New Dairy's 2025 Annual Report Released: What Hidden Concerns Lie Behind the High Growth?

Ask AI · Can listing in Hong Kong accelerate New Hope Dairy’s strategic transformation?

In 2025, New Hope Dairy’s debt-to-asset ratio was 56.51%, with room for further improvement

Investment Times Network, Punctuation Finance Researcher Li Lu

In 2025, overall sales growth in the liquid milk market came under pressure, and some companies in the industry faced performance pressure and challenges. Against this backdrop, New Hope Dairy Co., Ltd. (hereinafter referred to as “New Hope Dairy,” 002946.SZ) turned in a commendable set of results.

The annual report shows that in 2025, the company’s net profit attributable to shareholders was 731 million yuan, representing a year-over-year growth rate of 35.98%. By comparison, revenue growth was slightly weaker: during the year, it achieved operating revenue of 11.233 billion yuan, up 5.33% year over year. In the fourth quarter of 2025, the company’s revenue recorded double-digit growth, and net profit attributable to shareholders increased 69% year over year, outperforming the industry’s average level.

Supported by these performance results, the company also simultaneously announced its 2025 profit distribution plan, proposing to pay shareholders 3.8 yuan in cash for every 10 shares.

On the cash flow side, New Hope Dairy’s net cash flow from operating activities was approximately 1.51 billion yuan, up 1.26% year over year. The net increase in cash and cash equivalents was a net cash outflow of 65.7241 million yuan, expanding by 39.08% year over year. In terms of its financial structure, in 2025, accounts receivable reached 671 million yuan, up 4.6% year over year, accounting for approximately 92% of net profit attributable to shareholders, and about 6% of operating revenue.

Investment Times Network, Punctuation Finance Researcher noted that behind the changes in performance is the reflection of adjustments to New Hope Dairy’s strategic plan.

As an enterprise in the dairy segment under New Hope Group, New Hope Dairy relied on “buy, buy, buy” to quickly grow from a dairy company in the southwest region into a nationwide company. Over more than two decades, the company has successively acquired regional brands such as Yangping, Tianyou, Shuangxi, Nanshan, Xiajin, and Aouniu. According to information on the company’s official website, the company currently has 15 major dairy product brands, 16 dairy processing plants, and 12 owned ranches.

Through large-scale acquisitions, New Hope Dairy’s revenue grew from 5.675 billion yuan in 2019 to 10.987 billion yuan in 2023, successfully entering the “100-Billion Club.” However, behind this “external expansion” model, various risks have gradually begun to emerge, with particularly prominent risks including a high debt-to-asset ratio and high goodwill.

Before 2023, the company’s debt-to-asset ratio had long remained around 70%. Such an excessively high leverage level not only increased the company’s financial expenses and debt-servicing pressure, but also limited its subsequent financing capacity and development flexibility, placing extremely high demands on the company’s cash flow management.

Although in recent years the company has already recognized the risks of high leverage and has taken a series of measures to optimize its capital structure and reduce leverage, resulting in a continuous downward trend in the debt-to-asset ratio—down to 64.61% in 2024 and further down to 56.51% in 2025—seen from the overall industry level, this leverage ratio is still relatively high and there is significant room for improvement.

Besides the debt-to-asset ratio, the pressure from elevated goodwill is also worth paying attention to. As of the end of 2025, New Hope Dairy’s goodwill amounted to 992 million yuan, and the book original value balance at period end was 1.01 billion yuan. Of this, goodwill formed from the acquisition of Huanshi Dairy alone was 831 million yuan. The audit institution has classified this goodwill as a “key audit matter.”

New Hope Dairy’s debt-to-asset ratio trend over the past decade (%)

Data source: Wind

In fact, as early as May 2023, New Hope Dairy proposed a “five-year strategic plan,” explicitly stating that the sources of growth would shift from “advancing in both internal development and external expansion” to “internal development as the primary driver, with acquisitions as a supplement.” Under the plan, over the next five years, the company expects to reduce its debt-to-asset ratio by 10 percentage points and double its net profit margin. This is also the underlying reason why the company’s recent net profit growth rate has been significantly higher than its revenue growth rate.

To achieve multiple goals such as reducing leverage and improving efficiency, relying solely on existing funds is insufficient to support them, so the company urgently needs more open and more diversified capital channels.

On March 11, the company issued an announcement stating that, to meet the needs of business development, to deeply advance the internationalization strategy, and to build an international capital operation platform, and to further enhance its capital strength, the board of directors has approved a resolution for the company to go public in Hong Kong. This is the second attempt at the capital market after the company separated from within the New Hope Group system in 2011, embarked on an independent capital-authorization path, and then listed on the Shenzhen Stock Exchange in 2019.

According to the announcement, the company’s H-share issuance size will be no more than 15% of the total share capital after the issuance. The funds raised will be mainly used for product upgrades, market expansion, supply chain upgrades, technology research and development and digitalization construction, as well as the company’s operations.

After the announcement was released, the company’s A-share stock price fell sharply and has still not reached the 20 yuan/share interim high point. As of the noon trading on March 24, New Hope Dairy’s share price closed at 17.81 yuan per share, with a total market value of approximately 15.3 billion yuan.

New Hope Dairy’s stock price trend over the past ten trading days (yuan)

Data source: Wind

Investment Times keywords: New Hope Dairy (002946.SZ)

Author’s statement: Personal views are for reference only