Core Viewpoint - The dairy industry is facing significant challenges due to an oversupply of fresh milk, leading to financial losses for companies like Tianrun Dairy, which reported a net loss of 21.86 million yuan in the first half of 2025 [2][3]. Financial Performance - Tianrun Dairy's revenue for the first half of 2025 was 1.395 billion yuan, a decrease of 3.3% year-on-year, while the net loss narrowed from 27.91 million yuan in the same period of 2024 [3]. - The company's non-recurring losses were primarily due to the disposal of cattle, resulting in a loss of 165 million yuan from non-current asset disposals [3]. - As of mid-2025, Tianrun Dairy had a cattle inventory of 54,400 heads, down from 64,800 heads at the end of 2024 [3][4]. Industry Challenges - The fresh milk market has been in a state of oversupply since 2023, causing prices to decline and raising breeding costs, which has put pressure on dairy companies, particularly those with large-scale farming operations like Tianrun Dairy [4]. - The company initiated a cattle culling plan in 2024 to control costs, reducing its cattle inventory from 64,800 heads at the end of 2024 to 54,400 heads by mid-2025 [4]. Market Dynamics - Tianrun Dairy's revenue is split between domestic (Xinjiang) and external markets, with the latter experiencing a significant decline. In the first half of 2025, revenue from the domestic market was 748 million yuan (up 3%), while external market revenue was 607 million yuan (down 12.9%) [5][6]. - The external market had previously been a key driver of revenue growth, but it has faced challenges due to a price war and increased logistics costs associated with transporting products from Xinjiang to inland markets [6]. Strategic Adjustments - To address the challenges in the external market, Tianrun Dairy is focusing on enhancing production capacity at its factory in Shandong and has established a new e-commerce subsidiary to improve online sales [6][7]. - The company aims to leverage its full supply chain to mitigate losses from the upstream breeding segment by optimizing operations in the production and sales segments [7].