Nanqiao Food's fourth-quarter performance improves quarter-over-quarter, increasing investment in domestic dairy product substitution

On the evening of March 9th, Nanjiao Food released its annual financial report. By 2025, it aims to achieve operating revenue of 3.065 billion yuan, remaining generally stable; net profit attributable to shareholders was 40.6683 million yuan, a 79.81% decrease year-over-year.

Regarding performance fluctuations, Nanjiao Food stated that throughout the year, the prices of major raw materials increased to varying degrees compared to the previous year, leading to higher production costs. Additionally, the proportion of revenue from high-margin baking application oils declined, further pressuring overall gross profit margins.

It is worth noting that after the fourth quarter of 2025, the prices of relevant oil raw materials for Nanjiao Food showed signs of decline, easing cost pressures. This change was reflected in the company’s performance, with the fourth quarter turning from loss to profit, with net profit attributable to shareholders of 11.847 million yuan.

The rise in oil prices impacted performance, with a turning point in Q4

Nanjiao Food’s announcement indicated that its main raw materials include palm oil, soybean oil, coconut oil, and natural butter. In 2025, the prices of several raw materials experienced significant fluctuations or increases. Coupled with unfavorable effects from the euro exchange rate, these factors impacted the company’s costs.

Specifically, palm oil prices fluctuated notably. Although recent prices have fallen, the annual price still increased significantly compared to 2024. Data from Tonghuashun shows that in February 2025, spot palm oil prices peaked at 10,290 yuan/ton, a 35.57% increase year-over-year. Coconut oil prices hit a record high in 2025, reaching $2,721.02 per ton in August, up 97.13% year-over-year, marking the highest growth within the year. Additionally, according to China Customs statistics, the average import price of butter in China in 2025 was $8,082 per ton, up 16.4% year-over-year.

Besides Nanjiao Food, companies like Hairong Technology and Jiahua Food also faced rising costs due to increases in palm oil and other oil raw materials, putting pressure on their performance.

Hairong Technology forecasted a net loss of 27 million to 33 million yuan in 2025, citing that “the significant increase in palm kernel oil prices directly raised production costs for dairy fat-based plant fats and creams.” Jiahua Food expects a 81.78% to 87.85% decrease in net profit attributable to shareholders in 2025. Previously, the company stated that the prices of core raw materials for plant-based fats (such as palm kernel oil and coconut oil) rose temporarily, sharply increasing cost pressures.

Notably, after the fourth quarter of 2025, the prices of major oil raw materials for Nanjiao Food declined. Palm oil prices have been below the 2024 levels since late October 2025. The import average price of coconut oil also fell from its August peak, with December’s import price dropping 8.57% from the August high. As raw material prices trend downward, the company’s cost pressures are expected to ease, providing positive support for operational performance. Financial data shows that in Q4, Nanjiao Food’s gross profit margin was 19.73%, an increase of 2.68 percentage points from Q3; net profit attributable to shareholders was 11.847 million yuan, a significant improvement from Q3.

Multiple measures to ease pressure and focus on domestic dairy alternatives

In response to rising raw material costs, Nanjiao Food has coordinated efforts to reduce costs and improve efficiency while expanding market presence.

For cost reduction and efficiency, the company stated it will dynamically adjust procurement strategies based on market conditions, raw material inventory, and production operations. Additionally, it will optimize production processes and workflows, enhance automation levels, and strengthen supply chain management to systematically improve operational efficiency and cost control. Notably, the automated production line for bagels in Shanghai has become a flagship project, being the industry’s first fully automated bagel production line, helping the company reduce costs and improve efficiency from the production end.

On the product side, Nanjiao Food actively develops new products to diversify its portfolio according to market demand. With changing consumer trends and the broader environment, along with the domestic raw milk price advantage and ongoing technological breakthroughs by domestic companies, demand for domestically produced dairy products is growing. The company is seizing the opportunity for domestic substitution by advancing self-developed bakery ingredients related to dairy products.

In the segment of whipped cream, Nanjiao Food has launched series products such as Qiaobaili whipped cream, Witelili whipped cream, and Aiyi Chun whipped cream, targeting high-end domestic and cost-effective markets. Among these, the newly launched Aiyi Chun whipped cream in 2025 meets the new national standard GB19646-2025, containing 100% pure animal milk fat with a 36% milk fat content, completing the product matrix. In baking fats, the company focuses on butter, launching self-developed products like Qiaobaili fermented butter and Nanjiao fermented large butter, positioned as pure animal fat butter and high-end domestically produced pure milk fat fermented butter, respectively.

It is worth noting that Nanjiao Food’s imported high-end dairy baking ingredients such as cream and butter complement its self-produced products, forming a gradient product matrix. China Post Securities believes that Nanjiao Food’s “self-produced +代理 (agency)” dual strategy, which includes representing high-end brands and producing high-end series, mainly leverages its strong service capabilities in the high-end market and deep brand heritage.

Channel layout continues to optimize; domestic deepening and overseas expansion

Nanjiao Food continues to optimize its distribution channels, deepening penetration in domestic lower-tier markets while steadily expanding overseas. In 2025, the company established close cooperation with distributors and rapidly expanded channels in third, fourth, and fifth-tier cities. By the end of 2025, the number of distributors reached 539, an increase of 58 from the previous year, a 12.06% growth.

In overseas markets, the company has officially opened channels, successfully selling baking fats, light cream, and pre-made baked goods to Singapore, Thailand, Malaysia, Vietnam, Indonesia, and other Southeast Asian countries. It also exported small quantities of frozen dough products to Japan, Canada, and the Middle East.

At the industry level, the domestic baking industry continues to develop rapidly, significantly driving the growth of baking raw materials. According to USDA Foreign Agricultural Service data, China’s baking raw materials market was approximately $18 billion in 2024, with a projected compound annual growth rate of 7.8% through 2030. Currently, per capita baking consumption in China is only 7–8 kg/year, far below the US (40 kg) and Japan (25 kg), indicating broad growth potential.