Core Viewpoint - Nanchao Food (605339) reported its worst half-year results since its listing, with a revenue decline of 0.69% and a net profit drop of 72% in the first half of 2025 [1][2] Financial Performance - In the first half of 2025, Nanchao Food achieved approximately 1.555 billion yuan in revenue, down 0.69% year-on-year, and a net profit attributable to shareholders of approximately 35.96 million yuan, down 72% year-on-year [2] - The net profit excluding non-recurring gains and losses also saw a decline of 72.21%, amounting to approximately 33.65 million yuan [2] - The significant drop in net profit is attributed to the product price increase lagging behind the rise in raw material costs, leading to pressure on overall profit levels [2] Market Strategy and Operations - Nanchao Food has been focusing on expanding into lower-tier markets and refining its distributor channels, increasing the number of distributors to 471, a year-on-year increase of 42 [1][6] - The company continues to pursue a strategy of comprehensive layout in baking, catering, and retail markets, despite challenges from macroeconomic conditions and raw material price fluctuations [3] Raw Material Costs - The main raw materials include palm oil, soybean oil, coconut oil, and natural cream, with palm oil prices remaining high compared to the same period in 2024, despite a slight decrease in 2025 [2] - The company has implemented measures such as product price adjustments and structural changes to mitigate the impact of rising raw material costs [2] Subsidiary Performance - Among the major subsidiaries and associated companies, 5 reported profits while 6 incurred losses, indicating a mixed performance across the company's portfolio [5] Expansion Plans - Nanchao Food is actively expanding its overseas market presence, with its Thailand subsidiary achieving localized production of pre-made baked goods [7] - The company plans to continue expanding its overseas production and research layout, targeting Southeast Asia as a starting point for global expansion [7] - However, some expansion projects have been delayed, with the completion date for certain projects pushed to June 2026 from the original September 2025 [7][8] Investment in Technology - The total planned investment for expansion and technological improvement projects is approximately 383 million yuan, with 303 million yuan already invested as of June 30, 2025, representing a progress rate of 79.29% [8] - The necessity for these projects is to optimize product structure and adapt to industry development trends [8]

Core Viewpoint - Nanchao Food reported its worst half-year results since its listing, with a revenue decline of 0.69% and a net profit drop of 72% in the first half of 2025 [4][8]. Financial Performance - In the first half of 2025, Nanchao Food achieved approximately 1.555 billion yuan in revenue, down 0.69% year-on-year, and a net profit attributable to shareholders of approximately 35.96 million yuan, down 72% year-on-year [8]. - The net profit excluding non-recurring gains and losses also saw a decline of 72.21%, amounting to approximately 33.65 million yuan [8]. Cost and Pricing Challenges - The significant drop in net profit is attributed to the increase in raw material costs outpacing the price increase of products, leading to pressure on overall profit levels [9]. - Key raw materials include palm oil, soybean oil, coconut oil, and natural cream, with palm oil prices remaining high compared to the same period in 2024, despite a slight decrease in 2025 [10]. Market Strategy and Expansion - The company aims to continue expanding into lower-tier markets and refining its distributor channels, increasing the number of distributors to 471, a year-on-year increase of 42 [7][16]. - Nanchao Food is focusing on a comprehensive strategy to develop the baking, catering, and retail markets, while also creating new products and expanding customer channels to stabilize revenue [12]. Subsidiary Performance - Among the major subsidiaries, 5 were profitable while 6 reported losses, indicating challenges within the company's broader operational structure [14]. International Expansion - The company is actively pursuing overseas market opportunities, with its subsidiary in Thailand achieving localized production of pre-made baked goods [18]. - Nanchao Food plans to expand its overseas production and research layout, targeting Southeast Asia as a starting point for global expansion [19]. Project Delays - Some expansion and technological improvement projects are experiencing delays, with the expected completion date pushed to June 2026 from September 2025 [19][21]. - The necessity for these projects is to optimize product structure and adapt to industry trends, ensuring that new production capacities align with market demands [22].