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].

Company Overview - Nanchao Food Group has been a leader in the baking oil market for nearly 30 years, offering over 200 product varieties to meet diverse customer needs across various sectors [2] - The company's baking oil revenue reached 1.542 billion yuan in 2024, accounting for 48.8% of total revenue, making it highly sensitive to raw material price fluctuations [2] - Nanchao Food has expanded its business into other areas such as cream, dairy products, and pre-prepared baked goods, with the share of pre-prepared baked goods increasing from 2.13% in 2015 to 13.53% in Q1 2025 [2] Financial Performance - For the first half of the year, Nanchao Food expects a net profit attributable to shareholders of between 32.36 million yuan and 38.84 million yuan, with a non-recurring net profit of between 30.29 million yuan and 36.35 million yuan [1] - The company faces pressure on overall profit levels due to the lagging price increase of its products compared to the rising costs of raw materials, including palm oil, soybean oil, coconut oil, and natural cream [1] Industry Insights - The retail market size of China's baking food industry is projected to reach 285.3 billion yuan in 2024, with an expected growth to 302.6 billion yuan by 2029 [3] - The continuous growth of the baking market reflects the industry's vitality and broad prospects, driven by consumers' increasing pursuit of quality of life and emotional value associated with baked products [3] - There remains room for brand enhancement within the baking industry, indicating that leading companies can further expand their market share, potentially increasing industry concentration [3]

Group 1 - The core viewpoint of the articles highlights that Nanchao Food (605339.SH) reported a 3.31% year-on-year decline in consolidated revenue to 255 million yuan in May, continuing a trend of performance volatility [2][3] - The decline in revenue is attributed to rising raw material costs and challenges from market transformation, particularly the volatility in commodity prices like palm oil, which heavily impacts Nanchao's main products [2] - Despite attempts to pass on cost increases to downstream customers, competitive market conditions have hindered full absorption of price hikes, leading to sustained pressure on gross margins [2][3] Group 2 - The shift in consumer demand towards healthier options, such as low-sugar and low-fat baked goods, has negatively impacted traditional products like margarine and shortening, contributing to slower market growth [2] - Nanchao Food has begun to diversify into emerging businesses like frozen dough and cream, but these segments currently represent a small revenue share and are unlikely to offset the decline in baking oil revenue in the short term [2] - The company's distribution model faces challenges, with weaker risk resilience among small and medium-sized distributors and slow recovery in offline consumption in some regions, leading to stagnant distributor income growth [3] Group 3 - Nanchao Food is attempting to adjust its business structure by expanding frozen dough capacity and strengthening partnerships with large supermarkets to align with efficiency trends in the baking industry [3] - The competitive landscape is intensifying, with international giants like Cargill and AAK accelerating their market presence, making cost control and product innovation critical for Nanchao's future market position [3] - While short-term performance remains uncertain, Nanchao's technological accumulation and channel advantages in the baking ingredient sector provide a competitive edge for long-term prospects [3]