Huangjiu Black Horse's Kuaijishan profits surge significantly, but dividends shrink considerably | Liquor Industry Financial Report Review

Ask AI · How can high-collateral shareholders benefit from performance growth?

Reporter Xiao Xia from 21st Century Business Herald

On the evening of March 31, Huiji Shaoxing disclosed its annual report: In 2025, it achieved revenue of 1.822 billion yuan, up 11.68%, and realized net profit attributable to shareholders of 245 million yuan, up 24.7% year over year; net profit attributable to shareholders after excluding non-recurring items rose even 32% year over year.

This is Huiji Shaoxing’s third consecutive year of achieving double-digit growth in both revenue and profits, with 235 million yuan in net profit attributable to shareholders after excluding non-recurring items—and it also marks a new high over its 12 years since listing. After all, across the entire liquor industry segment, only a few companies saw profit growth of more than 20% in 2025.

Huiji Shaoxing’s profitability performance also slightly exceeded brokerage expectations—according to data compiled by Eastmoney (Tonghuashun), over the past six months, the average forecast from seven brokerages for Huiji Shaoxing’s prior year net profit attributable to shareholders was 222 million yuan.

As is well known, in recent years Huiji Shaoxing has broken through with younger-oriented new products, driving renewed capital-market attention on the Yellow Wine sector. Last year, its share price at one point doubled, and the increase ranked first across the entire liquor category.

A reporter from 21st Century Business Herald reviewing the financial reports can note that last year Huiji Shaoxing’s mid-to-high-end liquor recorded single-digit growth, while the faster-growing category was “ordinary yellow wine and other liquors”—with revenue up 21% year over year.

Younger-oriented new products such as sparkling yellow wine and sparkling rice wine are classified by Huiji Shaoxing as “other liquors.” Judging from the data for the first three quarters of last year, other liquors already accounted for about 13% of Huiji Shaoxing’s revenue.

(The two younger-oriented products from Huiji Shaoxing entered Yonghui supermarkets in various places—photo by 21 reporter)

However, a reporter from 21st Century Business Herald noticed that Huiji Shaoxing’s dividend payout was clearly lower.

The annual profit distribution proposal shows that Huiji Shaoxing plans to pay a dividend of 3 yuan for every 10 shares in 2025. The total cash dividend amount decreased from 188 million yuan in the same period of the previous year to 141 million yuan, and the dividend payout ratio fell sharply from 95% in the previous year to 57%.

Profits are clearly up significantly—so why is the dividend more cautious?

A reporter from 21st Century Business Herald noted that, alongside the active embrace of younger-oriented new products and other products through online marketing channels such as live streaming, Huiji Shaoxing’s advertising investment last year increased markedly, and its operating cash flow noticeably declined.

The annual report shows that the net cash flow from operating activities last year decreased 27.7% year over year. The explanation given was: “mainly due to increases in payments for advertising and promotional expenses, etc.”

Advertising and promotional expenses are generally categorized under selling expenses.

In 2025, Huiji Shaoxing’s selling expenses surged 42% year over year, significantly faster than the revenue growth rate, reaching 473 million yuan; the selling expense ratio rose to 26%. Compared with other yellow-wine stocks, Jinfeng Liquor Industry, which disclosed its annual report the day before, had a selling expense ratio of nearly 20% last year, while Gu Yue Longshan has stayed at around 13% in recent years.

Of course, a higher selling expense ratio can be seen as Huiji Shaoxing’s reasonable short-term strategy to quickly capture the heat/“bonus” from the yellow wine trend and accelerate its nationwide expansion.

Compared with Gu Yue Longshan, where more than 40% of revenue comes from regions outside Jiangsu, Zhejiang, and Shanghai, Huiji Shaoxing still has a gap in its level of nationwide expansion. In the first three quarters of last year, it was under 15%. If Huiji Shaoxing had not actively marketed to make younger-oriented products go viral across the whole internet, the capital market would also not have held such high expectations for a yellow wine brand with distinct regional characteristics.

In recent years, with Huiji Shaoxing’s performance entering a fast track, the more direct benefit is the soaring stock price—which the controlling shareholder Zhongjian Xinchengle is happy to see.

Huiji Shaoxing’s former shareholder Jingong Group went bankrupt and underwent reorganization due to tight funding chains, after having pledged large amounts of the shares it held.

In mid-2023, Zhongjian Xinchengle acquired 31.11% of the shares of Huiji Shaoxing held by the former shareholder Jingong Group at a cost of nearly 1.9 billion yuan, becoming Huiji Shaoxing’s controlling shareholder.

And about half of that money was bank loans; therefore, after Zhongjian Xinchengle took over, it immediately carried out high-proportion share pledging.

Since Zhongjian Xinchengle became the controlling shareholder, the pledge ratio of Huiji Shaoxing shares it holds has remained in the 70%–80% range. The latest announcement this March shows that after it released and re-pledged, the pledge ratio of the shares it holds is close to 75%.

With Huiji Shaoxing’s performance growing rapidly and supporting the rise in its stock price, the benefit is that it thickens the safety cushion and reduces the likelihood of needing to provide additional pledged-collateral margin, thereby easing the cash-flow pressure on the controlling shareholder.

A performance that slightly exceeds expectations could still boost Huiji Shaoxing’s share price. It’s just that retail investors who want to share in the dividend benefits from performance growth will need to wait a bit longer.