China Shengmu has turned losses for three consecutive years and is expected to have a net profit of at least RMB 100 million last year

On March 9, China Shengmu, the “largest organic dairy company in China,” released its 2019 profit forecast, saying that the estimated after-tax profit would exceed 100 million yuan.This means that after experiencing three consecutive losses, China Shengmu realized a turnaround.Regarding the reasons for profit, China Shengmu explained that in 2018, the company’s downstream business generated financial and contract asset impairment replacements.At 1.2 billion US dollars, the company completed the sale of its 51% stake in the internal Mongolian Shengmu High-tech Dairy Co., Ltd. in May 2019, so the report gradually no longer impairs the asset.In addition, due to the continuous increase in the minimum residual amount of raw milk in 2019, the content of raw milk in China Shengmu has increased in 2018; at the same time, the structure of the herd is improving, which reduces the fair value of biological assets and reduces sales expenses.According to public information, China Shengmu was founded by Yao Tongshan, a former executive director of Mengniu, in October 2009. It features the entire organic industrial system in the desert and is known as “China’s largest organic dairy company”. In 2012, it further expanded its business to its own liquid state.Milk brand.Affected by the decline in milk prices, the impairment of biological assets, and the decline in sales of its own liquid milk brands, China Shengmu replaced 6 in 2016-2018.8.1 billion, 9.8.6 billion, 22.2.5 billion.On December 24, 2018, China Shengmu announced that its wholly-owned subsidiary Shengmu Holdings, Shengmu Hi-Tech will sell a 51% stake in Inner Mongolia Shengmu Gaoke Dairy Co., Ltd. to Inner Mongolia Mengniu Dairy (Group) Co., Ltd.And set up a new joint venture company.As a prerequisite for the transaction, China Shengmu needs to transfer all its downstream dairy product business chain and related assets to the target company, and no longer engage in downstream dairy products business.In January 2020, Inner Mongolia Mengniu acquired the remaining 49% stake in the aforementioned company.On March 6, 2020, China Shengmu Enlightenment and Mengniu’s long-term fresh milk supply framework agreement and financial aid framework agreement.In the next three years, at least 80% of China Shengmu ‘s raw milk will be supplied to Mengniu, and at the same time will receive financial assistance from Mengniu loans.China Shengmu said to Sauna and Yewang that the extension of the supply agreement will bring about a positive sales of Shengmu ‘s raw milk during the epidemic.Sauna, Ye Wang Guo Tie editor Li Yan proofreading Liu Baoqing