FAST NEWS: Modern Dairy’s profit plunges on weaker margins
The latest: Dairy farming company China Modern Dairy Holdings Ltd. (1117.HK) said on Friday it expects to report a profit of 160 million yuan ($22.5 million) to 200 million yuan for 2023, down 66% to 72% year-on-year.
Looking up: The company’s new business areas such as feed, digital intelligence platforms and forage grass planting, contributed to its profit last year as its revenue jumped 40% to 3.3 billion yuan.
Take Note: The decrease in the company’s profit owed primarily to higher losses related to changes in the fair value of its dairy cows, and lower profit margins for its raw milk business.
Digging Deeper: Established in 2005 in China’s Anhui Province, Modern Dairy focuses on dairy farming and milk production in China and raised HK$2.6 billion ($330 million) in a 2010 Hong Kong listing. It became a subsidiary of Mengniu Dairy (2319.HK) in 2017 when the dairy giant purchased 965 million Modern Dairy shares, raising its stake to 39.9%. Modern Dairy’s business was growing, but took a hit during the pandemic on reduced overseas demand.
Market Reaction: Modern Dairy’s shares fell on Monday, closing down 4.3% to HK$0.67 at the midday break. The stock now trades near the lower end of its 52-week range.
Translation by A. Au
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