Source: Food Review Vitasoy International's sluggish performance in mainland China may also pose challenges to its full-year results. Recently, Vitasoy International Holdings Limited (hereinafter "Vitasoy International") disclosed its interim results for the six months ended September 30, 2021. During the reporting period, Vitasoy International recorded revenue of HK$3.604 billion (unit, same below), down 18.28% year-on-year; net profit was only HK$32.804 million, down 95% year-on-year. Moreover, Vitasoy International stated in the announcement that due to unsatisfactory performance and the need to prioritize the recovery of mainland China business, it would not declare an interim dividend. Compared with the previous fiscal year, due to the downturn in mainland China, the full-year performance may also face challenges. Stumbling in Mainland China Regarding the revenue decline, Vitasoy International stated that while its businesses in Hong Kong, Australia & New Zealand, and Singapore recorded steady growth, sales and profits in mainland China were severely impacted by declining sales. For the significant drop in net profit, Vitasoy International attributed it mainly to declining sales in mainland China, reduced government subsidies related to the pandemic as it gradually came under control, and the resumption of advertising and promotional expenditures that were reduced last year due to the pandemic. By business region, mainland China remained the company's largest revenue source, accounting for over 63%. During the reporting period, Vitasoy International generated revenues of HK$2.274 billion in mainland China, HK$1.024 billion in Hong Kong, HK$304 million in Australia & New Zealand, and HK$64 million in Singapore. Among these, mainland China saw the steepest decline, with revenue only 71.78% of the HK$3.168 billion recorded in the same period last year. The decline in mainland China directly dragged down the net profit of the entire listed company. During this reporting period, Vitasoy International incurred a loss of HK$33 million in mainland China, compared with a profit of HK$743 million in the same period last year. Additionally, Vitasoy International's gross profit fell 28% to HK$1.727 billion in the first half, and the gross margin dropped to 48% from 55% in the same period of the previous fiscal year. Hong Kong business benefited from successful new product launches, with revenue up 3%; Australia & New Zealand business revenue rose 27%, with net profit up 15%; Singapore business revenue increased 3%, with an operating loss of HK$3.343 million. Full-Year Performance "Ruined" According to Vitasoy International's fiscal year 2020/2021 results, for the year ended March 31, 2021, revenue increased 4% to HK$7.52 billion, and profit attributable to equity holders was HK$548 million, up 2% year-on-year. At that time, Vitasoy International stated that revenue growth was mainly attributed to the performance in mainland China, which remained the company's largest market. During that period, revenue in mainland China was HK$5.008 billion, up 11% year-on-year; operating profit was HK$524 million, up 10% year-on-year. The turning point for Vitasoy International in mainland China occurred in July this year. On July 2, 2021, the official Weibo account of "Vitasoy" issued a statement saying that the company had noticed the relevant incident and had accepted and cooperated with the investigation. At noon on July 3, the official Weibo account of "Vitasoy Group" issued a statement saying that the document circulating online had not been officially approved or released by Vitasoy Group, but was privately written and internally forwarded by an employee, without authorization and without following Vitasoy Group's internal approval process. Despite issuing two statements, public dissatisfaction was not quelled. After being embroiled in the public opinion storm, artists cooperating with the company announced the termination of all cooperation with the Vitasoy brand. Furthermore, the incident triggered merchants in many regions and various platforms to voluntarily remove Vitasoy products from shelves. Vitasoy International had anticipated the impact on mainland China. As early as August 6, Vitasoy International disclosed in a profit warning announcement that during July, product removals occurred across different sales channels in mainland China. Although products gradually began to be re-listed in some channels, it was expected that sales losses during the peak summer season would have a significant impact on first-half revenue and profits. Clearly, compared with the previous fiscal year, Vitasoy International's current fiscal year is essentially "ruined." Are you "watching" me?