When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

On July 9th, Cailian Press (Reporter Chen Kang) reported that cheese is seen as a breakthrough in the dairy product industry. Cheese companies are trying to get their performance back on track in the first half of this year by exploring ways to decrease cost and increase revenue. Tonight, "the first share of cheese" MeikeLanTuo (600882.SH) announced that the net income of the first half of the year is expected to be 65-90 million yuan, an increase of 128%-215% YoY; non-net profit after deduction is 45-70 million yuan, an increase of about 1,532%-2,439% YoY.

MeikeLanTuo mentioned that the YoY increase in net income of the first half of the year depends on "the decrease in the cost of raw material procurement" and "the YoY decrease in sales expense ratio and management expense ratio brought by various measures to reduce costs and improve efficiency."

This also means that the YoY increase in net income is not primarily due to the growth of the cheese consumption market. Based on the company's Q1 performance, although the net income increased by 70.6% YoY, the revenue decreased by 7.14% YoY, continuing the trend of revenue YoY decline in 2023.

The company attributed the decline in cheese business income and product gross margin rate in 2023 to "the impact of double fluctuations in the raw material market environment and exchange rates." MeikeLanTuo's cheese products' main raw materials come from the international market, and the fluctuation of raw material market prices and exchange rates directly affect the product profits of the company.

However, it should not be overlooked that 2023 was a year of slowing growth for the cheese industry. MeikeLanTuo founder and president Chai Xiu said at an industry forum in early July that the overall performance of China's cheese industry in 2023 declined by double digits, mainly due to soft consumption, industry competition, and rising costs of raw materials.

On June 12th, in order to eliminate competition in the same industry, MeikeLanTuo announced that it will acquire Mengniu's cheese business in full for 448 million yuan in cash, making Mengniu cheese a wholly-owned subsidiary of MeikeLanTuo, and its cheese and related raw material trading business will be included in MeikeLanTuo.

MeikeLanTuo is confident of this merger, believing that it will not only enhance the company's profitability and consolidate its leading position in the cheese category, but also enhance investors' confidence. It is worth mentioning that Mengniu cheese was in a loss state for both the whole year of 2023 and the first quarter of this year. The acquisition faces both cooperation and pressure.

After solving the problem of competition in the cheese business with Mengniu, MeikeLanTuo announced on June 19th that it would postpone the withdrawal from the liquid milk business and plans to fulfill the commitment by July 9, 2027. In 2023, MeikeLanTuo's liquid milk business accounted for 8.27% of its revenue. Delaying the divestment of this business may be MeikeLanTuo waiting for the cheese business to return to its growth trajectory.