On the evening of August 9, Weihai Baihe Biology Technological Co.,Ltd. released its semi-annual report for 2026. During the reporting period, the company achieved operating revenue of 504 million yuan, up 19.81% year-on-year, while net profit attributable to shareholders fell 13.64% to 62.0727 million yuan. Deducted non-recurring profit and loss net profit was 60.33 million yuan, down 13.38% year-on-year. Despite nearly 20% revenue growth, the double-digit decline in profit exposes the operational challenges the company currently faces.

On the surface, the 19.81% revenue increase appears impressive, but a closer look reveals that growth primarily relied on external acquisitions. In August 2025, the company completed the acquisition of a 56% stake in New Zealand-based Oranutrition (ORA), which was consolidated in the first half of 2026, contributing 82.0624 million yuan in revenue and 12.2846 million yuan in net profit.

The direct driver of the profit decline was rising expenses. In the first half of the year, the company's administrative expenses reached 35.1622 million yuan, soaring 74.11% year-on-year, mainly due to subsidiary consolidation and increased cross-border operational management costs. Financial expenses shifted from net interest income of 7.126 million yuan in the same period last year to a net expense of 945,700 yuan, impacted by lower deposit rates and exchange rate fluctuations, with exchange losses increasing year-on-year.

A deeper challenge lies in the imbalance of the business structure. The company has long pursued a dual-driven strategy of "contract manufacturing plus proprietary brands," but its proprietary brands have been shrinking. In the first half of the year, proprietary brand revenue at the parent company level was only 30.7295 million yuan, while contract manufacturing revenue reached 467 million yuan. Proprietary brand gross margins are approximately 42%, higher than the 34% for contract manufacturing, and their continued contraction means the company is becoming more reliant on low-margin OEM business, putting long-term profitability under pressure.

Quality control risks under the OEM model are also a concern. In April 2026, the State Administration for Market Regulation reported that a batch of "Shankayou" brand liquid calcium special dietary beverage, produced by Weihai Baihe Biology Technological Co.,Ltd. under contract, failed inspection due to insufficient vitamin D content. In recent years, the company has faced multiple regulatory penalties for product issues. In its annual report, the company acknowledged that its contract manufacturing clients are primarily small and medium-sized brands, some of which lack adequate management practices, and their misconduct could negatively impact the company's brand image. As food safety regulations tighten, balancing OEM scale expansion with quality control is a practical challenge the company must address.