During the first half of 2026, the dairy industry began showing signs of hitting a bottom after more than four years of declining raw milk prices. Since mid-July, the average price of fresh milk has turned positive year-on-year, and with a reduction in dairy cow inventories, the supply-side contraction has started to transmit to pricing.

Looking at individual dairy companies, most saw earnings recover in the first half of this year. Revenue growth was recorded at 12 companies, accounting for 63% of the sample, compared with just 7 in the same period last year; net profit growth was seen at 11 companies, or 58%, versus 9 a year earlier. The secondary market has also responded, with the dairy index rising more than 20% from its bottom since July 27. Has the dairy industry truly turned a corner, and which companies are rising or falling behind in this cycle?

In the first half of 2026, 19 listed dairy companies collectively generated revenue of 99.849 billion yuan, up 3.41% year-on-year, while net profit attributable to shareholders reached 7.121 billion yuan, down 14.48%. Revenue scale is expanding, but profits are contracting, showing a typical pattern of "increasing revenue without increasing profit." The industry's Matthew effect is intensifying, with market share and profits continuing to concentrate among leaders, while regional players and small and medium-sized enterprises face comprehensive pressure to exit. Among the 10 companies primarily engaged in liquid milk, at least 6 saw revenue decline; Huangshi Group (rights protection), Pinwei Food, and Zhuangyuan Ranch fell into losses, while Junyao Health's net profit was less than 10 million yuan, hovering on the edge of losses.

Despite signs of a rebound in raw milk prices, differences are significant across companies, value chain segments, and product categories. Overall, upstream farming and raw milk-related companies have shown the greatest flexibility. Qishi Dairy's gross margin improved from 13.96% to 15.47%, and its net margin rose from 1.12% to 6.55%; Tianrun Dairy's gross margin increased from 16.87% to 18.27%, and its net margin turned positive from -2.88% to 3.18%.

Downstream dairy processing companies, however, are generally under pressure. In the first half, 8 companies saw net profit declines, including Huangshi Group (mainly water buffalo milk), Pinwei Food (imported milk), Yantang Dairy and Junyao Health (dairy beverages), as well as Sunshine Dairy, Yili Co., Ltd., Panda Dairy, and Beingmate (rights protection). The main reason is that rising raw milk prices benefit companies with their own pastures but create cost pressure for processing enterprises that purchase raw milk externally.

At the same time, demand-side pressures remain unresolved. According to data from Mashangying, from Q3 2024 to Q2 2026, only Q4 2025 and Q1 2026 saw year-on-year positive growth in offline retail sales of dairy products, while the other six quarters all declined. From a category perspective, differentiation is pronounced: sales of ambient pure milk and ambient yogurt continue to fall, while low-temperature fresh milk and low-temperature yogurt are growing steadily, becoming the main growth engine. Both Mengniu and Yili have achieved notable growth in low-temperature products, and this segment has become a new battleground for major dairy companies.

It is important to note that the high prosperity of the low-temperature track does not mean all low-temperature dairy companies benefit. Bright Dairy saw revenue decline 4.81% in the first half, and although net profit grew 15.34% by shrinking low-margin businesses, gross margin still fell 1.28 percentage points; Sunshine Dairy's revenue dropped 8.13%, with net margin falling from 24.94% to 21.02%. Beijing Sanyuan Foods Co., Ltd.'s performance is also less than satisfactory. This shows that the structural dividend of low-temperature milk is mainly captured by companies with nationwide channel layout capabilities.

In addition, sub-sectors such as cheese and adult milk powder have also achieved impressive growth. In the first half of 2026, Beijing Sanyuan Foods Co., Ltd. ended four consecutive years of declining interim revenue, achieving total operating income of 3.468 billion yuan, up 4.11% year-on-year; net profit attributable to shareholders was 185 million yuan, and non-GAAP net profit was 176 million yuan, both with slight growth. As a regional dairy company, Beijing Sanyuan Foods Co., Ltd. ranks fourth in revenue among the 19 listed dairy companies, 9th in revenue growth, and 11th in net profit growth, all in the middle of the industry.

Has the company turned a corner? From several angles, the answer is nuanced. First, despite the revenue growth, gross margin fell 2.38 percentage points to 22.17% in the first half, ranking 11th among the 19 listed companies. Net margin slipped 0.19 percentage points to 5.16%, ranking 8th. The gross margin decline was mainly due to operating costs growing faster than revenue, with the company citing "business structure and logistics costs and other comprehensive factors."

In the face of a larger gross margin decline, Beijing Sanyuan Foods Co., Ltd. stabilized net margin by compressing expenses, with the period's comprehensive expense ratio at 21.04%, down 2.76 percentage points year-on-year. Notably, the company's total investment income reached 156 million yuan in the first half, of which investment income from Beijing McDonald's accounted for 147 million yuan, representing 79% of the company's net profit attributable to shareholders. Excluding McDonald's, the core "cash cow" asset, the profit from Sanyuan's own dairy business totaled only 38 million yuan, with the main business net margin as low as 1.1%.

Second, by business segment, the growth drivers for Beijing Sanyuan Foods Co., Ltd. were mainly ice cream and solid-state milk. Liquid milk, which contributed 55% of revenue, decreased 4.76%, while solid-state milk and ice cream achieved growth of more than 15%. With weak ambient liquid milk and contraction in out-of-region markets, the main business faces considerable pressure.

Third, the company's operating cash flow net amount in the first half fell sharply by 37.61% year-on-year. Accounts receivable increased 12.15% to 803 million yuan, exceeding the revenue growth rate. At the same time, the number of distributors decreased by 109. Whether terminal sell-through and channel confidence are recovering remains to be verified over time.

Fourth, as of mid-year, monetary funds stood at 1.212 billion yuan, while short-term interest-bearing liabilities were 2.035 billion yuan. The asset-liability ratio rose rather than fell, and the company still faces significant debt repayment pressure.