Dairy giant Mengniu released its half-year results, showing high growth in both revenue and net profit. Surprisingly, Mengniu's net profit surged 38.5%. It is understood that on the evening of August 29, Mengniu Dairy (2319.HK) announced its 2018 interim results in Hong Kong. In the first half, Mengniu achieved sales revenue of 34.474 billion yuan, up 17% year-on-year; net profit was 1.562 billion yuan, up 38.5%, far exceeding industry levels. So far, this is the best performance among major dairy companies that have published their half-year reports. Mengniu's subsidiary Yashili achieved revenue of 1.504 billion yuan, up 55.6% year-on-year; net profit was 41.3 million yuan, doubling. Mengniu's achievement is indeed commendable. I. Dairy Business As the leader in ambient milk, in 2017 Mengniu's low-temperature milk sales exceeded the 10 billion yuan mark for the first time, ushering in a new era for the industry and ranking first in the national low-temperature fresh dairy market. In the first half of this year, Mengniu's low-temperature category continued to hold the top market share, with products such as Guanyiru BB-12 and European-style charcoal-baked yogurt maintaining high growth rates. The ice cream business progressed steadily, achieving double-digit growth. Additionally, in the first half of this year, Mengniu's e-commerce sales revenue grew by 60%, and online categories expanded from ambient milk to low-temperature yogurt and ice cream. During the "6·18 E-commerce Festival," Mengniu once again won the top sales spot across the entire network. While star products performed excellently, Mengniu's outstanding performance at the World Cup also made it a brand star in the first half of the year. In the World Cup integrated marketing campaign, Mengniu's brand power was significantly enhanced. In terms of reach, over 50 billion person-times came into contact with the Mengniu brand through various media channels. In terms of engagement, the "Scan QR Code to Win Red Packets" activity attracted nearly 240 million consumer participations. In terms of topicality, following the twists and turns of signed star Messi's World Cup journey, Mengniu's brand proposition "Born to Be Strong" became a hot topic on social media. The public welfare activity "Kick the Ball, Youngsters Strong" also attracted widespread attention from domestic and international media, yielding positive social benefits. The World Cup sponsorship and promotional activities helped Mengniu's brand power increase by 11.4%, ranking first in the industry, with consumers' preference for and purchase intention towards the Mengniu brand significantly improved. In terms of channel construction, Mengniu made simultaneous efforts in traditional and new retail areas. In the first half, Mengniu continued to increase its layout in third- and fourth-tier cities, with the number of outlets at the town and village level significantly increasing compared to the same period last year. The proportion of revenue from new retail in Mengniu's sales also continued to rise. In the first half, Mengniu's e-commerce sales revenue grew by 60%, and online categories expanded from ambient milk to low-temperature yogurt and ice cream. During the "6·18 E-commerce Festival," Mengniu once again won the top sales spot across the entire network. Beyond traditional supermarkets and e-commerce channels, Mengniu was among the first FMCG brands to pilot the social retail model. The "Manran" fiber milkshake milk, launched early this year, targets the increasingly popular weight management market and uses a "one-on-one" new retail channel that directly communicates with consumers, quickly becoming a hit product. This innovative marketing model will occupy a more important position in Mengniu's business in the future. To secure high-quality milk sources for low-temperature pasteurized milk, Mengniu increased its stake in Modern Farming at the beginning of 2017 for 1.9 billion yuan. Just yesterday (August 28), Lu Minfang pointed out at Modern Farming's 2018 interim results briefing that in the first half of this year, 83.1% of Modern Farming's raw milk sales went to Mengniu, and another 5.8% was supplied to Modern Farming's "Xianyu" brand, meaning nearly 90% of Modern Farming's high-quality milk was supplied to Mengniu. II. Milk Powder Business For a long time, Mengniu's milk powder business has been a weak segment. A year ago, at the 2017 interim results briefing in Hong Kong, in response to investors and media questions about the continued losses of Yashili, Mengniu's milk powder business unit, Lu Minfang stated that Mengniu had communicated with its second-largest shareholder Danone, and cooperation would deepen further, saying "we must do the milk powder business well." A year later, Mengniu's milk powder business revenue achieved breakthrough growth of over 60%, and Yashili finally turned from loss to profit. Last evening, Yashili's 2018 interim report showed that its first-half sales revenue was 1.504 billion yuan, up 55.6% year-on-year; net profit was 41.003 million yuan, up 133.9% year-on-year. In the interim report, Yashili stated that the group's "Yashili," "Dumex," "Ruibunen," "Duola Xiaoyang," and "Arla" brands cover consumer needs from the mainstream market to the high-end market with a rich product line. As of August 2018, the group and its partner Arla had obtained approval for 48 infant formula registrations across 16 series. This article is compiled from Xiaofei Rixu and Hushu Youli. -END-