On August 25, Youran Dairy (09858), a leading upstream player in China's dairy industry, released its interim results for the first half of 2026. During the reporting period, the company achieved total revenue of RMB 10.63 billion, a year-on-year increase of 3.3%, and posted a net profit of RMB 850 million, surging 442% year-on-year, with both profit growth and quality exceeding market expectations. Buoyed by the strong earnings recovery, the company's share price jumped 10% on the day the profit forecast was disclosed, placing it among the top domestic scale raw milk listed companies in terms of recovery momentum and profit growth, establishing it as a core player in the current dairy cycle repair.

Looking at key financial metrics, Youran Dairy's debt-to-asset ratio stood at 64.0% during the reporting period, down 7.8 percentage points year-on-year. Financing costs decreased by RMB 120 million, a 30.5% reduction, while free cash flow reached RMB 2.27 billion, up 2574.8% year-on-year. Net cash flow from operating activities totaled RMB 3.41 billion, a 19.0% increase, reflecting a marked improvement in cash flow, with multiple financial indicators hitting their best levels for the same period in recent years. Leading brokerage analysts predict that Youran Dairy's high growth is characterized by certainty, sustainability, and scarcity. The substantial profit surge is the result of multiple medium-to-long-term factors working in concert, including full industry chain barriers, advancements in breeding technology, product structure upgrades, and lean operational cost reductions, signaling a shift in the growth narrative from short-term cyclical recovery to long-term value creation, with the sustainability of earnings fully validated.

Raw Milk Business: Triple Iteration in Yield, Cost, and Structure Solidifies Absolute Industry Leadership

In the first half of 2026, Youran Dairy continued to deepen its presence across the nation's premium milk belts, operating 100 standardized smart scaled farms with a dairy cow inventory of 616,000 heads and 22,000 dairy goats, maintaining a top-tier scaled farming scale in the industry. During the reporting period, with a stable herd, the company increased mature cow milk yield by 0.2 tonnes and reduced feed cost per kilogram of milk by 4.7%, driving raw milk business revenue to RMB 8.05 billion, up 2.0% year-on-year. Total raw milk output reached 2.218 million tonnes, a 6.6% increase, with scale growth and profitability continuing to lead the sector.

Continuous technological innovation driving the evolution of breeding techniques and management capabilities is the core barrier that places Youran Dairy's operational quality far above industry peers. In recent years, the company has pioneered the establishment of three major technical systems—"Healthy Breeding, Smart Pasture, and Precision Nutrition"—alongside two management frameworks: "Breeding Technology SOP and TPM Lean Management." The healthy breeding system, guided by the principles of health, high yield, and longevity, leverages the company's full industry chain model and technical strengths to form a comprehensive animal health solution. Its subordinate Qilechuan Ecological Smart Pasture has been certified by the UN Food and Agriculture Organization as the world's first "5G Demonstration Pilot Farm."

The smart pasture system features independently developed core technologies such as the "Hui Mu Yun" AI big data management system, IoT-based intelligent environmental controls, smart AI sprinkler systems, and wearable smart identification systems, pioneering the world's most advanced "fully intelligent unmanned barn" and significantly boosting farming management efficiency. The company's collaborative project with research institutions, "Standardization and Key Technologies for Smart Pastures in the Dairy Industry," has been awarded the First Prize for Scientific and Technological Progress in Inner Mongolia Autonomous Region. In precision nutrition, Youran Dairy has iteratively upgraded its precision feeding system, integrating nutritional practices from its 100 farms with internal and external expert experience, and leveraging AI models for continuous learning to develop the "AI Cow Doctor" for ruminant precision nutrition. This system allows farms to interactively resolve nutritional management challenges in real-time.

The SOP management system integrates top-tier U.S. dairy farming techniques with domestic best practices, combined with the company's 49 kg high-yield breeding standards, to establish and disseminate standardized operating procedures. Meanwhile, Youran Dairy has globally pioneered the adoption of TPM lean management, creating a sustainable, standardized operational model with world-class production management. These initiatives standardize breeding operations, raise milk yield, lower farming costs, enhance efficiency, and continuously elevate production management standards. During the reporting period, the annualized mature cow yield rose by 0.2 tonnes to 13.1 tonnes, while feed cost per kilogram of milk dropped by RMB 0.09, a 4.7% decline, marking a third consecutive year of reduction, keeping breeding efficiency at the industry's forefront.

Industry data indicates that the optimal herd structure features mature cows at approximately 58% of the total. In prior years, as new farms were brought online, the herd was relatively young, leaving significant room for structural optimization. Youran Dairy's self-developed "Herd Prediction System" enables precise forecasting of herd composition. In the first half of this year, the mature cow ratio reached 55.7%, up 2.2 percentage points year-on-year, indicating a favorable trend with further capacity release potential. Additionally, the company is deepening its focus on high-value specialty raw milk products, opening new growth avenues. Specialty milk offers advantages such as lower cyclicality, higher margins, and premium pricing, effectively hedging against base milk price fluctuations. In the first half of 2026, the company launched new DHA A2 premium milk, expanding its specialty milk categories from 8 to 9, now encompassing organic milk, Jersey milk, organic Jersey milk, A2 milk, organic A2 milk, DHA milk, selenium-rich milk, goat milk, and DHA A2 milk—making it the most comprehensive and scaled specialty raw milk supplier in China.

Solution Business: Meat Cattle and Sheep Segment Enters Rapid Payoff Phase, Amplifying Scale Effects

In the first half of 2026, Youran Dairy's ruminant farming systematic solutions business achieved steady revenue growth, reaching RMB 2.57 billion, up 7.8% year-on-year. Brokerages note that this segment is the core embodiment of the company's full industry chain synergy, with the four sub-businesses—"seed industry, feed, e-commerce, and grass industry"—sharing resources and complementing strengths, making it a key profit driver. The feed business, characterized by asset-light operations, stable cash flow, and low cyclicality, serves as a stable cornerstone. The company focuses on meat cattle breeding and feed, and by leveraging overlapping channels and customer resources with its breeding business, it effectively reduces operational costs and enhances competitiveness, continuously improving segment quality. In the first half of 2026, feed revenue hit RMB 2.21 billion, up 6.7%, with 15 standardized feed production bases operating steadily and concentrate feed output reaching 593,000 tonnes, an 8.5% increase. Sales of meat cattle and sheep concentrate feed surged 63.6% year-on-year, signaling that the second growth curve is entering a rapid payoff phase.

In the critical area of dairy cow genetic breeding, Youran Dairy has achieved core technological breakthroughs, demonstrating national-team-level competitiveness, with the breeding business poised for sustained growth. During the reporting period, breeding product sales rose 21.5% year-on-year to 657,000 doses. The company independently developed the "Breeding Chip 2," which tests for high yield, high fertility, disease resistance, and longevity traits, is compatible with mainstream international chips, and has been upgraded to cover approximately 50,000 loci across the dairy cow genome, achieving international advanced precision in genetic selection. Driven by efficient breeding technologies, some of the company's top dairy bulls now rank in the international first tier. In April 2023, the company successfully bred a bull ranked 35th globally by concurrent U.S. genomic ranking and first domestically. In December 2025, bull No. 15522027 claimed a fourth consecutive championship, marking another historic breakthrough. By April 2026, in the latest domestic ranking, Youran Dairy-bred bulls secured 5 of the top 10 and 47 of the top 100 spots, leading the industry in representation. These achievements demonstrate that the company's self-bred bulls have reached international first-class standards in core breeding metrics, achieving a historic leap from follower to leader.

In the first half of 2026, Youran Dairy's dairy cow supermarket business generated revenue of RMB 290 million, up 27.2% year-on-year. Online, it leverages the Jumucheng technology platform, while offline it operates 22 physical stores, supplying over 10,000 types of farming consumables and serving more than 2 million dairy cows nationwide, covering full-scenario pasture operations. The grass business continues to tackle germplasm technology, focusing on alfalfa cold-resistance gene technology and superior germplasm hybridization to drive domestic feed substitution for imports. During the reporting period, the company led a key R&D project in Inner Mongolia, "Research on Key Technologies for Creating High-Yield, High-Quality Alfalfa New Germplasm and New Variety Breeding," concentrating on variety development and winter survival and high-yield cultivation techniques to deliver cost-effective domestic feed solutions to the industry.

As the dairy industry enters an upward cycle, the advantages of leading players will continue to amplify. Youran Dairy will leverage its four core strengths—full industry chain synergy, technology empowerment, premium milk segment positioning, and self-controlled genetic resources—to steadily raise its profit center, sustainably unlock long-term value, and lead the industry's high-quality development.