HUANLEJIA Food Group Co. Ltd.

The dairy sector saw a broad rally on July 29, with Huanlejia hitting the 20 percent daily limit, Knight Dairy surging over 18 percent, Pinwo Food and Panda Dairy rising more than 10 percent, and JuneYao Health, Sanyuan Foods, and Liziyuan among multiple stocks hitting their daily limits. A research report from China Securities shows that the dairy cow herd stood at 5.772 million head in June, down 22,000 head month-on-month, maintaining a rapid pace of destocking. Recently, bulk milk prices have risen in many regions, and the interplay of beef and milk prices is driving a positive turn in the raw milk cycle. Kaiyuan Securities notes that from 2024 to 2025, the national dairy cow herd cumulatively destocked about 550,000 head, and by the end of the second quarter of 2026, the Holstein cow herd further declined to 5.794 million head, with the pace of capacity reduction accelerating. At the same time, yield per cow growth is slowing. In the first half of 2026, raw milk output rose 2.4 percent year-on-year, while dairy product output increased 6.0 percent. On the pricing front, bulk milk prices are leading the gains, with contract prices following. Bulk milk purchase prices in major producing areas have risen sharply, with current mainstream prices at 2.8 to 3.1 yuan per kilogram, and in tight supply areas reaching 3.2 to 3.5 yuan per kilogram. Contract milk prices have turned positive year-on-year. On July 24, the fresh milk price in major producing areas was 3.06 yuan per kilogram, up 0.3 percent month-on-month and 1.0 percent year-on-year, with clear bottoming signals. Aijian Securities points out that dairy products represent the clearest direction of improvement in fund holdings in the second quarter. Active equity funds' combined holdings of Yili Group, New Hope Dairy, Youran Dairy, and China Modern Dairy increased by 12.3 percent, 18.7 percent, 17.3 percent, and 17.8 percent quarter-on-quarter, respectively. Kaiyuan Securities believes that supply contraction, price stabilization, and initial profit verification are largely in place, and raw milk reversal signals are gradually emerging. The industry may be transitioning from a left-side bottoming phase to a right-side confirmation phase. The upstream segment will benefit first with significant earnings elasticity, with a focus on Youran Dairy. The downstream competitive environment is improving and leading companies are regaining market share, with attention on New Hope Dairy and Yili Group.

Huanlejia Food Group Co., Ltd. announced that it has received the Civil Ruling issued by the Intermediate People's Court of Zhanjiang City, Guangdong Province, in which the court ruled to lift the freeze on the bank accounts and funds of Zhongxing Lihua Zhanjiang branch. Upon inquiry by the company, the relevant bank accounts and the remaining frozen funds of 558,000 yuan have been fully unfrozen and restored to normal use. The company first disclosed the freezing of funds in an individual bank account of the branch on February 13, 2026, and subsequently disclosed the progress of partial unfreezing on March 9. The company stated that during the period when part of the funds in the bank account were frozen, there was no material impact on the company's daily production and operations.

Huanlejia announced that its wholly-owned subsidiary Huanlejia Investment plans to jointly establish a joint venture with controlling shareholder Haoxing Investment, director Cheng Song, vice president Yang Ronghua, vice president and CFO Weng Sumin, and external investor Li Xiaodong. The registered capital is 60 million yuan, of which Huanlejia Investment will contribute 30.6 million yuan for a 51 percent stake. The joint venture will primarily engage in the production of pre-carbonized coconut shell materials and coconut-shell-based hard carbon anode materials. This transaction constitutes a related-party transaction but does not constitute a major asset restructuring.