Minhe Co., Ltd. 2025 Annual Report Analysis: Operating Cash Flow Surges by 348.39%, Net Loss Widens to 269 Million Yuan

Core Profitability Indicators: Three Straight Years of Losses, and the Losses Worsen Further

In 2025, Minhe Co., Ltd. continues to be loss-making, with core profitability indicators under pressure:

• Operating revenue: In 2025, the company achieved operating revenue of 2.162 billion yuan, up slightly by 0.09% year over year. For three consecutive years, revenue has fluctuated within the 2.0–2.2 billion yuan range, and growth has hit a bottleneck. Breaking it down, revenue from the livestock business was 2.111 billion yuan, accounting for 97.67%—the core source of revenue. Chicken product revenue was 1.120 billion yuan, down 2.21% year over year; day-old chicks revenue was 880 million yuan, up 3.26% year over year, becoming the main support for the slight increase in revenue.
• Net profit: The net loss attributable to shareholders of the listed company reached 269 million yuan, expanding by 7.78% from the 249 million yuan loss in 2024. The company has been loss-making for three straight years, but the loss size narrowed compared with 2023. The main reasons for the loss are an imbalance in supply and demand in the white-feather broiler industry, high feed costs, and insufficient end-market consumption demand. Prices of the core products—day-old chicks and chicken meat products—came under pressure. At the same time, ongoing losses at the company’s equity-investee Beidahuang Baoqianling Agribusiness and Animal Husbandry continued to drag down performance.
• Non-GAAP net profit: Non-GAAP net loss was 287 million yuan, expanding 9.08% year over year. The expansion exceeded that of net profit, indicating that gains/losses from non-recurring items provided less cushioning for losses. Total non-recurring items in the year were 18.8045 million yuan, mainly government subsidies of 18.3017 million yuan, resulting in limited positive contribution to net profit.
• Earnings per share: Basic earnings per share were -0.77 yuan/share, and non-GAAP earnings per share were -0.82 yuan/share. Year over year, both decreased by 8.45% and 9.33%, respectively. This aligns with the movement trends of net profit and non-GAAP net profit, reflecting a further decline in per-share profitability.

Expense Control: Selling expenses drop sharply, R&D spending slightly decreases

In 2025, the company’s total expenses were 2.790 billion yuan, down 6.14% year over year. This was mainly due to a significant reduction in selling expenses. The breakdown is as follows:

Selling expenses: Promotional spending cut in half, and the control effect is significant

Selling expenses fell sharply by 34.35% year over year. The core reason is that sales promotion expenses dropped from 93.7971 million yuan to 47.8746 million yuan, a reduction of 45.9225 million yuan year over year, with a decline of 48.96%. The company states that, as the prepared food and seasoning products business has matured gradually, it reduced promotional investment. Meanwhile, storage fees decreased by 30.76%, mainly because Hangzhou Minyue—an e-commerce company—and cooperation partners negotiated and reduced costs. However, packaging fees increased by 13.38% year over year and travel expenses grew by 13.62%, partially offsetting the reduction in promotional expenses.

Administrative expenses: Essentially flat, with a stable structure

Administrative expenses decreased slightly by 0.31% year over year, and the overall scale remained basically stable. Specifically, employee compensation was 73.8138 million yuan, up 6.57% year over year, making it the largest component of administrative expenses. Fees for engaging intermediaries were 4.9122 million yuan, up sharply by 80.48% year over year; other items such as office expenses, travel expenses, depreciation and amortization showed no major changes.

Finance expenses: Interest payments increase, lifting expenses

Finance expenses rose by 26.20% year over year, mainly because interest expense increased from 42.5933 million yuan to 45.0780 million yuan, while interest income decreased from 11.2837 million yuan to 6.1957 million yuan. The net effect of one up and one down pushed up the scale of finance expenses.

R&D expenses: Slight scale decline, focusing on breeding technologies

R&D expenses decreased by 3.34% year over year. Investment totaled 21.5544 million yuan, all recorded as expense. The R&D direction is concentrated in core breeding areas such as broiler parent stock brooding techniques, research on nutritional requirements, and resource utilization of livestock and poultry waste. Specific projects include R&D of new broiler parent-stock rearing methods, R&D of a multi-layer breeding model in buildings, and research on nutritional requirements for caged broiler parent stock, among others. At present, several projects are in the pilot-study stage or in the application and promotion stage.

R&D personnel: Team expands slightly, and the structure is optimized

In 2025, the number of R&D personnel was 126, up 8.62% from 116 in 2024. The proportion of R&D personnel increased from 2.18% to 2.35%. In terms of education structure, although the number of personnel with bachelor’s degree or above decreased, the proportion of personnel with junior college or below increased. Overall, the team’s size expanded slightly, providing manpower support for推进 of R&D projects.

Cash flow: Operating cash flow turns from negative to positive, while investing and financing cash flows face pressure

In 2025, the company’s cash flow situation diverged clearly: operating cash flow improved significantly, but investing and financing cash flows were not strong:

Operating cash flow: Turns from negative to positive, with a major improvement

Net cash flow from operating activities changed from -560 million yuan in 2024 to 140 million yuan in 2025, up significantly by 348.39% year over year. This was mainly due to a 6.20% reduction in cash outflows from operating activities. Specifically, cash paid for purchases of goods and receipt of labor services decreased by 1.176 billion yuan, and cash paid for other items related to operating activities decreased by 472 million yuan. At the same time, cash inflows from operating activities increased slightly by 2.13%. Cash received from sales of goods and provision of services increased by 166 million yuan. In addition, the difference between net profit and operating cash flow was large, mainly due to impacts on net profit from accrued asset depreciation, asset impairment, finance expenses, and investment losses, but these did not affect operating cash flow.

Investing cash flow: Cash outflows decrease, and the net outflow narrows

Net cash flow from investing activities was -149 million yuan, narrowing the loss by 66 million yuan year over year, a decrease of 30.60%. On the one hand, investing cash inflows fell sharply by 98.80% year over year, mainly due to a decrease in the recovery of structured deposits. On the other hand, investing cash outflows decreased by 51.81% year over year, because capital expenditures on infrastructure projects and the reduction in structured deposits caused the scale of cash outflows to drop substantially.

Financing cash flow: Turns from positive to negative, and pressure shows

Net cash flow from financing activities shifted from 243 million yuan in 2024 to -18 million yuan. It fell sharply by 107.60% year over year. The core reason is that repayments of borrowings increased during the period, and financing cash outflows rose by 9.50% year over year. Financing cash inflows decreased by 5.92% year over year, resulting in an overall net financing cash outflow.

Risk Warning: Five major risks continue to affect the industry landscape

The company’s operations are still exposed to multiple industry-wide common risks, and the following need to be monitored continuously:

1. Epidemic prevention and control risk: Avian epidemics such as avian influenza are the biggest risks in the industry. If a large-scale outbreak occurs, it will directly pressure day-old chick and chicken meat product prices and impact operating performance. Although the company is a “highly pathogenic avian influenza-free biosecurity isolation zone for broiler chickens,” the spread of external epidemics and consumer psychological expectations may still bring negative effects.
2. Product price fluctuation risk: Commodity day-old chicks are the product with the highest gross margin and the greatest flexibility, but prices can fluctuate sharply due to factors such as supply and demand and the business cycle. Meanwhile, the company’s commodity chicken breeding and slaughter processing business has not yet fully matched, making it difficult to effectively hedge price fluctuation risk.
3. Risk of rising raw material prices and labor costs: Feed ingredients such as corn and soybean meal are highly volatile due to factors including food policy, international trade, and climate conditions. At the same time, labor wages, electricity and water, and fuel costs continue to rise, squeezing the space for breeding profits.
4. Environmental protection risk: Environmental policies are tightening. The company needs to invest more capital to build environmental protection facilities and pay pollutant discharge fees. If disposal is not handled properly, it will affect production and operations. However, the company’s subsidiary Minhe Biological has technological accumulation in handling livestock and poultry manure and waste, which can alleviate environmental pressure to a certain extent.
5. Food safety risk: Food safety issues may damage brand image and undermine consumer confidence. Although the company has established a quality control system, it may still be affected by inadequate control or by food safety problems at other companies in the industry.

Executive compensation: Core management pay is stable, and adjustments align with performance

During the reporting period, the company’s compensation for directors, supervisors, and senior executives was linked to operating performance. The situation for core executives is as follows:

• Chairman Sun Xianfa: During the reporting period, the total pre-tax remuneration received from the company was 760,500 yuan. As one of the company’s actual controllers, his compensation remained stable.
• General Manager Zhang Dongming: He took over as general manager in December 2025. During the reporting period, his total pre-tax remuneration was 570,500 yuan. Previously, he served as deputy general manager. His compensation aligns with the company’s executive compensation system.
• Deputy General Manager Zhou Dong: Total pre-tax remuneration was 566,500 yuan, basically the same as the previous year.
• Chief Financial Officer Zhong Xianjun: Total pre-tax remuneration was 289,200 yuan, in line with the compensation level for financial leadership.

During the reporting period, the company incurred operating losses. Management proactively proposed an appropriate reduction in the compensation of directors and senior management personnel. The next steps require approval by the shareholders’ meeting, reflecting management’s attitude of sharing operating pressure with the company.

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