In the first half of 2026, Bright Dairy released a semi-annual report with a discrepancy between its financials and actual performance.
The financial report shows that during the reporting period, Bright Dairy & Food Co., Ltd. achieved operating revenue of 11.873 billion yuan, down 4.81% year-over-year; net profit attributable to shareholders of the listed company was 251 million yuan, up 15.34% year-over-year.
Notably, its net profit attributable to the parent company in the first half included a one-time disposal gain from the sale of New Zealand's North Island assets under Newlite, a subsidiary of its overseas company.
The financial report shows that after deducting non-recurring gains and losses, China Mengniu Dairy's net profit attributable to its parent company was 218 million yuan, down 13.39% year-over-year.
Just 35 days before the release of this semi-annual report, Bright Dairy's new chairman, Lu Junfei, was formally elected and took office. Amid intensifying industry competition, the new management team still faces three core challenges: pressure on main business profitability, inventory depreciation pressure, and the lingering risks of overseas assets.
Asset disposal is not equivalent to risk clearance
As the core overseas layout entity of Bright Dairy, New Latitude has been the main drag on the listed company's semi-annual performance over the past three years, with its overseas business long stuck in a "loss-making state".
Financial reports show that from 2023 to 2025, Synlait recorded full-year net losses of 296 million yuan, 450 million yuan, and 407 million yuan, respectively. These substantial losses flowed directly through to the listed parent company. As a result, Bright Dairy posted a net loss attributable to shareholders of 149 million yuan for full-year 2025, marking its first annual loss since 2008.
In the face of continued losses from its overseas assets, Bright Dairy announced in September 2025 that it plans to sell New Zealand's North Island assets of Newmalt. According to the semi-annual report, in the first half of 2026, Newmalt completed the disposal of its North Island assets in New Zealand, optimizing its capital structure. During the same period, Newmalt achieved operating revenue of 4.075 billion yuan, with a net loss of 0.64 billion yuan, still in a state of loss.
"Net profit attributable to the parent company grew 15.34%, mainly due to the gains from the disposal of Beihai Island assets and a 44.68% decrease in financial expenses." Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, believes this indicates that Guangming Dairy's domestic main business is still experiencing a decline in its true profitability. Additionally, the sale of the Beihai Island factory brought in 1.21 billion yuan, and after the transfer is completed, Newmarch is expected to see its annual net profit increase by only 10-15 million New Zealand dollars (approximately 39.6-59.4 million yuan), which has limited impact on the overall profit recovery.
Xinleite's biggest problem now stems from the factories still retained in Nandao, according to Bai Wenxi. The factories mainly produce industrial milk powder and bulk raw materials, which do not match the demands of the domestic consumer market, resulting in consistently poor sales.
In June 2026, Bright Dairy will also provide NZ$130 million (approximately RMB 520 million) in loans to Newmalt through its subsidiary, Bright Dairy International, and assume joint liability guarantees.
In Bai Wenxi's view, this means that Xinxing is currently unable to achieve self-sufficiency, and the funds raised from selling the Beidao factory are still insufficient to fully cover Xinxing's funding gap. At the same time, fluctuations in raw milk prices, changes in overseas operating costs, and exchange rate fluctuations will all have an impact, making it difficult to determine whether Xinxing can reduce its losses in 2026.
Made provisions for inventory depreciation of 107 million yuan
Apart from the short-term loss pressure brought by New Hope Dairy, Bright Dairy's deeper pressure lies domestically. According to the financial reports compiled by Phoenix WEEKLY Finance, its revenue has declined for four consecutive years.
In terms of product structure, Bright Dairy's total revenue in the first half of 2026 was mainly composed of four major segments: liquid milk, other dairy products, pastoral products, and other businesses.
Among them, liquid milk revenue was 5.913 billion yuan, down 10.48% year-over-year, making it the largest source of revenue, with products including fresh milk, yogurt, room temperature milk, and lactic acid bacteria drinks. In this period, revenue from the Shanghai headquarters market fell 13.35% year-over-year.
Revenue from other dairy products was 4.386 billion yuan, down 1.45% year-on-year, with the segment covering infant formula, cheese, butter, ice cream, and the processed products business of overseas subsidiary Newlak.
Revenue from animal husbandry products reached 1.014 billion yuan, up 95.84% year-on-year. The semi-annual report notes that this growth is mainly due to an increase in revenue from New Light's external sales of raw milk materials, rather than an improvement in the company's domestic self-owned pasture business.
Revenue from other businesses was 451 million yuan, down 46.02% year-over-year, mainly due to logistics, trading and other ancillary businesses, with the decline stemming from a decrease in third-party product sales revenue on the Suixin platform.
The company's new low-temperature products have only gained traction in limited markets in East China, lacking a blockbuster product that can open up the national market, according to Bai Wenxi's analysis. Meanwhile, its self-built pasture and cold chain model, which is capital-intensive, has resulted in Guangming's comprehensive operating cost per ton of fresh milk being higher than that of other national dairy companies. The "city direct sales" model has an advantage in first- and second-tier cities in East China, but in lower-tier markets, it heavily relies on distributors' networks, which has become a weakness for Guangming.
During the reporting period, Bright Dairy & Food Co., Ltd. made provisions for inventory depreciation of 107 million yuan. In accordance with the accounting principle of valuing inventory at the lower of cost and net realizable value, this impairment directly eroded the company's total profit for the period.
Notably, the semi-annual report's notes did not disclose the specific inventory categories corresponding to the impairment, nor did it distinguish between the provision scales of domestic business and overseas subsidiaries.
In the view of Chen Jingjing, founder of Jingjie Brand Consulting, the main pressure is more likely to come from New Zealand's Newmalt rather than domestic dairy product sales. On the one hand, the provision time coincides highly with Newmalt's business adjustment; on the other hand, Newmalt had previously experienced inventory write-offs due to production issues. Although domestic sales are under pressure, they currently appear to be a proactive inventory clearance in the context of declining revenue, rather than a concentrated exposure of inventory risks.
The significant increase in new provisions in Q2 compared to Q1 indicates that the pressure of impairment is still being exposed. According to Chen Jingjing's analysis, this provision has a clear meaning of risk clearance, but it does not mean that inventory risks have been released all at once. "If domestic liquid milk sales continue to weaken and affect inventory turnover, it may lead to new impairment pressure."
A new management team has taken the stage,
The third-quarter report focuses on three key indicators
Ahead of its semi-annual report disclosure, Bright Dairy has completed a change of its core management team. On July 2, the company announced that Chairman Huang Liming had resigned from all positions due to a work reassignment. On July 27, an extraordinary shareholders' meeting elected Lu Junfei as a director, and the board subsequently elected him chairman. General Manager Ben Min remains in her post, and the new management team is now fully in place.
Public information shows that Lu Junfei is an executive who has grown up within the Bright Food system, born in 1978, with a master's degree in Business Administration and a senior economist. His career experience covers the entire chain of production manufacturing, procurement control, regional sales, and national marketing, having previously held positions such as factory director of Bright Dairy & Food's Yong'an factory, procurement director, general manager of the North China region, and deputy general manager and marketing director. He was later appointed as the chairman of Shanghai Sugar, Tobacco and Wine Group, and prior to taking office, he served as the vice president of Bright Food Group.
Before his formal election as chairman, in early July, Lu Junfei appeared at the 17th China Dairy Industry Conference as the Party Secretary of Bright Dairy, and proposed that "the foundation of high-quality development in the dairy industry lies in quality, breakthroughs in innovation, and winning with digital intelligence," regarding quality, innovation, and digitalization as the core drivers of enterprise development.
The new management team's specific business strategy, implementation measures, and actual operating results still need to be verified through the 2026 third-quarter report, institutional research, and subsequent shareholder meetings.
For the new team's reform effectiveness, Chen Jingjing suggested focusing on three key indicators in the third-quarter report: first, whether the decline in liquid milk business and the Shanghai local market can be stopped, which will determine if the core business has hit bottom; second, on the premise of revenue stabilization, whether the non-IFRS net profit margin has improved, distinguishing whether profit improvement comes from cost reduction and efficiency increase or business recovery itself; third, whether Newlay's losses can be further narrowed, assessing whether the historical burden overseas is close to being cleared.
Currently, none of the above three conditions for a bottom have been met. In the view of Bo Wenxi, the current improvement is equivalent to selling off a loss-making factory, but still being burdened with loss-making overseas subsidiaries; domestically, the national market continues to shrink, and even the Shanghai stronghold is being impacted by external competitors. The sale of Beidao assets is just a necessary measure to stop the bleeding, but it is not enough to complete the turnaround.
Bright Dairy's ability to overcome its difficulties hinges on whether the new management team can stop the losses from its remaining New Laurel production capacity within 18 months and reverse the decline in its liquid milk business. If these two goals cannot be achieved, the company's valuation may continue to face downward pressure.
(Source: Bright Dairy & Food official WeChat)