avahi-daemon runs with wrong hostname

I have a problem on one device where the avahi-daemon is running with the wrong hostname and it is messing up my system. The hostname is ABC-100001 but when I check the process list it shows that

avahi       9243 20.7  0.0   6964  5408 ?        Ss   02:39   0:01 avahi-daemon: running [ABC-100002.local]

Using hostnamectl set-hostname localhost and restarting the avahi-daemon changes the process to:

avahi       9601 11.0  0.0   6652  5148 ?        Ss   02:40   0:00 avahi-daemon: running [linux.local]

Changing it back hostnamectl set-hostname ABC-100001 and restarting the daemon again shows it running as ABC-100002. I have searched high and low but can not figure out where the avahi-daemon gets it hostname from.