New Dairy's net profit increased by over 30% year-on-year last year. Why does its strong performance still fail to alleviate market concerns? | Earnings Report Analysis

Why Did AI · New Dairy’s H-Share Listing Encounter Market Coldness?

Cailian Press, March 22 (Reporter Zhu Wanping): By reducing management costs and increasing investment returns, local dairy company New Dairy (002946.SZ) achieved a net profit growth of over 30% last year, despite revenue increasing by approximately 5.33%, exceeding market expectations. The company plans to distribute a cash dividend of 3.8 yuan per 10 shares to all shareholders in 2025.

Tonight, New Dairy announced that last year, the company achieved operating revenue of 11.233 billion yuan, up 5.33% year-on-year; net profit attributable to shareholders of the listed company was 731 million yuan, up 35.98%; net profit after non-recurring gains and losses was 774 million yuan, up 33.76%; and operating cash flow was 1.51 billion yuan, up 1.26%.

Quarterly, in Q4 last year, the company’s performance was particularly impressive, with revenue achieving double-digit growth and net profit attributable to the parent increasing by 69% year-on-year, significantly outperforming the industry average. Additionally, the company’s net profit margin on sales increased to 6.72%, up 1.57 percentage points year-on-year. As of the end of last year, the company’s asset-liability ratio was 56.51%, down 8.10 percentage points from the beginning of the year.

By product, last year, sales of core products such as low-temperature fresh milk and low-temperature yogurt both achieved double-digit growth, with specialty yogurt sales increasing by over 30% year-on-year. The higher-margin low-temperature category’s proportion increased, becoming a key factor in profit improvement. By channel, direct sales accounted for 63.77% of revenue, up 15.07% year-on-year; however, revenue from distribution and other channels declined by 7.17% and 14.01%, respectively.

However, strong performance did not fully dispel market concerns. After New Dairy announced its H-share listing plan on March 11, its stock price plummeted 9.21% on the same day, and many core worries in the market continue to ferment. Although the company’s asset-liability ratio has decreased, at 56.51%, it remains relatively high in the industry, and doubts about its Hong Kong listing “to raise funds” have not been fully resolved.

New Dairy Factory Image source: Cailian Press Reporter Zhu Wanping

In fact, the valuation of the Hong Kong dairy sector is currently low, and liquidity is weak. Against this backdrop, there is considerable uncertainty regarding New Dairy’s valuation pricing and actual fundraising results for its Hong Kong listing.

Additionally, amid recent widespread pressure on consumer stock prices, New Dairy has significantly increased its cash dividends to support its stock price. The company states that the total dividends for 2024 and mid-term will increase by 90% year-on-year. For 2025, the company plans to distribute 3.8 yuan per 10 shares, a roughly 52% increase.

Regarding its operational plan for 2026, New Dairy did not provide specific targets in its annual report, only stating that it will actively explore a second growth curve, deepen strategic implementation, and strive for sustained revenue growth and further improvement in net profit margin.

Cailian Press has learned that New Dairy’s revenue target for 2026 is not only to continue growing but also to outperform the industry average, with a net profit margin goal of 8%–10%. Under multiple pressures such as rising raw milk prices and intensified industry competition, the realization of this performance target remains to be verified.

(Reporter Zhu Wanping, Cailian Press)