Shede Spirits (SH:600702) 阿尔法工场研究院·2025-11-14 07:01Core Viewpoint - Shede Liquor is facing significant challenges including declining performance, channel imbalances, and tightening cash flow, raising questions about its ability to continue its national expansion strategy amidst a "not-so-strong peak season" [2][3]. Financial Performance - In the first three quarters of 2025, Shede Liquor reported revenue of 3.702 billion yuan, a year-on-year decrease of 17%, and a net profit of 472 million yuan, down 29.43% [3]. - The third quarter alone saw revenue of 1 billion yuan, a decline of 15.88%, and a net profit of 28.73 million yuan, plummeting 63.18%, marking the lowest quarterly profit since 2016 [3]. - The company’s cash flow from operating activities was -244 million yuan, a drop of 69.47%, with a net outflow of 312 million yuan in the third quarter [4]. Market Dynamics - Despite the overall decline, Shede Liquor's main product, T68, saw a sales increase of 16.46%, and e-commerce sales grew by 39.62% [10]. - However, the high-end liquor segment experienced a revenue drop of 23.96%, while ordinary liquor revenue increased by 16.46% [10]. - The overall gross margin fell to 64.73%, down 4.67 percentage points year-on-year, and the net profit margin decreased to 12.69% [10]. Distribution Challenges - The company has seen a significant exit of distributors, with 461 leaving this year, surpassing the total for 2024 [2][9]. - As of the end of the third quarter, the total number of distributors was 2,554, a decrease of 109 from the previous year [15]. - Inventory levels have risen, with a balance of 5.677 billion yuan at the end of the third quarter, an increase of 460 million yuan since the beginning of the year [16]. Management and Strategy - Since becoming controlled by the Fosun Group in late 2020, Shede Liquor has experienced frequent management changes, with over 20 high-level personnel changes in four years [18]. - The company has shifted its strategic focus multiple times, from high-end liquor to mass-market expansion, leading to instability in its long-term strategy [19]. - The management has announced plans to focus on "de-stocking, stabilizing prices, and promoting sales," while also leveraging e-commerce and live retail channels [20]. Regulatory and ESG Concerns - The company has faced scrutiny from regulators regarding the rationale behind significant investments in expansion amid declining revenues and production capacity [7]. - There have been controversies surrounding land acquisition and compensation issues related to its expansion projects, raising questions about the company's ESG practices [8].