Group 1 - The company reported a revenue of 1.651 billion RMB for the six months ending June 30, 2025, representing a year-on-year increase of 5.3% [1] - The loss attributable to the parent company was 48.322 million RMB, which narrowed by 66.4% compared to the previous year [1] - The basic loss per share was 0.006 RMB [1]

[Company Information and Performance Summary](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E4%B8%9A%E7%BB%A9%E6%91%98%E8%A6%81) This section provides an overview of the company, its interim performance highlights, and dividend policy [Company Profile](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) China Shengmu Organic Milk Limited (Stock Code: 1432) announced its interim results for the six months ended June 30, 2025, with all amounts presented in RMB thousands - Company Name: **China Shengmu Organic Milk Limited** (CHINA SHENGMU ORGANIC MILK LIMITED)[2](index=2&type=chunk) - Stock Code: **1432**[2](index=2&type=chunk) - Reporting Period: Six months ended **June 30, 2025**[2](index=2&type=chunk) [Interim Performance Highlights](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E4%BA%AE%E7%82%B9) During the reporting period, the company's operating revenue increased by 5.3%, cash EBITDA grew by 19.7%, loss attributable to owners of the parent significantly narrowed by 66.4%, annual milk yield per mature cow improved by 1.7%, and cost of sales per kg of milk decreased by 7.4% Key Operating Status for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,650,912 | 1,567,692 | +5.3% | | Sales Revenue | 1,444,274 | 1,490,702 | -3.1% | | Gross Profit | 364,866 | 394,509 | -7.5% | | Loss Attributable to Owners of the Parent | (48,322) | (143,681) | -66.4% | | Cash EBITDA | 484,420 | 404,740 | +19.7% | | Annual Milk Yield per Mature Cow (tonnes/year/head) | 12.27 | 12.07 | +1.7% | | Administrative Expense Ratio | 3.9% | 4.2% | -0.3% | | Cost of Sales per kg of Milk (RMB/kg) | 2.89 | 3.12 | -7.4% | [Interim Dividend](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (2024: nil)[4](index=4&type=chunk) [Financial Statements](index=3&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the company's interim condensed consolidated income statement, comprehensive income statement, and statement of financial position [Interim Condensed Consolidated Statement of Profit or Loss](index=3&type=section&id=%E4%B8%AD%E6%9C%9F%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E8%A1%A8) During the reporting period, the company's sales revenue decreased by 3.1% and gross profit by 7.5%, but due to a significant increase in other income and gains and effective control over various expenses, both loss before tax and loss for the period narrowed significantly Key Data from Interim Condensed Consolidated Statement of Profit or Loss | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Sales Revenue | 1,444,274 | 1,490,702 | -3.1% | | Cost of Sales | (1,079,408) | (1,096,193) | -1.5% | | Gross Profit | 364,866 | 394,509 | -7.5% | | Loss from Changes in Fair Value of Biological Assets Less Costs to Sell | (471,255) | (451,023) | +4.5% | | Other Income and Gains | 166,525 | 49,900 | +233.7% | | Selling and Distribution Expenses | (26,062) | (27,883) | -6.5% | | Administrative Expenses | (55,768) | (62,678) | -11.0% | | Finance Costs | (19,366) | (23,464) | -17.5% | | Loss Before Tax | (45,386) | (145,506) | -68.8% | | Loss for the Period | (45,601) | (145,510) | -68.7% | | Loss Attributable to Owners of the Parent | (48,322) | (143,681) | -66.4% | | Profit / (Loss) Attributable to Non-controlling Interests | 2,721 | (1,829) | Turnaround to profit | - Basic and diluted loss per share attributable to ordinary equity holders of the parent was **RMB 0.006**, a significant reduction from **RMB 0.018** in the prior period[9](index=9&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=5&type=section&id=%E4%B8%AD%E6%9C%9F%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) During the reporting period, the company's total comprehensive loss for the period significantly narrowed to RMB 48.6 million from RMB 149.5 million in the prior period, primarily due to the reduction in loss for the period Key Data from Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss for the Period | (45,601) | (145,510) | | Other Comprehensive Loss, Net of Tax | (3,000) | (4,000) | | Total Comprehensive Loss for the Period | (48,601) | (149,510) | | Attributable to Owners of the Parent | (51,322) | (147,681) | | Attributable to Non-controlling Interests | 2,721 | (1,829) | [Interim Condensed Consolidated Statement of Financial Position](index=6&type=section&id=%E4%B8%AD%E6%9C%9F%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2025, the company's total non-current assets decreased, total current liabilities increased, leading to an expansion of net current liabilities; total equity slightly decreased, but the capital structure remained stable Key Data from Interim Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Non-current Assets | 5,812,094 | 6,342,946 | | Total Current Assets | 2,215,300 | 2,121,306 | | Total Current Liabilities | 3,055,573 | 2,639,153 | | Net Current Liabilities | (840,273) | (517,847) | | Net Assets | 4,131,729 | 4,175,792 | | Total Equity | 4,131,729 | 4,175,792 | - Biological assets (non-current portion) decreased from **RMB 3,380,138 thousands** at the end of 2024 to **RMB 3,245,672 thousands** as of June 30, 2025[12](index=12&type=chunk) - Interest-bearing bank borrowings (current portion) significantly increased from **RMB 666,565 thousands** at the end of 2024 to **RMB 1,451,128 thousands** as of June 30, 2025[12](index=12&type=chunk) [Notes to the Financial Statements](index=8&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) This section provides detailed notes on the preparation basis, accounting policy changes, operating segment information, revenue analysis, and other financial statement components [Basis of Preparation and Going Concern](index=8&type=section&id=%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80%E4%B8%8E%E6%8C%81%E7%BB%AD%E7%BB%8F%E8%90%A5) The interim financial information is prepared in accordance with IAS 34 and on a going concern basis, as the Board believes the company has sufficient financial resources to meet its obligations as they fall due - The interim condensed consolidated financial information is prepared in accordance with **IAS 34 "Interim Financial Reporting"**[14](index=14&type=chunk) - As of June 30, 2025, the Group's net current liabilities were **RMB 840,273 thousands**, an increase from **RMB 517,847 thousands** at the end of 2024[15](index=15&type=chunk) - The Board is confident that the Group has the ability to fully meet its financial obligations as they fall due in the foreseeable future, thus preparing the financial information on a **going concern basis**[15](index=15&type=chunk) [Changes in Accounting Policies](index=8&type=section&id=%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%98%E5%8A%A8) During the reporting period, the company first adopted the revised IFRS, but these revisions had no significant impact on the interim condensed consolidated financial information as the Group's transaction and functional currencies are convertible to the presentation currency - Adopted amendments to **IAS 21** regarding lack of exchangeability[16](index=16&type=chunk)[17](index=17&type=chunk) - These amendments had no impact on the interim condensed consolidated financial information as the currencies used for the Group's transactions and the functional currencies of its entities are convertible to the Group's presentation currency[17](index=17&type=chunk) [Operating Segment Information](index=9&type=section&id=%E7%BB%8F%E8%90%A5%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group has only one reportable operating segment, with all revenue and non-current assets derived from mainland China - The Group has **only one reportable operating segment**[18](index=18&type=chunk) - All of the Group's revenue is derived from customers located in **mainland China**, and all non-current assets are located in **mainland China**[19](index=19&type=chunk) [Sales Revenue Analysis](index=9&type=section&id=%E9%94%80%E5%94%AE%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) Sales revenue primarily derived from raw milk sales, totaling RMB 1,444,274 thousands during the reporting period, a slight decrease year-on-year Sales Revenue Details | Category | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Sales of Raw Milk | 1,444,274 | 1,490,702 | | Geographical Market | Mainland China | Mainland China | | Timing of Revenue Recognition | At a point in time | At a point in time | [Components of Loss Before Tax](index=10&type=section&id=%E9%99%A4%E7%A8%8E%E5%89%8D%E4%BA%8F%E6%8D%9F%E6%9E%84%E6%88%90) Loss before tax was primarily affected by losses from changes in fair value of biological assets less costs to sell, cost of inventories sold, and depreciation and amortization, but the amount of write-down of inventories to net realizable value significantly decreased Main Components of Loss Before Tax | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of Inventories Sold | 1,079,408 | 1,096,193 | | Write-down of Inventories to Net Realizable Value | 900 | 20,557 | | Loss from Changes in Fair Value of Biological Assets Less Costs to Sell | 471,255 | 451,023 | | Depreciation of Property, Plant and Equipment | 63,550 | 62,831 | | Depreciation of Right-of-Use Assets | 8,990 | 9,050 | | Amortization of Other Intangible Assets | 1,293 | 718 | [Income Tax Expense](index=10&type=section&id=%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) Income tax expense for the reporting period was RMB 215 thousands, primarily due to supplementary tax payments for prior years' income tax reconciliation, a significant increase from the prior period Income Tax Expense | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current - China Expense for the Period | — | 4 | | Supplementary Tax Payment for Prior Years' Income Tax Reconciliation | 215 | — | | Total | 215 | 4 | [Loss Per Share](index=11&type=section&id=%E6%AF%8F%E8%82%A1%E4%BA%8F%E6%8D%9F) Both basic and diluted loss per share significantly narrowed, reflecting an improvement in the company's loss situation, with no dilutive effect from potential ordinary shares Loss Per Share Calculation Data | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss Attributable to Ordinary Equity Holders of the Parent | (48,322) | (143,681) | | Weighted Average Number of Shares for Basic Loss Per Share | 8,268,292,000 | 8,169,239,000 | | Weighted Average Number of Shares for Diluted Loss Per Share | 8,268,292,000 | 8,169,239,000 | | Basic Loss Per Share | (RMB 0.006) | (RMB 0.018) | | Diluted Loss Per Share | (RMB 0.006) | (RMB 0.018) | [Trade Receivables](index=12&type=section&id=%E8%B4%B8%E6%98%93%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9) As of the end of the reporting period, trade receivables were primarily within 3 months, with the total amount slightly decreasing Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 271,796 | 287,701 | [Trade Payables and Bills Payable](index=12&type=section&id=%E8%B4%B8%E6%98%93%E5%BA%94%E4%BB%98%E6%AC%BE%E9%A1%B9%E5%8F%8A%E5%BA%94%E4%BB%98%E7%A5%A8%E6%8D%AE) As of the end of the reporting period, total trade payables and bills payable decreased, but amounts aged 4 to 6 months increased Aging Analysis of Trade Payables and Bills Payable | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 757,748 | 1,036,986 | | 4 to 6 months | 614,299 | 596,909 | | 7 to 12 months | 6,525 | 3,689 | | 1 to 2 years | 1,629 | 5,898 | | 2 to 3 years | 2,476 | 2,283 | | Over 3 years | 4,786 | 3,995 | | Total | 1,387,463 | 1,649,760 | [Biological Assets](index=13&type=section&id=%E7%94%9F%E7%89%A9%E8%B5%84%E4%BA%A7) As of the end of the reporting period, total biological assets decreased, with reductions in both mature cows and heifers, calves, and beef cattle Biological Assets Value | Category | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Mature Cows | 1,861,264 | 1,942,658 | | Heifers, Calves and Beef Cattle | 1,401,887 | 1,523,863 | | Total | 3,263,151 | 3,466,521 | - The Group has engaged **JLL Corporate Appraisal and Advisory Limited**, an independent professional valuation firm, to assist in assessing the fair value of biological assets[27](index=27&type=chunk) [Share Award Scheme](index=13&type=section&id=%E8%82%A1%E4%BB%BD%E5%A5%96%E5%8A%B1%E8%AE%A1%E5%88%92) The company adopted a ten-year share award scheme in 2022, and during the reporting period, the second and third tranches of share awards were vested - The company adopted a **ten-year long-term share award scheme** on April 19, 2022[28](index=28&type=chunk) - For the six months ended June 30, 2025, the **second tranche of 49,220,000 shares** and the **third tranche of 27,577,000 shares** were vested[28](index=28&type=chunk) [Events After Reporting Period](index=13&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%90%8E%E4%BA%8B%E4%BB%B6_%E9%99%84%E6%B3%A8) Subsequent to the reporting period, the company received a final judgment from the Inner Mongolia Autonomous Region Higher People's Court, significantly reducing the plaintiff's awarded compensation, and the company has adjusted its provision for litigation and claims accordingly - On July 28, 2025, the company received a copy of the final judgment from the Inner Mongolia Autonomous Region Higher People's Court regarding the investment agreement litigation[29](index=29&type=chunk) - The appellate court significantly reduced the plaintiff's awarded compensation and dismissed other claims[29](index=29&type=chunk) - The Group has adjusted its provision for litigation and claims to **RMB 39,436 thousands**, with this adjustment made as of June 30, 2025[29](index=29&type=chunk) [Industry Overview and Business Review](index=14&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) This section provides an overview of the industry landscape, including macroeconomic conditions and challenges in the dairy sector, along with a review of the company's operational performance and ESG practices [Industry Overview](index=14&type=section&id=%E8%A1%8C%E4%B8%9A%E6%A6%82%E8%A7%88) In the first half of 2025, China's economy grew steadily, but the dairy industry faced severe challenges with slow consumption recovery, continuous decline in raw milk prices, and widespread losses among farms, partially alleviated by falling feed costs [Macroeconomic and Consumer Market](index=14&type=section&id=%E5%AE%8F%E8%A7%82%E7%BB%8F%E6%B5%8E%E4%B8%8E%E6%B6%88%E8%B4%B9%E5%B8%82%E5%9C%BA) In the first half of 2025, GDP grew by 5.3%, total retail sales of consumer goods increased by 5.0%, and CPI decreased by 0.1%, indicating consumption structure upgrades but insufficient consumer capacity and willingness - Half-year domestic production value was **RMB 66.0536 trillion**, a year-on-year increase of **5.3%**[30](index=30&type=chunk) - Half-year total retail sales of consumer goods were **RMB 24.5458 trillion**, a year-on-year increase of **5.0%**[30](index=30&type=chunk) - Half-year national consumer price index (CPI) decreased by **0.1%** year-on-year[30](index=30&type=chunk) [Challenges Faced by China's Dairy Industry](index=15&type=section&id=%E4%B8%AD%E5%9B%BD%E5%A5%B6%E4%B8%9A%E9%9D%A2%E4%B8%B4%E7%9A%84%E6%8C%91%E6%88%98) Dairy product consumption recovery was slow, raw milk prices declined for three consecutive years, and total imported dairy products increased, with international prices of whole milk powder consistently higher than domestic raw milk purchase prices, intensifying domestic market substitution pressure - Dairy product consumption recovery was slow, and raw milk prices declined for **three consecutive years**, remaining at historically low levels[31](index=31&type=chunk) - In the first half of 2025, national large-scale dairy product manufacturing enterprises produced **14.33 million tonnes**, a year-on-year decrease of **0.3%**[31](index=31&type=chunk) - In the first half, imports of various dairy products totaled **1.3825 million tonnes**, a year-on-year increase of **5.7%**; of which dry dairy products increased by **8.7%**, and liquid milk decreased by **2.6%**[31](index=31&type=chunk) [Dairy Farming Industry Status](index=16&type=section&id=%E5%A5%B6%E7%89%9B%E5%85%BB%E6%AE%96%E8%A1%8C%E4%B8%9A%E7%8A%B6%E5%86%B5) In the first half, China's total raw milk production slightly increased by 0.5%, but fresh milk prices continued to fall to historical lows; feed costs decreased, yet farm economic efficiency remained low, with widespread losses leading to accelerated culling of low-yield dairy cows - In the first half of 2025, China's total raw milk production was **18.64 million tonnes**, a year-on-year increase of **0.5%**[32](index=32&type=chunk) - The average price of fresh milk was **RMB 3.04/kg**, a year-on-year decrease of **7.0%**[32](index=32&type=chunk) - Average corn price decreased by **3.9%** year-on-year, and average soybean meal price decreased by **9.1%** year-on-year, easing feed cost pressure[32](index=32&type=chunk) [Business Overview](index=16&type=section&id=%E4%B8%9A%E5%8A%A1%E6%A6%82%E8%BF%B0) The Group's core business is dairy farming, focusing on producing and selling high-end desert organic raw milk, organic A2 raw milk, and DHA raw milk, forming a differentiated competitive advantage through a "high-end + diversified" product strategy - Core business: **Dairy farming**, producing and selling **high-end desert organic raw milk, organic A2 raw milk, and DHA raw milk**[33](index=33&type=chunk) - Strategy: Deepen the main business of desert organic milk production and sales, while developing various functional raw milk products to enrich the product matrix and enhance profitability[33](index=33&type=chunk) [Operating Review](index=17&type=section&id=%E7%BB%8F%E8%90%A5%E5%9B%9E%E9%A1%B5) The company achieved steady growth in raw milk sales and a decrease in cost of sales per kg of milk through optimizing herd structure, improving yield, and lean operations, while the beef cattle business benefited from rising beef prices [Herd Size and Structure Optimization](index=17&type=section&id=%E7%95%9C%E7%BE%A4%E8%A6%8F%E6%A8%A1%E8%88%87%E7%B5%90%E6%A7%8B%E5%84%AA%E5%8C%96) As of June 30, 2025, the Group operated 34 farms with a total herd size of 146,516 head, including 143,553 dairy cows, with mature cows accounting for 44.9%; beef cattle inventory decreased but focused on high-end breeds Herd Size | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Farms | 34 | 34 | | Dairy Cow Inventory (head) | 143,553 | 144,448 | | Of which: Mature Cows (head) | 64,477 | 62,842 | | Calves and Heifers (head) | 79,076 | 81,606 | | Proportion of Mature Cows in Dairy Cow Inventory | 44.9% | 43.5% | | Beef Cattle (head) | 2,963 | 12,033 | - Beef cattle inventory decreased by **9,070 head** from the end of last year, with breeding focused on high-end core cattle such as Wagyu and Angus[34](index=34&type=chunk) [Production Efficiency and Cost Management](index=18&type=section&id=%E7%94%9F%E7%94%A2%E6%95%88%E7%8E%87%E8%88%87%E6%88%90%E6%9C%AC%E7%AE%A1%E7%90%86) In the first half, annual milk yield per mature cow reached a record high of 12.27 tonnes, and raw milk sales volume increased by 6.3%; despite an 8.9% decrease in average raw milk selling price, cost of sales per kg of milk decreased by 7.4%, and total three expenses decreased by 11.3% - In the first half of 2025, annual milk yield per mature cow reached **12.27 tonnes**, an increase of **1.7%** from mid-2024, setting a new historical high[36](index=36&type=chunk) - Raw milk sales volume in the first half was **372,973 tonnes**, a year-on-year increase of **6.3%**, with high-end raw milk sales accounting for **80%**[36](index=36&type=chunk) - Average raw milk selling price decreased to **RMB 3.87/kg**, a year-on-year decrease of **8.9%**[37](index=37&type=chunk) - Cost of sales per kg of milk was **RMB 2.89/kg**, a year-on-year decrease of **7.4%**, primarily due to lower feed costs[37](index=37&type=chunk) - Total three expenses (administrative, selling, finance) in the first half were **RMB 101.2 million**, a year-on-year decrease of **11.3%**[37](index=37&type=chunk) [Beef Cattle Business](index=20&type=section&id=%E8%82%B2%E8%82%A5%E7%89%9B%E4%B8%9A%E5%8A%A1) The company moderately reduced dairy cow inventory based on market demand, optimizing herd structure, with inefficient and aged cows being the primary culling targets; the beef cattle business benefited from rising beef prices, with sales revenue significantly increasing year-on-year - Dairy cow inventory was **143,553 head**, a decrease of **895 head** from the end of last year, with mature cows accounting for **44.9%**[38](index=38&type=chunk) - In the first half, inefficient and aged cows were the primary culling targets, and revenue from culled cows increased year-on-year[38](index=38&type=chunk) - Beef cattle inventory decreased to **2,963 head**, and beef cattle sales revenue significantly increased year-on-year[38](index=38&type=chunk) [ESG Practices and Human Resources](index=21&type=section&id=%EESG%E5%AE%9E%E8%B7%B5%E4%B8%8E%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90) The company continues to implement ESG principles, achieving an overall "B" rating in CDP and winning multiple ESG awards; simultaneously, digital investments improved per capita efficiency, leading to a decrease in total employee costs [ESG Practices](index=21&type=section&id=%EESG%E5%AE%9E%E8%B7%B5) The Group achieved an overall "B" rating in climate change, water security, and forest risk in the 2024 CDP assessment, received the "Outstanding ESG Disclosure Contribution Excellence Award" and "2024 China Enterprise ESG Practice Demonstration Unit" title, and was the first to implement ISSB's IFRS S2 climate-related disclosure standards, continuously improving animal welfare - Achieved an overall **"B" rating** in climate change, water security, and forest risk in the 2024 CDP assessment[39](index=39&type=chunk) - Awarded the **"Outstanding ESG Disclosure Contribution Excellence Award"** by the Hong Kong Quality Assurance Agency[39](index=39&type=chunk) - First to fully implement the International Sustainability Standards Board (ISSB)'s latest **IFRS S2 Climate-related Disclosures**[39](index=39&type=chunk) - Awarded the **"Farm Animal Welfare Product Certification"**, becoming the first domestic farming enterprise to receive **"Three-Star Certification"**[40](index=40&type=chunk) [Human Resources and Employee Remuneration](index=22&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90%E5%8F%8A%E5%83%B1%E5%93%A1%E8%96%AA%E9%85%AC) The company improved per capita efficiency through digital and intelligent investments, resulting in a slight reduction in employee numbers and a year-on-year decrease in total employee costs - As of June 30, 2025, the Group had **2,193 employees** (December 31, 2024: 2,217 employees)[41](index=41&type=chunk) - Total employee costs for the first half of 2025 were **RMB 149.2 million** (first half of 2024: RMB 169.6 million), a year-on-year decrease of **12.0%**[41](index=41&type=chunk) [Financial Review](index=22&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%B5) This section provides a detailed financial review, analyzing sales revenue, cost of sales, gross profit, fair value changes of biological assets, other income, and various expenses, concluding with the loss attributable to owners of the parent and cash EBITDA [Sales Revenue Analysis](index=22&type=section&id=%E9%94%80%E5%94%AE%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) During the reporting period, sales revenue decreased year-on-year, primarily due to the continuous decline in average raw milk selling prices, but increased sales volume through improved yield contributed to the company's cash flow Sales Revenue Data | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Sales Volume (tonnes) | 372,973 | 350,848 | | Average Selling Price (RMB/tonne) | 3,872 | 4,249 | | Sales Revenue (RMB thousands) | 1,444,274 | 1,490,702 | - Average raw milk selling price decreased by **8.9%** year-on-year[42](index=42&type=chunk) - Annual milk yield per mature cow increased to **12.27 tonnes**, a year-on-year increase of **1.7%**, achieving growth in both raw milk production and sales volume[42](index=42&type=chunk) [Cost of Sales and Gross Profit](index=24&type=section&id=%E9%94%80%E5%94%AE%E6%88%90%E6%9C%AC%E4%B8%8E%E6%AF%9B%E5%88%A9) Benefiting from declining feed and forage prices and lean operations, cost of sales per kg of milk decreased by 7.4% year-on-year, but gross profit margin decreased by 1.2 percentage points as the decline in milk prices outpaced the cost reduction - Feed cost per kg of milk decreased by **RMB 0.18/kg** year-on-year[43](index=43&type=chunk) - Cost of sales per kg of milk decreased to **RMB 2.89/kg** (first half of 2024: RMB 3.12/kg), a year-on-year decrease of **7.4%**[43](index=43&type=chunk) - Raw milk gross profit margin recorded **25.3%** (first half of 2024: 26.5%), a year-on-year decrease of **1.2 percentage points**[43](index=43&type=chunk)[45](index=45&type=chunk) [Loss from Changes in Fair Value of Biological Assets Less Costs to Sell](index=24&type=section&id=%E7%94%9F%E7%89%A9%E8%B5%84%E4%BA%A7%E5%85%AC%E5%B9%B3%E5%80%BC%E5%8F%98%E5%8A%A8%E5%87%8F%E9%94%80%E5%94%AE%E8%B4%B9%E7%94%A8%E4%BA%A7%E7%94%9F%E4%BA%A7%E7%9A%84%E4%BA%8F%E6%8D%9F) During the reporting period, loss from changes in fair value of biological assets less costs to sell was RMB 471.3 million, largely consistent with the prior period, primarily influenced by the actual characteristics and market prices of dairy cows and their culling for sale - Loss from changes in fair value of biological assets less costs to sell was **RMB 471.3 million** (first half of 2024: RMB 451.0 million), largely consistent with the prior period[46](index=46&type=chunk) - The loss primarily refers to changes in the fair value of dairy cows due to their actual characteristics, market prices, and changes in discounted future cash flows from these cows[44](index=44&type=chunk) [Other Income and Gains](index=25&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) Other income and gains significantly increased by 233.7% during the reporting period, primarily due to the receipt of government subsidies and the reversal of prior year litigation provisions - Other income and gains recorded **RMB 166.5 million** (first half of 2024: RMB 49.9 million), a year-on-year increase of **233.7%**[47](index=47&type=chunk) - Primarily due to the full receipt of government subsidies for projects such as **dairy cow breeding and smart farm construction** in the first half[47](index=47&type=chunk) - Reversal of prior year litigation provisions of **RMB 45.6 million**[47](index=47&type=chunk) [Beef Cattle Farming Business](index=25&type=section&id=%E8%82%B2%E8%82%A5%E7%89%9B%E5%85%BB%E6%AE%96%E4%B8%9A%E5%8A%A1) Beef cattle farming business revenue significantly increased by 617.0% year-on-year, achieving net profit, primarily due to focusing on the high-end beef market segment and upgrading the herd structure Beef Cattle Farming Business Performance | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Sales Volume (head) | 15,010 | 2,492 | | Beef Cattle Farming Business Revenue | 145,461 | 20,288 | | Beef Cattle Farming Business Costs | (142,518) | (35,770) | | Gross Profit | 2,943 | (15,482) | - Beef cattle farming business revenue increased by **617.0%** year-on-year, with a net profit of **RMB 2.9 million** (first half of 2024: loss of RMB 15.5 million)[49](index=49&type=chunk) - The company focused on the **high-end beef market segment**, comprehensively upgrading its beef cattle herd structure by introducing high-end core breeds such as **Wagyu and Angus**[49](index=49&type=chunk) [Selling and Distribution Expenses](index=26&type=section&id=%E9%94%80%E5%94%AE%E5%8F%8A%E5%88%86%E9%94%80%E5%BC%80%E6%94%AF) Selling and distribution expenses decreased by 6.5% year-on-year during the reporting period, reflecting the company's improved operational efficiency and effective cost control - Total selling and distribution expenses decreased from **RMB 27.9 million** in the prior period to **RMB 26.1 million** in the reporting period, a decrease of **6.5%**[50](index=50&type=chunk) [Administrative Expenses](index=26&type=section&id=%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) Administrative expenses decreased by 11.0% year-on-year, and their proportion to sales revenue decreased by 0.3 percentage points, reflecting the company's effective reduction of administrative costs through streamlining organizational structure and strict budget control - Administrative expenses were **RMB 55.8 million** (first half of 2024: RMB 62.7 million), a year-on-year decrease of **11.0%**[51](index=51&type=chunk) - The ratio of administrative expenses to sales revenue decreased from **4.2%** in the prior period to **3.9%** in the current period, a decrease of **0.3 percentage points**[51](index=51&type=chunk) [Other Expenses](index=27&type=section&id=%E5%85%B6%E4%BB%96%E5%BC%80%E6%94%AF) Other expenses significantly decreased by 92.0% year-on-year, primarily due to reduced spray-dried milk volume and a decrease in impairment provision for milk powder inventory - Other expenses were **RMB 2.1 million** (first half of 2024: RMB 26.0 million), a year-on-year decrease of **92.0%**[52](index=52&type=chunk) - Impairment provision for milk powder inventory decreased by **RMB 19.7 million** compared to the prior period[52](index=52&type=chunk) [Finance Costs](index=27&type=section&id=%E8%9E%8D%E8%B5%84%E6%88%90%E6%9C%AC) Finance costs decreased by 17.5% year-on-year, mainly due to increased financial support from the state for the dairy product industry chain, leading to higher recognized interest subsidies - Finance costs were **RMB 19.4 million** (first half of 2024: RMB 23.5 million), a year-on-year decrease of **17.5%**[53](index=53&type=chunk) - Recognized interest subsidies increased year-on-year, benefiting from **national financial support for the dairy product industry chain**[53](index=53&type=chunk) [Share of (Loss) / Profit of Associates](index=27&type=section&id=%E5%88%86%E4%BD%94%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%EF%BC%88%E8%99%A7%E6%90%8D%EF%BC%89%E2%88%95%E6%BA%A2%E5%88%A9) During the reporting period, the company's share of loss from associates was RMB 1.9 million, compared to a profit of RMB 1.3 million in the prior period, turning from profit to loss - Share of loss from associates was **RMB 1.9 million** (first half of 2024: profit of RMB 1.3 million)[55](index=55&type=chunk) - Associates include Mengniu Shengmu Gaoke Dairy Products, Fuyou United Shengmu Dairy Products, Inner Mongolia Shengmu Low-Temperature Dairy Products, Inner Mongolia Yiyingmei Dairy Industry, Mudanjiang Liangyuan Technology Co., Ltd., and Bayannur Muyiyuan Biotechnology Co., Ltd[54](index=54&type=chunk) [Income Tax Expense](index=28&type=section&id=%E6%89%80%E5%BE%97%E7%A8%8E%E9%96%8B%E6%94%AF_%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%B5) The Group's income tax expense was RMB 214.9 thousands, primarily from domestic operations in China, with agricultural activities enjoying corporate income tax exemption - During the reporting period, the Group's income tax expense was **RMB 214.9 thousands** (first half of 2024: RMB 4.0 thousands)[56](index=56&type=chunk) - The Group's income from **dairy farming and primary agricultural product processing** and other agricultural activities is exempt from corporate income tax[56](index=56&type=chunk) [Loss Attributable to Owners of the Parent and Profit / (Loss) Attributable to Non-controlling Interests](index=28&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E6%93%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%94%E8%99%A7%E6%90%8D%E5%8F%8A%E9%9D%9E%E6%8E%A7%E8%82%A1%E6%AC%8A%E7%9B%8A%E6%87%89%E4%BD%94%E6%BA%A2%E5%88%A9%E2%88%95%EF%BC%88%E8%99%A7%E6%90%8D%EF%BC%89) Loss attributable to owners of the parent significantly narrowed by 66.4% year-on-year, cash EBITDA grew substantially by 19.7%, and non-controlling interests turned from loss to profit - Loss attributable to owners of the parent was **RMB 48.3 million** (first half of 2024: RMB 143.7 million), a year-on-year reduction in loss of **RMB 95.4 million**[57](index=57&type=chunk) - Cash EBITDA was **RMB 484.4 million** (first half of 2024: RMB 404.7 million), a year-on-year increase of **19.7%**[57](index=57&type=chunk) - Profit attributable to non-controlling interests was **RMB 2.7 million** (first half of 2024: loss of RMB 1.8 million)[57](index=57&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=28&type=section&id=%E6%B5%81%E5%8A%A8%E6%80%A7%E3%80%81%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90%E5%8F%8A%E8%B5%84%E6%9C%AC%E7%BB%93%E6%9E%84) This section details the Group's liquidity, financial resources, and capital structure, including bank borrowings, equity, asset pledges, capital commitments, and risk exposures [Liquidity and Financial Resources](index=28&type=section&id=%E6%B5%81%E5%8A%A8%E6%80%A7%E5%8F%8A%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90) The Group's working capital primarily comes from internal cash flows and bank credit lines, maintaining a credit scale of tens of billions with a utilization rate below 30%, and the Board believes the company has sufficient financial assets to settle debts - The Group's credit scale consistently maintains a **ten-billion RMB quota**, with a utilization rate stable at **below 30%**[58](index=58&type=chunk) - The Board believes that the Group has **sufficient financial assets** to settle its debts and fund its daily operations and contracted capital expenditures[58](index=58&type=chunk) [Interest-Bearing Bank Borrowings](index=29&type=section&id=%E8%AE%A1%E6%81%AF%E9%93%B6%E8%A1%8C%E5%80%9F%E6%AC%BE) As of the end of the reporting period, total interest-bearing bank borrowings were largely consistent with the end of the prior year, but borrowings repayable within one year significantly increased, while net borrowings remained stable Interest-Bearing Bank Borrowings | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Interest-Bearing Bank Borrowings | 2,257.0 | 2,274.3 | | Interest-Bearing Bank Borrowings Repayable Within One Year | 1,451.1 | 666.6 | | Net Borrowings | 1,206.9 | 1,209.0 | - The annual interest rate for interest-bearing liabilities ranged from **0.90% to 3.20%** (December 31, 2024: 0.82% to 3.20%)[59](index=59&type=chunk) [Capital Structure](index=30&type=section&id=%E8%B5%84%E6%9C%AC%E7%BB%93%E6%9E%84) As of the end of the reporting period, the Group's total equity slightly decreased, and the financial leverage ratio was largely consistent with the end of the prior year, indicating a stable capital structure Key Capital Structure Data | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Equity | 4,131.7 | 4,175.8 | | Current Assets | 2,215.3 | 2,121.3 | | Non-current Assets | 5,812.1 | 6,342.9 | | Current Liabilities | 3,055.6 | 2,639.1 | | Non-current Liabilities | 840.1 | 1,649.3 | | Financial Leverage Ratio | 55.7% | 55.9% | [Pledge of Assets](index=30&type=section&id=%E8%B5%84%E4%BA%A7%E6%8A%B5%E6%8A%BC) As of the end of the reporting period, restricted bank deposits totaled RMB 105.0 million, with a portion frozen due to litigation - Restricted bank deposits totaled **RMB 105.0 million** (December 31, 2024: RMB 129.0 million)[61](index=61&type=chunk) - Of this, **RMB 85.7 million** was frozen due to litigation[61](index=61&type=chunk) [Capital Commitments](index=30&type=section&id=%E8%B5%84%E6%9C%AC%E6%89%BF%E6%8B%85) As of the end of the reporting period, the Group's capital commitments for renovation and upgrading of property, plant, and equipment amounted to RMB 8.3 million, an increase from the end of the prior year - Capital commitments for renovation and upgrading of property, plant, and equipment amounted to **RMB 8.3 million** (December 31, 2024: RMB 5.2 million)[62](index=62&type=chunk) [Contingent Liabilities](index=30&type=section&id=%E6%88%96%E6%9C%89%E8%B4%9F%E5%80%BA) As of the end of the reporting period, the Group provided guarantees for bank borrowings of Bayannur Shengmu Gaoke Ecological Grass Industry Co., Ltd., with the guaranteed amount increasing - The Group provided guarantees for bank borrowings of **RMB 150.0 million** (December 31, 2024: RMB 70.0 million) for Bayannur Shengmu Gaoke Ecological Grass Industry Co., Ltd[63](index=63&type=chunk) [Foreign Exchange Risk](index=31&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group's operations are primarily located in mainland China, with most transactions conducted in RMB, thus posing no significant foreign exchange risk in its operations - The Group's operations are primarily located in **mainland China**, with most transactions conducted in **RMB**[64](index=64&type=chunk) - Apart from a small amount of Hong Kong Dollar and US Dollar cash, the Group has **no significant foreign exchange risk** in its operations[64](index=64&type=chunk) [Credit Risk](index=31&type=section&id=%E4%BF%A1%E8%B4%B7%E9%A3%8E%E9%99%A9) The Group only transacts with reputable third parties and conducts credit reviews, so credit risk primarily arises from counterparty default, but collateral is generally not required - The Group only transacts with **recognized and reputable third parties** and conducts credit reviews[65](index=65&type=chunk) - The maximum risk faced is equal to the **carrying amount of the financial instruments**, and generally **no collateral** is required from third parties[65](index=65&type=chunk) [Other Information](index=31&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) This section covers the company's environmental policies, significant acquisitions and disposals, and future major investment plans [Environmental Policies and Performance](index=31&type=section&id=%E7%8E%AF%E5%A2%83%E6%94%BF%E7%AD%96%E5%8F%8A%E8%A1%A8%E7%8E%B0) During the reporting period, the Group's operations complied in all material respects with currently applicable national and local environmental protection laws and regulations in China - The Group's operations complied in all material respects with **currently applicable national and local government environmental protection laws and regulations in China**[66](index=66&type=chunk) [Significant Acquisitions and Disposals](index=31&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B4%AD%E5%8F%8A%E5%87%BA%E5%94%AE%E4%BA%8B%E9%A1%B9) Except as disclosed in this announcement, the Group did not undertake any significant acquisitions or disposals during the reporting period - Except as disclosed in this announcement, neither the Company nor any of its subsidiaries undertook any **significant acquisitions or disposals** during the reporting period[67](index=67&type=chunk) [Future Major Investment Plans](index=31&type=section&id=%E6%9C%AA%E6%9D%A5%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84%E8%AE%A1%E5%88%92) As of the date of this announcement, the Group has no plans for any major investments or acquisitions of capital assets, other than the capital commitments disclosed and future plans in the prospectus - As of the date of this announcement, the Group has **no plans for any major investments or acquisitions of capital assets**, other than those disclosed under "Capital Commitments" above and in the "Future Plans and Use of Proceeds" section of the prospectus[68](index=68&type=chunk) [Events After Reporting Period](index=32&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%90%8E%E4%BA%8B%E4%BB%B6) Subsequent to the reporting period, the company received a final judgment from the Inner Mongolia Autonomous Region Higher People's Court, significantly reducing the plaintiff's awarded compensation, and the company has adjusted its provision for litigation and claims accordingly - On July 28, 2025, the Board received the final judgment from the appellate court, which **significantly reduced the plaintiff's awarded compensation**[69](index=69&type=chunk) - The Group adjusted its provision for litigation and claims from **RMB 85.0 million** in prior years to **RMB 39.4 million**, with this adjustment made as of June 30, 2025[69](index=69&type=chunk) [Future Outlook](index=32&type=section&id=%E6%9C%AA%E6%9D%A5%E5%B1%95%E6%9C%9B) Supported by national policies, the dairy farming industry is expected to overcome difficulties; the Group will steadfastly implement its "quality improvement, cost control, stable supply chain, and market expansion" strategy, ensure high-end raw milk supply, develop integrated dairy-beef operations, and accelerate breeding, environmental protection, and smart farm construction for sustainable growth - National "No. 1 Document" and Ministry of Agriculture and Rural Affairs policies clearly support the stable development of the livestock industry and promote relief for the dairy and beef cattle industries[70](index=70&type=chunk) - The Group will implement the **"quality improvement, cost control, stable supply chain, and market expansion"** operating strategy, focusing on ensuring raw milk quality, enhancing cost efficiency, and upgrading green production[72](index=72&type=chunk) - As the largest organic raw milk supplier to Mengniu Group, the primary task will be to ensure high-quality supply for the growth of **Mengniu Telunsu Desert Organic business**[72](index=72&type=chunk) - Actively promote integrated dairy-beef operations, establishing a dynamic operating mechanism of **"stabilizing production with dairy, increasing efficiency with beef,"** and strengthening vertical synergy and brand premium capabilities across the industry chain[72](index=72&type=chunk) - Accelerate the construction of national core breeding farms, water resource assurance, environmental facility upgrades, and smart farm management systems[72](index=72&type=chunk) [Corporate Governance](index=33&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) This section outlines the company's commitment to high-level corporate governance, adherence to the Listing Rules' Corporate Governance Code, standards for directors' securities transactions, and the role of the Audit Committee [Corporate Governance Practices](index=33&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A7%84) The company is committed to achieving and maintaining a high level of corporate governance, having adopted, applied, and complied with the provisions of the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules during the reporting period - The company ensures that it and its subsidiaries achieve and maintain a **high level of corporate governance**[73](index=73&type=chunk) - During the reporting period, the company adopted, applied, and complied with the code provisions set out in the **Corporate Governance Code** in Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[73](index=73&type=chunk) [Standard Code for Securities Transactions by Directors](index=34&type=section&id=%E8%91%A3%E4%BA%8B%E8%BF%9B%E8%A1%8C%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%E4%B9%8B%E6%A0%87%E5%87%86%E5%AE%88%E5%88%99) The company has adopted a code of conduct for securities transactions no less stringent than the Model Code in Appendix C3 of the Listing Rules, and all directors confirmed compliance with this code during the reporting period - The company has adopted a code of conduct for securities transactions that is **no less stringent than the Model Code** set out in Appendix C3 of the Listing Rules[74](index=74&type=chunk) - All directors confirmed their compliance with the required standards set out in the Model Code throughout the period[74](index=74&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=34&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E8%B5%8E%E5%9B%9E%E6%88%96%E5%87%BA%E5%94%AE%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) Except as disclosed in this announcement, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the reporting period - Except as disclosed in this announcement, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's **listed securities** during the reporting period[75](index=75&type=chunk) [Audit Committee](index=35&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Audit Committee, comprising two independent non-executive directors and one non-executive director, chaired by Mr. Wang Liyan, is responsible for reviewing accounting principles, risk management, internal controls, and financial reporting matters - The Audit Committee comprises **Mr. Wang Liyan (Chairman)**, **Mr. Wu Liang (Independent Non-executive Director)**, and **Mr. Zhang Ping (Non-executive Director)**[76](index=76&type=chunk) - The Audit Committee reviews the **accounting principles and practices** adopted by the company and discusses **audit, risk management, internal controls and systems, and financial reporting matters**[76](index=76&type=chunk) [Scope of Work of Ernst & Young](index=35&type=section&id=%E5%AE%89%E6%B0%B8%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E7%9A%84%E5%B7%A5%E4%BD%9C%E8%8C%83%E5%9B%B4) The financial information in the Group's interim results announcement has been agreed upon by its auditor, Ernst & Young, but their work does not constitute an assurance service, thus no assurance is expressed on the results announcement - The financial information for the Group's results announcement for the six months ended June 30, 2025, has been **agreed upon by the Group's auditor, Ernst & Young**[77](index=77&type=chunk) - The work performed by Ernst & Young in this regard does not constitute an assurance service, and therefore **no assurance is expressed on the results announcement**[77](index=77&type=chunk) [Appendix](index=36&type=section&id=%E9%99%84%E5%BD%95) This section includes information on interim dividends, publication of interim results and report, acknowledgements, and the composition of the Board of Directors [Interim Dividend](index=36&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF_%E9%99%84%E5%BD%95) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board of Directors does not recommend an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[78](index=78&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=36&type=section&id=%E5%88%8A%E5%8F%91%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E5%85%AC%E5%91%8A%E5%8F%8A%E4%B8%AD%E6%9C%9F%E6%8A%A5%E5%91%8A) This interim results announcement will be published on the HKEX and company websites, and the interim report, containing all information required by the Listing Rules, will be dispatched to shareholders and published later - This interim results announcement will be published on the **HKEX website (www.hkexnews.hk)** and the **Company's website (www.shengmuorganicmilk.com)**[79](index=79&type=chunk) - The Company's interim report for the six months ended June 30, 2025, containing all information required by the Listing Rules, will be **dispatched to shareholders and published on the aforementioned websites at a later date**[79](index=79&type=chunk) [Acknowledgements](index=36&type=section&id=%E8%87%B4%E8%B0%A2) The Board extends its sincere gratitude to all shareholders for their continuous support and expresses heartfelt appreciation to all employees for their diligent efforts and loyal dedication - The Board sincerely thanks all shareholders for their **continuous support** and expresses heartfelt appreciation to all employees for their **diligent efforts and loyal dedication**[80](index=80&type=chunk) [Board of Directors](index=36&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%88%90%E5%91%98) As of the date of this announcement, the Board comprises executive, non-executive, and independent non-executive directors, with Mr. Chen Yiyi serving as the Chairman of the Board - Executive Director: **Mr. Zhang Jiawang**[82](index=82&type=chunk) - Non-executive Directors: **Mr. Chen Yiyi (Chairman)**, **Mr. Zhang Ping**, **Mr. Zhao Jiejun**, **Mr. Sun Qian**, and **Ms. Shao Lijun**[82](index=82&type=chunk) - Independent Non-executive Directors: **Mr. Wang Liyan**, **Mr. Wu Liang**, and **Mr. Sun Yansheng**[82](index=82&type=chunk)

Performance Summary - China People's Insurance Group reported revenue of 324.12 billion yuan, a year-on-year increase of 10.87%, and a net profit of 26.67 billion yuan, up 13.98% [1] - China Life Insurance recorded revenue of 239.49 billion yuan, a 2.2% increase, with a net profit of 40.93 billion yuan, growing by 6.9% [1] - CNOOC's revenue was approximately 207.61 billion yuan, down 8.45%, with net profit around 69.5 billion yuan, a decrease of 13% [2] - Meituan's revenue reached 178.40 billion yuan, up 14.7%, but adjusted net profit fell by 41% to 12.44 billion yuan [3] - CITIC Bank's revenue was 105.43 billion yuan, down 2.96%, while net profit increased by 2.8% to 36.48 billion yuan [3] - Fosun International's revenue decreased by 10.8% to 87.28 billion yuan, with net profit down 8.2% to 0.66 billion yuan [3] - New Hope Energy reported revenue of 55.67 billion yuan, a 2% increase, but net profit decreased by 5.6% to 2.43 billion yuan [4] - China Cinda's revenue was 34.36 billion yuan, down 2%, while net profit increased by 5.8% to 2.28 billion yuan [5] - China Orient Group's revenue decreased by 12% to 19.86 billion yuan, but net profit surged by 116% to 0.20 billion yuan [6] - Shimao Group's revenue fell by 49% to 14.80 billion yuan, with a net loss of 8.93 billion yuan, narrowing by 61% [7] - Chongqing Steel's revenue was approximately 13.08 billion yuan, down 13.26%, with a net loss of 0.13 billion yuan, narrowing by 81% [8] - United Group's revenue increased by 197.3% to 12.08 billion yuan, with a net profit of 1.69 billion yuan, reversing from a loss of 0.21 billion yuan [9] - Chow Sang Sang's revenue decreased by 2.5% to 11.04 billion yuan, while net profit increased by 71.4% to 0.90 billion yuan [10] - Tianhong International's revenue was 11.03 billion yuan, down 1.86%, with net profit rising by 53.33% to 0.42 billion yuan [11] - Meidong Automotive's revenue fell by 4.9% to 10.14 billion yuan, with a net loss of approximately 0.82 billion yuan, expanding by about 29 times [12] - Jian Sha Tsui's revenue was 8.24 billion yuan, down 6.6%, with net profit of 2.33 billion yuan, a decrease of 7.06% [13] - Sino Land's revenue decreased by 6.64% to 8.18 billion yuan, with net profit down 8.7% to 4.02 billion yuan [14] - Xinyi International's revenue was 8.10 billion yuan, down 5.7%, with net profit of 0.14 billion yuan, a decrease of 19.22% [15] - Fuyao Glass reported revenue of approximately 7.74 billion yuan, down 27.7%, with net profit of approximately 0.26 billion yuan, a decrease of 82.6% [16] - Tianjin Port Development's revenue increased by 3% to 6.95 billion yuan, while net profit decreased by 17.3% to 0.35 billion yuan [17] - Guotai Junan International's revenue was approximately 2.83 billion yuan, up 30%, with net profit of approximately 0.55 billion yuan, a growth of 182% [21] - IGG's revenue decreased by 0.5% to 2.72 billion yuan, with net profit down 2.85% to 0.32 billion yuan [22] - China Aircraft Leasing's revenue was 2.40 billion yuan, down 4.86%, while net profit increased by 6.66% to 0.14 billion yuan [22] - China Orient Education's revenue increased by 10.2% to 2.19 billion yuan, with net profit rising by 48.4% to 0.40 billion yuan [23] Corporate News - China Shengmu signed a new procurement framework agreement with Yiyingmei Dairy for milk powder [24] - Rongchang Bio's clinical trial for Taitasip in treating IgA nephropathy reached its primary endpoint in Phase III [24] - China Huaxing's Bagua City project is expected to start construction in October, with completion by the end of 2026 [24] Buyback Activities - Tencent Holdings repurchased 909,000 shares for 550 million HKD at prices between 596-614.5 HKD [24] - HSBC repurchased 1.5472 million shares for approximately 156 million HKD at prices between 100.2-101.5 HKD [24] - Hang Seng Bank repurchased 210,000 shares for approximately 23.49 million HKD at prices between 111.5-112.2 HKD [24] - MGM China repurchased 1 million shares for approximately 16.02 million HKD at prices between 15.92-16.13 HKD [24]

Group 1 - China Shengmu (01432) announced a new procurement framework agreement with Yiyingmei Dairy for infant formula, anticipating increased demand for its products [1] - The agreement is effective from August 28, 2025, to December 31, 2026, allowing for ongoing purchases of infant formula [1] - Yiyingmei Dairy, a subsidiary of Dabeinong Group, focuses on high-quality infant formula production and has received national certifications for its production processes [1] Group 2 - To alleviate the ongoing downward pressure in the raw milk industry, the company is actively expanding raw milk sales channels while stabilizing milk powder sales [2] - The company is advancing its milk powder export trade business in August 2025, with international clients recognizing the quality of Yiyingmei Dairy's products [2] - The new procurement agreement will enable the company to distribute high-quality milk powder to international clients, enhancing customer satisfaction and loyalty [2]

Group 1 - China Shengmu (01432) announced a new procurement framework agreement with Yiyingmei Dairy for infant formula, anticipating increased demand for the products [1] - The agreement is effective from August 28, 2025, to December 31, 2026, allowing the group to purchase infant formula as needed during this period [1] - Yiyingmei Dairy, a subsidiary of Dabeinong Group, focuses on producing high-quality infant formula and has received national certifications for its production processes [1] Group 2 - To alleviate the ongoing downward pressure in the raw milk industry, the company is actively expanding raw milk sales channels while stabilizing milk powder sales [2] - The company is advancing its milk powder export trade business in August 2025, with international clients recognizing the quality of Yiyingmei Dairy's products [2] - The new procurement agreement will enable the group to distribute high-quality milk powder to international clients, enhancing customer satisfaction and loyalty [2]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容而產生或因依賴該等內 容而引致的任何損失承擔任何責任。 CHINA SHENGMU ORGANIC MILK LIMITED 中國聖牧有機奶業有限公司 （於開曼群島註冊成立的有限公司） （股份代號：1432） 持續關連交易 新益嬰美乳業奶粉採購框架協議 新益嬰美乳業奶粉採購框架協議 茲提述本公司日期為二零二四年三月二十八日的公告，內容有關（其中包括）聖牧 高科（為其本身及代表本公司及其附屬公司）（本公司的間接全資附屬公司）與益嬰 美乳業（為其本身及代表其附屬公司）（大北農集團的非全資附屬公司）訂立日期為 二零二四年三月二十八日的現有奶粉採購框架協議，內容有關本集團向益嬰美乳 業採購奶粉，期限自二零二四年三月二十八日起至二零二六年十二月三十一日止。 由於本公司預期對益嬰美乳業奶粉的需求將會增加，聖牧高科（為其本身及代表本 公司及其附屬公司）與益嬰美乳業（為其本身及代表其附屬公司）於二零二五年八月 二十七日訂立新益嬰美乳業奶粉採購框架協議，內容有關本集團於新益嬰 ...

Investment Rating - Industry rating: Outperform the market (maintained rating) [9] Core Insights - The pet industry is experiencing significant growth, with the Asia Pet Expo showcasing over 2,600 exhibitors and 20,000 brands, indicating a thriving market driven by globalization and innovation [2][13] - China's pet food exports have shown continuous growth, with 201,000 tons exported from January to July 2025, reflecting a year-on-year increase of 6.64% [14] - The pig farming sector is facing challenges, with the average pig price at 13.82 yuan/kg, a decrease of 3.63% from the previous week, and the average weight of pigs reaching a historical high [15][16] - The dairy sector is poised for a recovery, with the original milk price expected to rebound as production capacity decreases after a prolonged period of losses [17][18] - The poultry sector is focusing on breeding gaps, with a significant decline in the import of breeding chickens due to avian influenza concerns, which may impact future supply [19][20] - The planting sector emphasizes food security and the importance of biotechnology, with a focus on high-yield and resilient crop varieties [25] - The feed sector is recommended for investment, particularly in companies like Haida Group, which is expected to benefit from market recovery and increased market share [26] Summary by Sections Pet Sector - The Asia Pet Expo has reached a record scale of 310,000 square meters, highlighting the industry's vitality and innovation potential [2][13] - Pet food exports from China have increased, with a total of 201,000 tons exported in the first seven months of 2025, showing a year-on-year growth of 6.64% [14] - Recommended companies include pet food brands like Guibao Pet, Zhongchong Co., and Petty Co. [14] Pig Sector - The average pig price is currently at 13.82 yuan/kg, with a year-to-date low in profitability for pig farming [15][16] - The average weight of pigs is at a historical high, indicating supply pressures [15] - Recommended companies include leading pig farming firms such as Wens Foodstuffs Group and Muyuan Foods [16] Dairy Sector - Yuran Dairy reported stable performance with a revenue of 10.3 billion yuan, showing a year-on-year growth of 2.3% [17] - The dairy industry is expected to see a recovery as production capacity decreases [18] - Recommended companies include Yuran Dairy and China Shengmu Organic Milk [18] Poultry Sector - The poultry sector is facing challenges with breeding imports, particularly for white chickens, due to avian influenza [19][20] - Recommended companies include Shennong Development and Yisheng Livestock [20] Planting Sector - The focus is on food security and biotechnology, with an emphasis on high-yield and resilient crop varieties [25] - Recommended companies include Longping High-Tech and Dabeinong Technology Group [25] Feed Sector - Haida Group is highlighted as a key investment opportunity due to its increasing market share and performance [26] - The animal health sector is also recommended, particularly companies like Kexin Biological [27]

Group 1 - The core viewpoint is that raw milk prices continue to decline, and there is potential for supply-demand balance in H2 2025 due to accelerated herd reduction and improved demand during peak seasons [2][3] - The report suggests that the dairy industry is likely to see a price increase in 2026, driven by reduced dairy cow replenishment and a recovery in demand, supported by new policies aimed at boosting dairy consumption [2][3] - The beef market is expected to enter an upward cycle in 2025, as low beef prices have started to reverse, benefiting from reduced supply and diminished import pressures [3][4] Group 2 - The report highlights strong profit elasticity for livestock companies due to the resonance of meat and milk cycles, with potential improvements in gross margins driven by rising milk prices and cost reductions [4] - The valuation of breeding cows and income from culling are expected to increase with rising beef prices, which could enhance total revenue for leading livestock companies [4] - Companies like YouRan Dairy and Modern Farming are recommended for investment, while China Shengmu and Aoyuan Group are noted as companies to watch due to their involvement in the livestock sector [1][4]

Core Viewpoint - China Shengmu (01432) experienced a decline of 6.82% in stock price, trading at 0.41 CNY per share with a transaction volume of 11.71 million CNY as of 13:01 on August 19 [1]. Group 1: Company Overview - China Shengmu Organic Milk Industry Co., Ltd. is the largest organic dairy company in China, focusing on producing the highest quality organic raw milk globally [1]. - The company has successfully transformed 200 square kilometers of desert into an oasis and established 34 farms, with a daily fresh milk production exceeding 1,700 tons, of which over 1,100 tons is organic fresh milk [1]. - The company was listed on the main board of the Hong Kong Stock Exchange in 2014 [1]. Group 2: Financial Performance - As of the 2024 annual report, China Shengmu reported total operating revenue of 3.126 billion CNY and a net profit of -65.495 million CNY [2]. - The company is set to disclose its interim report for the fiscal year 2025 on August 27 [3].

Core Viewpoint - The dairy sector continues to show strong performance, driven by new government policies aimed at boosting infant formula consumption and improving the overall dairy market conditions by 2025 [1] Group 1: Market Performance - As of the report, China Shengmu (01432) increased by 9.09% to HKD 0.48, YouRan Dairy (09858) rose by 3.53% to HKD 4.4, Mengniu Dairy (02319) gained 1.46% to HKD 16.67, and Ausnutria (01717) climbed 1.19% to HKD 2.55 [1] Group 2: Policy Impact - On July 28, the "Implementation Plan for the Childcare Subsidy System" was released, which will provide an annual subsidy of HKD 3,600 per child for families with children under three years old starting January 1, 2025 [1] - This policy is expected to benefit over 20 million families with infants, likely leading to increased consumption of dairy products, particularly infant formula [1] Group 3: Industry Outlook - Guosen Securities is optimistic about a reversal in the beef cycle by 2025, predicting that meat prices will continue to rise until 2027 [1] - The domestic raw milk supply and demand situation is expected to improve in the second half of 2025, with prices likely to recover [1] - For dairy farming companies, the improvement in raw milk prices is anticipated to enhance main business profitability, while the upward trend in the beef cycle may significantly increase profits from culling dairy cows and selling calves [1] - Companies such as YouRan Dairy, Modern Dairy, and China Shengmu are recommended due to their high performance recovery potential in the context of dairy and beef market synergy [1]