New Hope Dairy Hong Kong IPO Concerns: Behind a 31.3% Surge in Net Profit Over Three Years, a Current Ratio of Only 0.5 Indicates Debt Repayment Pressure

Principal Business and Business Model: Low-Temperature Dairy Products at the Core, with a Multi-Brand Omnichannel Layout

China New Hope Dairy (CP) is positioned as a technology-driven nutrition food company, with the “Fresh Cube Strategy” as its core. It focuses on the R&D, production, and sales of dairy products. The company has more than 20 major dairy brands, forming a multi-brand system that combines national brands with regional specialty brands. Its product lineup covers low-temperature fresh milk, low-temperature yogurt, shelf-stable dairy products, and milk powder. Among them, the 24-hour™ Fresh Milk series, Asahi VIP® organic products, and Huilurun® functional probiotic yogurt form the core product portfolio.

In terms of its business model, the company builds an integrated industrial chain “from the farm to the dining table,” with 12 self-owned farms and 17 dairy processing plants, enabling a distributed capacity layout. Sales channels are diversified, including retailers (38.2%), institutional customers (16.3%), direct-to-consumer (9.3%), and distributors (30.4%), forming a three-dimensional network that blends online and offline.

Operating Revenue and Changes: CAGR of 1.1%, with Growth Driven by Low-Temperature Products

From 2023 to 2025, the company’s operating revenue was 10.99B yuan, 10.67B yuan, and 11.23B yuan, respectively, with a CAGR of 1.1%. Of this, low-temperature liquid dairy product operating revenue increased from 4.93B yuan in 2023 to 6.05B yuan in 2025, with a CAGR of 10.8%. Its share of total revenue rose from 44.8% to 53.8%, making it the main growth driver.

Net Profit and Changes: Net Profit Growth of 31.3% over Three Years, with Net Profit Margin Rising to 6.7%

Net profit performance is significantly stronger than revenue growth. From 2023 to 2025, it was 438M yuan, 549M yuan, and 754M yuan, respectively, achieving a CAGR of 31.3%. Net profit margin increased steadily from 4.0% in 2023 to 6.7% in 2025, mainly driven by a higher mix of high-gross-margin low-temperature products and cost control.

Gross Margin and Changes: Overall Gross Margin Up 2.3 Percentage Points, with Low-Temperature Products Contributing Core Gross Profit

The company’s overall gross margin rose from 26.9% in 2023 to 29.2% in 2025, mainly due to an increased share of revenue from high-gross-margin low-temperature products. Gross margin for low-temperature liquid dairy products remained around 36%, significantly higher than the 23.4% gross margin for shelf-stable products.

Net Profit Margin and Changes: Net Profit Margin Up 2.7 Percentage Points over Three Years, with Expense Control Showing Results

Net profit margin improved in tandem with the increase in gross margin and the decline in expense ratios. The selling expense ratio rose slightly from 15.3% in 2023 to 16.1% in 2025. The administrative expense ratio fell from 4.3% to 3.2%, and R&D expense ratio remained steady at 0.4%-0.5%. The finance expense ratio decreased from 1.5% to 0.7%, reflecting a decline in the company’s financing costs.

Operating Revenue Composition and Changes: Low-Temperature Products’ Share Breaks 50%, with High Regional Concentration

By product category, the revenue share of low-temperature liquid dairy products increased from 44.8% in 2023 to 53.8% in 2025, while the share of shelf-stable products fell from 44.0% to 39.6%. By region, the Southwest region accounted for 31.4% of revenue, and the East China region accounted for 34.1%. The two major regions together contributed 65.5% of revenue, indicating relatively high regional concentration.

Related-Party Transactions: Amount Paid for Logistics Services Purchased from the Controlling Shareholder Reaches 635M yuan

In 2025, the company purchased logistics services from Liu Yonghao and related parties controlled by Liu Chang for 635M yuan, accounting for 9.2% of total purchase amounts. It purchased feed from the New Hope Liuhe Group for 164M yuan, accounting for 2.6% of the total purchase amounts. The Stock Exchange has approved the company’s exemption from the requirement for independent shareholder approval for related-party transactions, but it is necessary to ensure that the transactions are conducted on normal commercial terms.

Financial Challenges: Current Ratio of 0.5 Puts Pressure on Debt Repayment; Operating Cash Flow Remains Net Outflows

As of the end of 2025, the company had current assets of 2.06B yuan and current liabilities of 4.42B yuan. With a current ratio of only 0.5, liquidity pressure is significant. In 2023-2025, the net cash generated from operating activities was 1.56B yuan, 1.49B yuan, and 1.51B yuan, respectively. However, net cash outflows from financing activities in the same period reached 946M yuan, 971M yuan, and 1.09B yuan, respectively, mainly used to repay debts and pay dividends.

Peer Comparison: Low-Temperature Market Growth Leads, but Scale Is Still Not as Large as Industry Leaders

According to a report by Frost & Sullivan, based on retail sales value in 2025, the company ranks fifth in China’s liquid dairy products market (4.6%) and fifth in the low-temperature liquid dairy products market (9.7%). From 2024 to 2025, the retail sales value growth rate of low-temperature liquid dairy products ranked first among the top five companies in the industry, but its scale is still far below leading companies such as Yili (30.3%), Mengniu (27.2%), and others.

Major Customers and Customer Concentration: The Top Five Customers Account for 16.4% of Revenue, with Dependence on Large Retailers

In 2025, revenue from the top five customers was 1.84B yuan, accounting for 16.4% of total revenue, and the largest customer contributed 5.8% of revenue. Major customers include large chain supermarkets, e-commerce platforms, and regional retailers. Customer concentration is relatively controllable, but there is a risk of dependence on core customers.

Major Suppliers and Supplier Concentration: The Top Five Suppliers Account for 24.9% of Purchases, with Dependence on Related Parties for Raw Milk

In 2025, purchases from the five largest suppliers totaled 2.31B yuan, accounting for 24.9% of total purchase amounts, and the largest supplier accounted for 9.2%. Specifically, logistics services and feed purchases from entities controlled by the controlling shareholder totaled 854M yuan, accounting for 9.2% of total purchase amounts, creating risks related to high supplier concentration and related-party dependence.

Controllers and Major Shareholder Status: The Liu Yonghao Family Controls 76.48% of Equity; High Share Concentration

As of the latest date of information that is actually practicable, Liu Yonghao and his daughter Liu Chang, through an agreement on concerted action, collectively control 76.48% of the voting rights of the company. Among them, Liu Chang indirectly holds 65.07% through UDL, while Liu Yonghao indirectly holds 11.42% through New Hope Investment. High equity concentration may lead to the risk that minority shareholders’ interests are overlooked.

Background and Compensation of Core Management: Deep Industry Experience; Total Directors’ Compensation in 2025 Was 3.4 million yuan

Chairman Dr. Xijang has nearly 20 years of experience in dairy industry management. CEO Dr. Chuan Zhu has 30 years of industry experience. The total directors’ compensation in 2025 was 3.4 million yuan, of which Xijang’s compensation was 1.2 million yuan and Chuan Zhu’s compensation was 1.0 million yuan. The compensation level is broadly consistent with the industry average. The company has not yet disclosed details of any executive incentive plans.

Risk Factors: Food Safety, Market Competition, and Related-Party Transactions Are the Main Hidden Risks

The prospectus lists multiple risks, including: food safety incidents could trigger brand reputation losses; intense competition from companies such as Yili and Mengniu; related-party transactions could harm independence; insufficient liquidity could lead to debt repayment risks; and third-party payment arrangements could involve money-laundering risks. Among them, food safety and market competition risks have the greatest impact on operating performance.

With performance growth driven by low-temperature products, New Hope Dairy has achieved rapid improvement in its results. However, risks such as liquidity pressure, dependence on related-party transactions, and intensifying industry competition must be kept in mind. Investors should focus on its ability to expand high-gross-margin products and its cash flow improvement.

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Editor: Xiao Lang Express News