Financial Performance - Revenue for the six months ended June 30, 2019, was RMB 2,570.1 million, representing a 4.1% increase from RMB 2,468.3 million in 2018[17]. - Profit attributable to owners of the Company was RMB 124.9 million, a significant turnaround from a loss of RMB 140.3 million in the previous year, marking a 265.2% change[17]. - Net operating cash inflow rose by 20.6% to RMB 855.6 million compared to RMB 709.5 million in 2018[17]. - Free cash flow surged by 151.3% to RMB 351.1 million from RMB 139.7 million in the prior year[17]. - Basic profit per share improved to RMB 2.05 from a loss of RMB 2.30, reflecting a change of 4.35[17]. - The Group achieved earnings of approximately RMB133.7 million and net free cash inflow of RMB351.1 million during the Reporting Period, marking a successful turnaround from losses to profits[37]. - The Group recorded total revenue of RMB2,570 million for the Reporting Period, representing an increase of 4.13% year-on-year compared to RMB2,468 million in 2018[90]. - Revenue from the dairy farming business increased by 9.64% year-on-year, with raw milk sales volume rising by 7.09% to 667.7 thousand tons[91]. Production and Yield - Gross profit before raw milk fair value adjustments increased by 22.1% to RMB 898.1 million from RMB 735.4 million[17]. - The annualized milk yield per milkable cow increased by 2.9% to 10.6 tons per head from 10.3 tons[17]. - Total milk yield for the period was 68.2 thousand tons, up 7.2% from 63.6 thousand tons in 2018[17]. - The herd scale increased slightly to 226,861 heads from 225,782 heads, a growth of 0.5%[17]. - Total milk production during the Reporting Period reached 682,000 tons, reflecting a year-on-year growth of 7.23%[39]. - The average milk yield per milkable cow increased to 10.6 tons in 2019, up by 2.91% year-on-year, while total milk yield grew by 7.23% to 682,000 tons compared to 636,000 tons in 2018[55][56]. - The Group operates 26 dairy farms with a total of 226,861 dairy cows across seven provinces in mainland China[28]. Cost Management - The Group successfully reduced the unit cost of raw milk (excluding depreciation) to RMB 2.31/kg, a decrease of 4.55% from RMB 2.42/kg in 2018, despite rising feed prices due to the Sino-US trade war[44]. - Direct feed costs decreased to RMB 1.78/kg from RMB 1.89/kg, representing a year-on-year decrease of 5.82%[44]. - Total feed cost for the reporting period was RMB1,225 million, approximately the same as RMB1,221 million in 2018, indicating effective cost control[99]. - The cash cost of raw milk sold (excluding depreciation) decreased by 4.58% year-on-year to RMB2,311/ton in 2019, down from RMB2,422/ton in 2018[100]. Quality and Recognition - Modern Dairy's pure milk was awarded the Gold Prize of Monde Selection for the sixth consecutive year[17]. - The Group's brand, Modern Dairy, has been recognized as a "Strategic Partner of China's Aerospace Industry," highlighting its premium quality[18]. - The Group's raw milk quality is among the top rankings globally, comparable to imported milk products in key indicators[81]. - Four products from the Group were awarded the Gold Prize at Monde Selection 2019, with pure milk winning the Gold Prize for the sixth consecutive time[81]. Strategic Initiatives - The introduction of walnut milk in July 2019 marks the Group's expansion into new product offerings[31]. - The Company launched new high-calcium pure milk and walnut milk products in early 2019 and July 2019, respectively, enhancing its product portfolio[48]. - The Group's unique integration model of forage planting, cow breeding, and milk processing positions it as the largest producer of raw fresh milk in mainland China[51]. - The Group focuses on high-standard environmental protection policies and rigorous epidemic prevention measures to ensure sustainable development[73]. - The Group aims to maintain its leading position in the dairy industry by adhering to food safety, environmental protection, and epidemic prevention[171]. Shareholder and Financial Structure - The Company entered into a subscription agreement with New Hope Dairy Co., Ltd, agreeing to issue 276,228,409 subscription shares at HK$1.3535 per share, raising approximately RMB709 million[82][85]. - Following the completion of the subscription, New Hope will hold 9.28% equity interests in the Company, becoming the second largest strategic shareholder[85]. - As of June 30, 2019, the total interest-bearing debt was RMB6,919.5 million[129]. - The Group's net gearing ratio was 96.4% as of June 30, 2019, compared to 95.0% a year earlier[128]. - The Group had a capital commitment of RMB29.1 million related to the acquisition of property, plant, and equipment as of June 30, 2019, an increase from RMB7.8 million as of December 31, 2018[158]. Employee and Social Responsibility - The Group's farms provide multiple job opportunities nationwide, effectively alleviating rural surplus labor pressure and increasing local farmers' income[170]. - The Group's social responsibility initiatives include direct donations and support for local economic development[170]. - As of June 30, 2019, the Group had 4,959 employees, an increase from 4,735 employees as of December 31, 2018[164].

Financial Performance - Revenue for the year ended December 31, 2018, was RMB 4,956.8 million, representing a 3.6% increase from RMB 4,783.8 million in 2017[15] - The company reported a gross profit before raw milk fair value adjustments of RMB 1,546.1 million, an increase of 8.1% from RMB 1,430.8 million in the previous year[15] - Cash EBITDA for 2018 was RMB 1,528.4 million, a significant increase of 41.3% compared to RMB 1,081.8 million in 2017[15] - The loss attributable to owners of the Company decreased by 49.1% to RMB 496.1 million from RMB 975.1 million in 2017[15] - Net operating cash inflow for the year was RMB 1,406.0 million, a substantial increase of 180.7% from RMB 500.9 million in 2017[15] - Total revenue increased by 3.6% to RMB4,956.8 million, with cash EBITDA rising by 41.3% to RMB1,528.4 million and net operating cash inflow escalating by 180.7% to RMB1,406.0 million compared to 2017[58] Production and Yield - Modern Dairy operates 26 dairy farms in China with over 230,000 dairy cows and an annual milk yield exceeding 1.27 million tons[7] - The total annual milk yield per milkable cow increased to 10.1 tons in 2018, up from 9.8 tons in 2017, reflecting a 3.1% growth[15] - The total number of dairy cows decreased slightly to 231,530 in 2018 from 233,058 in 2017, a decline of 1.3%[15] - The annual milk yield (AMY) per head of milkable cow increased by 3.1% to 10.1 tons, contributing to a total annual milk production of 1.28 million tons, an increase of 8.20% year-on-year[64] - The average milk yield per milkable cow increased by 3.06% to 10.1 tons in 2018, compared to 9.8 tons in 2017[76] Market and Industry Trends - In 2018, Modern Dairy achieved stable revenue growth despite soaring feed costs and global economic challenges, with significant increases in operating net cash inflow[35] - The company believes that milk prices have bottomed out and are expected to rise at a moderate pace moving forward[35] - The supply and demand of raw milk in China are reaching equilibrium, with raw milk prices continuing to rise, which is expected to improve the company's profitability[41] - The Chinese government has introduced several policies to support the dairy industry, emphasizing large-scale farming and quality assurance[38] - The introduction of new national standards for raw milk and dairy products in 2018 is expected to boost consumer confidence and increase domestic fresh milk consumption[54] - The dairy industry in China has undergone significant transformation over the past decade, improving both quality and quantity under stringent regulations[55] Quality and Recognition - Modern Dairy's products have been awarded the gold prize of Monde Selection for five consecutive years, highlighting the quality of its offerings[15] - The company has been recognized as a "Strategic Partner of China's Aerospace Industry," indicating broad societal recognition of its premium quality branded milk[16] - Modern Dairy's premium quality milk has received widespread recognition, winning the gold prize at Monde Selection for five consecutive years, along with three other product series[35] - The Group's dairy products ranked among the top in the world for quality, with four products awarded the Gold Prize at Monde Selection 2018[105] Cost Management - The unit cost of raw milk was maintained at RMB2.45/kg, with feed cost remaining at RMB1.89/kg, despite rising feed prices due to the Sino-US trade war[68] - The gross profit margin of the dairy farming business improved by 0.36 percentage points to 31.46% in 2018[64] - The gross profit of the dairy farming business before raw milk fair value adjustments was RMB1,520.6 million in 2018, an increase of 11.14% from RMB1,368.2 million in 2017[122] - The gross profit margin for the liquid milk products business fell to 8.27% in 2018 from 9.02% in 2017, attributed to a change in the pricing model to "cost-plus"[124] Strategic Initiatives - In early 2019, Modern Dairy entered a milk supply cooperation agreement with Yashili, expanding into a new high value-added business line[37] - The Group aims to enhance milk yield and quality through scientific breeding and feeding technologies, focusing on brand competitiveness and resource management[42] - The Group aims to focus on upstream business, consolidate resources, and enhance financial position and liquidity[63] - The Group aims to achieve high standards in herd breeding, focusing on increasing production output and reducing operational costs[90] Management and Leadership - Mr. Han Chunlin has over 20 years of experience in the food and beverage industry in China, previously serving as marketing vice general manager at Nowara Shinnosuke and marketing manager at Inner Mongolia Mengniu[179] - Ms. Gao Lina, aged 62, is a co-founder of the Group and has extensive experience in international trade and resource integration, having led the largest import-export enterprise in Tai'an City[180] - The management team has demonstrated strong strategic business and market planning capabilities, contributing to the success of the Group's operations in China[181] - The leadership team has received multiple awards for their contributions to the industry, including recognition as top business leaders in China[180] Environmental and Social Responsibility - The Group emphasizes environmental protection and epidemic prevention, continuously improving product quality and farm management[92] - The Group actively engages in social responsibility initiatives, including poverty alleviation and local economic development through job creation and direct donations[167] - The Group will release a separate Environmental, Social, and Governance (ESG) report to illustrate its commitment to sustainable development and corporate governance[172]