverage and the effective 12% ex-factory price cut put through inDecember 2025. We now expect the company to deliver MSD medium term EPS growth. Investment Implications We have double downgradedWuliangye to Underperformafter cutting our EPS estimatesby c. 45%, reducing our target multiple from 19x to 16x P/E and applying an incremental100bps of governance risk premium to our WACC calculation underpinning our DCFvaluation.We have cut our PT to RMB65, from RMB140,as a result (000858.CH). DETAILS Along with their Q4 2025 and & Q1 2026 results, Wuliangye significantly restated their Q1-3 2025 results, stating that “thecompany amended the business model in 2025 and adjusted the accounting related to the recognition of some businessrevenue in 2025 based on the principle of prudence”, but providing no other material explanation. Revenues reported for the first 9 months of 2025 were restated down by RMB 30b in total, representing a 50% cut, andbringing full year 2025 revenues in at a 61% yoy decline (Exhibit 1). Along with the revenue restatement, the company recorded a RMB28b increase in Other Current Liabilities, and wrote backRMB8.5b of stock to the balance sheet, but recorded no change in cash flows suggesting that distributors have been left outof pocket and have become creditors to Wuliangye. We see risk to the solvency of Wuliangye’s top 5 customers, in particular, asa result, and will be looking for evidence that the Other Current Liability balance is normalizing and cash flows from the sale ofgoods are recovering before we are confident that Wuliangye’s route to market has been stabilized. In Q1 2026, the company reported RMB23b of revenue which reflects 64% growth vs the restated 2025 comparable, but thiswas coupled with a 65% yoy decline inCash received from sales of goods,so we view the seemingly impressive Q1 bounce backas a consequence of the base restatement, rather than evidence of a reset in revenue trajectory. We expect Q2 2026 reported revenues to look similarly impressive, before slowing materially in Q3&4 when the restatementbenefit largely disappears, and we expect growth thereafter to be largely in line with sell-out at mid single digits from then on. The normalization of Other Current Liabilities back to low singe digit billion RMB will be a key metric to track, as the company isunlikely to see meaningful improvement in cash flow until their liabilities to distributors have been cleared. After this, we will belooking forCash received from sales of goodsto return to historical levels before we are confident that Wuliangye’s relationshipwith the channel is back in good health. Assuming continued weak consumer spending in China, we expect Wuliangye’s revenue growth algorithm to settle down at low-mid single digit volume release and low to mid-single digit mix enhancement laddering to mid-single digit revenue growth. Thisjustifies a lower valuation multiple than historical averages, in our view. We see risk to the solvency of Wuliangye’s top 5 distributors in particular, as the company have effectively leveraged thesecustomers’ balance sheets rather than actually buying back the inventory. Despite restating 9-month 2025 revenue down by RMB30b, and recording an RMB8.4b increase in Other Current Assets whichlooks to reflect