DaChan Food Posts Marginal H1 Turnaround as Gross Margin Climbs to 11.5%

Bulletin Express
Aug 04

DaChan Food (Asia) Limited reported a modest return to profitability for the six months ended 30 June 2026, underpinned by higher gross margins in its core segments and tighter cost control.

Revenue and Profitability • Group turnover edged down 0.5% year on year to RMB 2.90 billion. • Gross profit rose 8.9% to RMB 0.33 billion, lifting the gross margin by 1.0 percentage point to 11.5%. • Profit attributable to shareholders swung from a RMB 35.07 million loss to a marginal profit of RMB 0.09 million, translating into basic earnings per share of RMB 0.0001 (H1 2025: loss per share RMB 0.035).

Segment Performance 1. Processed Food – Revenue increased 5.1% to RMB 1.37 billion, driven by a larger contribution from mainland China sales (+3.0%) and a 22.4% jump in exports. – Segment gross profit improved 3.3% to RMB 0.24 billion, representing 70.8% of group gross profit. Margin held broadly stable at 17.2%.

2. Meat – Revenue inched up 1.1% to RMB 0.79 billion. – Gross profit almost doubled to RMB 44.71 million, lifting the margin to 5.7% (H1 2025: 2.9%) on the back of a shift to demand-driven production, tighter cost controls and product mix optimisation.

3. Livestock Feeds – Revenue declined 10.8% to RMB 0.74 billion amid continued consolidation in China’s pig-breeding sector. – Gross profit fell 4.7% to RMB 52.57 million, though margin improved to 7.1% (H1 2025: 6.7%) owing to cost initiatives and product mix upgrades.

Cash Flow and Balance Sheet • Cash and cash equivalents stood at RMB 564.45 million at end-June, up RMB 32.09 million from December 2025. • Interest-bearing borrowings fell 14.3% to RMB 376.41 million, leaving the company with a net cash position of RMB 188.04 million and an interest-bearing borrowings-to-equity ratio of 15.4%. • The current ratio remained healthy at 1.48x (end-2025: 1.68x). • Capital expenditure totalled RMB 30.62 million, funded primarily by long-term bank facilities; committed but unutilised capex amounted to RMB 94.01 million.

Operational Highlights • Continued investment in R&D, supply-chain digitalisation and capacity expansion supported the processed-food segment’s leading contribution. • The meat unit benefitted from a revamped production-marketing model, automated processing and a focus on higher-margin channels such as membership stores and chain supermarkets. • The feeds business intensified cooperation with medium-to-large farms and accelerated development of niche categories (e.g., ruminant feeds) to offset industry contraction.

Capital Management and Dividends No interim dividend was declared. Pledged assets at period-end totalled RMB 17.20 million, securing unutilised bank facilities of RMB 10.00 million.

Outlook Management will prioritise expansion of the processed-food division, diversification of export markets beyond Japan, continued optimisation of the meat supply chain, and product/channel broadening in feeds to reinforce resilience against market volatility.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10