China Modern Dairy Holdings Ltd (01117) has released its interim results for the first half of 2026, reporting revenue of approximately RMB6.593 billion, a year-on-year increase of 8.6%. Gross profit reached around RMB1.727 billion, up 7.72% compared to the same period last year. The company also achieved a turnaround to profitability, with profit attributable to equity shareholders of RMB15.29 million, reversing a loss from the prior year, while basic earnings per share stood at RMB0.2 cents.

According to the announcement, the swing back to profitability was primarily driven by a substantial reduction in losses from changes in the fair value of dairy cows minus selling costs, alongside an increase in gross profit. During the first half of 2026, despite some improvement in market conditions, the group continued to push forward with various cost-reduction and efficiency-enhancement measures, optimising herd structure and raising milk yield per cow.

During the period, the number of culled cows declined, and combined with higher culling prices, the loss from fair value changes of dairy cows decreased year-on-year. The gross profit margin from raw milk sales also grew, with gross margin remaining stable. Other operating costs and expenses were also effectively controlled during the period.

The group continued to strengthen lean management at its farms, increasing the proportion of its core herd and improving the health standards of its cattle, which drove notable improvements across key operational indicators. The group achieved an average annualised milk yield of 13.3 tonnes per mature cow (compared to 13.2 tonnes in 2025), a year-on-year increase of 0.4%, while total milk production reached 1.778 million tonnes (compared to 1.661 million tonnes in 2025), up 7.1% year-on-year.

The sustained improvement in milk yield per mature cow can be attributed to comprehensive and efficient herd management, along with meticulous monitoring and adjustments. These include cross-generational genetic optimisation of dairy cows, extending the peak lactation period, and management of parity, breed, living comfort, health status, and feed composition.

As of 20 July 2026, the group and parties acting in concert held approximately 71.49% of shares in China Shengmu Organic Milk Limited, with the offer becoming unconditional in all respects. By the end of the offer period on 3 August 2026, the group held approximately 53.53% equity in China Shengmu, making it the largest shareholder. This move allows the group to rapidly access scarce desert organic milk sources, enhance its product structure, and improve its ability to supply premium raw milk.

Following the completion of the acquisition, the group's business scale and asset base have expanded significantly, achieving economies of scale and enhanced synergies. This strengthens its overall operational and financial position, further consolidating the group's leading position in the raw milk supply market.