Core Viewpoint - Guizhou Southern Dairy Co., Ltd. is responding to the first round of inquiry from the Beijing Stock Exchange regarding its IPO application, addressing key issues such as milk supply chain, regional market dependence, subsidiary losses, and the rationale for fundraising [1][3]. Company Overview - Guizhou Southern Dairy is a subsidiary of Guizhou Agricultural Investment Development Group, focusing on the research, production, and sales of dairy products and livestock breeding, with brands including "Shanhua," "Huadu Pasture," and "Guicao" [3]. - The company has a significant reliance on the Guizhou market, with over 90% of its main business revenue generated from the province [3]. Market Expansion - Despite efforts to expand beyond Guizhou, the company still sees over 90% of its revenue from the province, although it has made inroads into markets in Hunan, Sichuan, Chongqing, Guangxi, Yunnan, Guangdong, and Hainan [3][4]. - The company reported a market share of approximately 67.84% in Guizhou in 2023, up from 59.37% in 2022, indicating growth potential in the local market [4]. Supply Chain and Sourcing - The company sources fresh milk from its own farms, subsidiaries, third-party large farms, and cooperatives, with over 51.1% of its fresh milk supply coming from external sources in 2024, a significant increase from 39.24% in 2023 [5][6]. - The average price of fresh milk has decreased from 4.16 yuan/kg in 2022 to 3.31 yuan/kg in 2024, a drop of 20.43%, prompting the company to increase its reliance on external milk sourcing [6][7]. Financial Performance - The company's revenue grew from 1.575 billion yuan in 2022 to 1.805 billion yuan in 2023, with a slight increase to 1.817 billion yuan in 2024, indicating a slowdown in growth [7]. - Net profit rose from 173 million yuan in 2022 to 200 million yuan in 2023, with a marginal increase to 209 million yuan in 2024, reflecting limited growth [7]. Subsidiary Losses - The company acknowledged that the collective losses of its three subsidiaries in 2024 were reasonable due to declining fresh milk prices and increased costs associated with new farm constructions [8]. - The subsidiaries are showing signs of recovery in 2025, with improved operational conditions and reduced costs [8][9]. Fundraising and Investment Plans - The company initially planned to raise 980 million yuan but has since reduced the total to 750 million yuan, eliminating the supplementary working capital project and adjusting the marketing network investment [10][11]. - The revised fundraising will support the establishment of a milk source production base and enhance the marketing network to improve brand influence and market share [11].

Core Viewpoint - Guizhou Southern Dairy Co., Ltd. is planning to publicly issue stocks and list on the Beijing Stock Exchange, having passed the guidance acceptance by the China Securities Regulatory Commission [1] Company Overview - Southern Dairy primarily engages in the manufacturing and sales of dairy products and milk-containing beverages, with major products including various low-temperature dairy products, room-temperature dairy products, milk-containing beverages, and fresh milk [4] - The company owns brands such as "Shan Hua," "Hua Du Pasture," and "Gui Cao" [4] Industry Context - Domestic milk production in China has been on the rise, reaching a peak in 2023, but is expected to see a slight decline in 2024 due to an imbalance in supply and demand in the fresh milk market [4] - The industry is projected to achieve supply-demand balance by 2025 [4] Financial Performance - In the reporting period from 2022 to 2024, the company reported revenues of 1.575 billion, 1.805 billion, and 1.817 billion yuan, with net profits of 173 million, 200 million, and 209 million yuan respectively [5] - The company's revenue growth has significantly slowed down, with a year-on-year revenue increase of only 0.65% in the latest reporting period [5] - The gross profit margin improved from 24.44% to 28.15% year-on-year [5] Challenges and Risks - The company faced a significant decrease in investment income, reporting a loss of 7.5949 million yuan, down 83.84% year-on-year, primarily due to losses from associated companies [6] - The company also experienced a substantial increase in losses from asset disposals, amounting to 45.2614 million yuan, a 363.33% increase year-on-year [6] - Southern Dairy's revenue is highly concentrated in Guizhou province, with over 90% of its main business income coming from this region, which poses risks if market conditions change [6] Management Changes - The company has seen two chairmen resign within a year, with the latest chairman resigning due to organizational changes [6] Product Quality Concerns - Southern Dairy has faced issues with product quality, including instances of non-compliance in safety inspections, which could damage its brand image [7][9] - Complaints from consumers regarding product quality have been reported, indicating potential issues in quality control [11]