Stock Price Plummets 70%, Yanghe Co. Locks Employees In

Listing | Damo Finance

The stock ownership plan launched in the past to motivate employees has now deeply entangled Yanghe Brewery (002304.SZ) employees.

On March 9, Yanghe Brewery announced that the first phase of its core backbone stock ownership plan will expire on September 10, 2026. After the continuation period expires, if not extended, the plan will automatically terminate.

This core backbone stock ownership plan was introduced in 2021, when the liquor industry was in an upward cycle. Yanghe Brewery aimed to improve its employee stock ownership and compensation assessment mechanisms, attract and retain talented staff, and align the interests of shareholders, the company, and employees, thereby enhancing the cohesion of the management team and the company’s competitiveness.

The announcement shows that Yanghe Brewery used previously repurchased shares for equity incentives, with a subscription price of 103.73 yuan per share. Up to 5,100 people participated in this stock ownership plan, covering nearly three-quarters of Yanghe Brewery’s employees, including then-Chairman Zhang Liandong, then-President Zhong Yu, then-Executive President Liu Huashuang, and other senior executives. These employees subscribed to a total of 9.1184 million shares, accounting for 0.61% of the company’s total share capital, with a total subscription amount of nearly 1 billion yuan.

On September 9, 2021, these shares were transferred to the dedicated account of the stock ownership plan. On the same day, Yanghe Brewery’s stock closed at 141.33 yuan per share, more than 36% above the employees’ subscription price.

However, employees who invested could not immediately realize the gains. The announcement shows that the lock-up period for the stock ownership plan is 24 months, with a total duration of 36 months. Yanghe Brewery also set performance targets: revenue in 2021 and 2022 must increase by 15% year-over-year. After the lock-up period and performance assessment are completed, the stock rights can be distributed to the participants.

In terms of results, Yanghe Brewery successfully met the performance targets. In 2021, the company’s revenue was 25.35 billion yuan, a 20.14% increase year-over-year; in 2022, revenue was 30.11 billion yuan, up 18.76%. By September 10, 2023, after the 24-month lock-up period, invested employees could choose to receive their allocated benefits.

But by then, Yanghe Brewery’s stock price had fallen below the two-year-ago level, closing at 121.29 yuan per share on the unlock date, about 17% above the subscription price of 103.73 yuan. Since then, the stock price continued to decline. As of March 11 this year, the stock price had dropped to 51.31 yuan per share, with a total market value of about 773 billion yuan. Compared to the peak of 224 yuan per share in 2021, the company’s stock price has now fallen more than 70%.

Since the establishment of the employee stock ownership plan, Yanghe Brewery has paid dividends multiple times, with a current dividend per share of about 16.05 yuan. Excluding dividends, based on the current stock price, employees who invested in the plan are on average experiencing a loss of about 40%.

As a result, many Yanghe Brewery employees have not yet realized their gains, and the plan has been extended twice. As of March 9 this year, the plan still held 6.3791 million shares, accounting for 0.42% of the total share capital.

It’s worth noting that Yanghe Brewery is not the only liquor company implementing employee stock plans. Wuliangye, Shuijingfang, Jinhui Liquor, Laobaigan Liquor, and other liquor companies have launched similar plans.

Some of the earlier companies to implement such plans saw employees cashing out at high stock prices, reaping large gains. For example, Wuliangye launched an employee stock plan as early as 2015, with an issuance price of 21.64 yuan per share. By December 2023, the company had transferred 21.06 million shares involving 2,413 employees to their securities accounts, at a stock price above 125 yuan per share.

In contrast, companies that launched plans around 2021 saw some employees “locked in.” For example, Shuijingfang completed the transfer of 695,700 shares to the dedicated account in November 2021, representing 0.14% of the total share capital, with a transfer price of 55 yuan per share, more than 50% below the stock’s closing price of 118.85 yuan that day. Since then, the stock price generally declined, and by May last year, when the plan’s term expired, the stock price was below 55 yuan per share, with 129,200 shares still not cashed out.

White Liquor Industry Faces Cooling

The fact that employee stock plans have “locked in” employees reflects the overall cooling of the white liquor industry.

By 2025, the industry will face a deep adjustment. In the third quarter of last year, among 18 listed white liquor companies on the A-share market, only a few like Kweichow Moutai and Shanxi Fenjiu maintained revenue growth, while most saw declines in revenue and net profit.

For example, Wuliangye, the “second largest” in white liquor, saw its third-quarter revenue halved, with net profit attributable to the parent dropping over 65%. Yanghe Brewery’s third-quarter revenue fell 29.01%, and it reported a loss of 369 million yuan, making it one of the rare leading liquor companies to report a loss. The pressure persisted into the fourth quarter.

In January this year, seven liquor companies announced their 2025 performance forecasts, all showing significant declines. Among them, Yanghe Brewery, Tianyoude Liquor, Jinzhi Liquor, Shunxin Agriculture, and Jiugui Liquor all reported quarterly losses in the fourth quarter.

As the leader of Jiangsu liquor, Yanghe Brewery’s performance peaked in 2023, with revenue reaching 33.126 billion yuan and net profit exceeding 10 billion yuan. However, since then, its performance has started to decline. In the second half of 2025, the company experienced losses for two consecutive quarters, with the fourth quarter’s loss estimated between 1.45 and 1.86 billion yuan.

With performance and stock prices under pressure, some companies’ high dividend strategies have also become unsustainable. In August 2024, Yanghe Brewery stated that from 2024 to 2026, the total annual dividends would not be less than 70% of net profit attributable to the parent, and not less than 7 billion yuan annually. But as performance sharply declined in 2025, the company quickly adjusted its dividend plan, setting the total annual dividend at no less than 100% of net profit, removing the minimum of 7 billion yuan.

To find new growth paths during the industry downturn, many liquor companies are seeking transformation. According to a GF Securities research report, at the 2026 distributor conferences of major liquor companies, the industry’s top players are emphasizing supply-demand matching and price-volume balance, or are adopting more conservative or phased low-growth targets.

CITIC Securities’ report suggests that leading white liquor companies are actively engaging with consumers, mid-tier companies are slightly lowering prices to maintain market volume and price stability, while smaller companies are halting production and clearing inventory. A “consumer-centric” channel collaboration system is expected to become a core competitive advantage in the next industry cycle, requiring companies to gradually improve customer acquisition, service, and scene operation capabilities.