Earnings pressured; core-product pricing stable

Luzhou Laojiao reported 9M26 revenue of CNY14.67bn (-36.6% y-y) and net profit of CNY5.67bn (-47.3% y-y). In 3Q26, revenue reached CNY4.20bn (-37.1% y-y, +71.4% q-q), while net profit was CNY1.33bn (-57.0% y-y, +111.1% q-q). Results were broadly in line with our expectations. We attribute the 9M26 revenue decline mainly to lower sales volumes and the profit decline to lower volumes and product-mix adjustments. Gross margin fell 3.5pp y-y to 83.6% in 9M26 and 7.8pp y-y to 79.4% in 3Q26. In 3Q26, the selling expense ratio rose 2.5pp y-y to 16.0%, partly due to lower revenue, and taxes and surcharges as a share of revenue increased 8.0pp y-y to 17.3%, driving a steeper decline in 3Q26 net profit. Channel destocking is progressing, with shipments controlled by linking allocations and quotas to sell-through. National Cellar 1573 wholesale prices remained stable, and the nationwide rollout of its low-alcohol variant remains on track. We maintain our 2026-28F forecasts and our TP of CNY84.92,