Golden Dragon Fish's performance rebounds but faces over 700 million yuan in provisions due to subsidiary litigation. Can it continue to turn around in the future?

Yihai Kerry Golden Dragon Fish Food Group Co., Ltd. recently released its 2025 performance forecast, showing double-digit growth in both revenue and net profit, ending four consecutive years of declining net profit. During the reporting period, the company achieved operating revenue of 245.126 billion yuan, a year-on-year increase of 2.87%; net profit of 3.153 billion yuan, a year-on-year increase of 26.01%. This data marks a successful “V-shaped rebound” for Golden Dragon Fish after experiencing a performance trough.

From a business structure perspective, the growth in sales of kitchen foods, feed raw materials, and oil technology products has been the main driver of revenue recovery. The increase in kitchen food sales is attributed to new factory capacity release and continuous expansion of sales channels; the feed raw materials and oil technology sectors benefit from strong downstream demand in aquaculture, the cost advantage of soybean meal, and sales channel advantages. In terms of profit, flour and rice businesses performed notably well, with raw material price declines and optimized procurement and marketing strategies being key factors in profit growth. The improvement in soybean crushing margins also contributed significantly to overall performance, mainly due to ample South American soybean supplies, reduced procurement costs, and support from soybean meal prices.

However, alongside the performance recovery, Golden Dragon Fish disclosed two litigation cases involving subsidiaries, with estimated liabilities exceeding 700 million yuan, casting a shadow over this achievement. The first case involves its subsidiary Yihai (Guangzhou) Grain and Oil Industry Co., Ltd., which was sentenced for aiding in contract fraud, bearing joint compensation of 1.881 billion yuan and a fine of 1 million yuan. Although Guangzhou Yihai has filed an appeal, the company still recognized an estimated liability of 260 million yuan based on prudence. The second case concerns the VAT input tax deduction issue with Dongguan Fuzhiyuan Feed Protein Development Co., Ltd. After the first-instance court dismissed the lawsuit, the company also appealed and recognized an estimated liability of 472 million yuan. Golden Dragon Fish stated that it does not agree with the relevant judgments and tax treatment decisions and will continue to defend its rights through legal channels.

Excluding the impact of these two cases, Golden Dragon Fish’s net profit attributable to parent company in 2025 would reach 3.886 billion yuan, a substantial year-on-year increase of 55.31%, approaching the peak level of 2021. However, unresolved litigation remains a “Damocles sword,” adding uncertainty to the company’s performance. Market reactions are mixed: some small and medium investors worry that provisions for losses may drag down net profit, potentially exerting short-term pressure on the stock price; long-term value investors believe that provisions are non-recurring gains and losses, the company’s core business fundamentals are stable, and growth in non-recurring net profit confirms its core profitability, with assets exceeding 200 billion yuan and sufficient financial strength to manage risks.

As a leading enterprise in the grain and oil industry, Golden Dragon Fish’s main products are closely related to people’s livelihoods. According to the 15th China Brand Power Index (C-BPI), the company has consecutively won brand leadership in the categories of edible oil, flour, and rice. In the field of food safety, Golden Dragon Fish has established industry benchmarks through strict quality control. By 2025, the company has conducted 5.28 million self-inspections, completed 30.77 million tests, undergone over 50,000 external inspections, with a 100% pass rate, and 40 laboratories have obtained national certification.

The standardized development of the prepared food industry offers new growth opportunities for Golden Dragon Fish. With the implementation of new national standards, industry order is gradually being regulated. Leading companies, leveraging advantages in R&D, production, cold chain logistics, and quality control, are expected to benefit from compliance dividends and expand market share. Golden Dragon Fish has established nine central kitchen parks nationwide, adopting the “central kitchen new model” to integrate upstream and downstream resources, achieving full-chain coverage from agricultural product processing to food manufacturing. This model not only reduces operating costs but also improves efficiency through resource sharing, laying a foundation for the company’s competitiveness in the prepared food sector.