Liziyuan profit slumps, director probed, but dairy cycle turns up
Raw milk cycle turning up lifts dairy stocks Milk prices are rising and the national dairy herd keeps shrinking, so investors bet the long dairy downturn is ending. Liziyuan shares jumped to their daily limit in a sector-wide rally. If milk prices keep recovering, demand and pricing for dairy drinks should improve, helping the stock.
This is the main positive force behind the stock's move and explains the sector rally it joined.
First-half profit down 32% on weak sales and costs Liziyuan's first-half net profit fell 32.3% to 65 million yuan, revenue slipped 2.7%, and second-quarter profit dropped 61.5%. The company blamed lower sales of milk-containing drinks and higher raw material costs. Weak earnings weigh on the stock because the business is still shrinking.
This is the company's own hard result and the clearest negative driver for the share price.
Big dividend payout cushions weak results Alongside the weak report, Liziyuan plans to pay 1.3 yuan per 10 shares, about 49.8 million yuan, or 76.6% of its profit. Paying out most earnings signals confidence and gives shareholders cash, which supports the stock and softens the blow of falling profit.
It is a concrete shareholder-return action that offsets the negative earnings news.
Independent director under investigation for serious violations Director Xiao Zuoping, who chairs Liziyuan's audit committee, is being investigated for suspected serious disciplinary and legal violations. He also sits on two other listed boards. The company says the case is unrelated to it and won't hurt operations, but an audit-committee head under probe raises governance worries.
It is the newest event and a governance risk that can pressure the stock despite company reassurances.