Bright Dairy's Decline: Selling Assets While Supporting Overseas Subsidiary

Deep News2025-11-24

Bright Dairy & Food Co., Ltd. (600597.SH), once a leader in China's dairy industry, is now struggling to maintain profitability. The company has resorted to selling land and injecting capital into its loss-making overseas subsidiary to shore up its financials.

**Falling Behind Peers** Once part of China's "Big Three" dairy giants alongside Mengniu and Yili, Bright Dairy has seen its revenue stagnate below the RMB 30 billion mark, a threshold its competitors crossed years ago. In 2021, Bright Dairy's revenue peaked at RMB 29.21 billion, while Yili and Mengniu reported RMB 110.14 billion and RMB 88.14 billion, respectively. Since 2022, Bright Dairy's revenue has declined for three consecutive years, with Q1 2025 figures showing a 0.76% year-on-year drop to RMB 6.37 billion.

**Profitability Under Pressure** Bright Dairy's 2024 net profit attributable to shareholders fell 25.36% to RMB 722 million. However, non-recurring gains—primarily from land sales—accounted for 76.4% of this figure. Excluding these one-time gains, core net profit plunged 67.48% to just RMB 170 million. The company sold a Shanghai industrial plot for RMB 822 million in compensation, with half received in 2024, artificially inflating profits.

**Overseas Subsidiary Drains Resources** Bright Dairy's 2010 acquisition of New Zealand's Synlait Milk (51% stake for RMB 421 million) has backfired. Synlait posted losses of RMB 450 million in 2024, forcing Bright Dairy to provide RMB 561 million in loans and increase its stake to 65.25% via a capital injection. These moves have strained Bright Dairy's liquidity, with short-term debt coverage dropping to 37.89%.

**Questionable Management Decisions** While cutting employee salaries by 3.6% in 2024, Bright Dairy raised executive pay—including a 43% hike for its CEO. Meanwhile, aggressive product launches (40+ new items in 2024) and marketing efforts (RMB 674 million in ad spending) have yet to revive sales. Its premium fresh milk product "Bright Youbest 5.0" ranked only 14th in e-commerce新品榜.

**Outlook Remains Challenging** With Synlait still unprofitable and domestic competition intensifying, Bright Dairy's turnaround efforts—including sponsorships and regional marketing—show limited impact. The company's reluctance to match rivals' marketing budgets (12.24% of revenue vs. Mengniu's 26.04%) further hampers visibility. As Q1 2025 results indicate no recovery, Bright Dairy's path back to growth remains uncertain.

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