Analysis of the Rationality of Bright Dairy's Consideration for Acquiring the Remaining 40% Equity of Xiaoxiniu

According to the 2024 Annual Report and relevant announcements of Bright Dairy Co., Ltd. [0][1], the basic details of this transaction are as follows:

This acquisition is Bright Dairy’s fulfillment of the terms of the “60% Equity Acquisition Agreement” signed in November 2021. According to the original agreement, after the expiration of the performance commitment period, Bright Dairy has a purchase option (call option), and Foxit Venture Capital has a sale option (put option) [0].

• The transaction’s PE ratio (13.98x) is approximately a
  40% discount
  to the average PE of comparable listed companies (23.41x) [1]
• This indicates that the transaction pricing has a good margin of safety

• It is approximately 5.8% lower than the PE ratio (14.84x) of the 2021 acquisition of 60% equity
• This reflects Bright Dairy’s advantageous position in transaction negotiations

• The theoretical price calculated according to the agreement formula is RMB 622 million
• After negotiations between the two parties, the final consideration is RMB 500 million, representing a discount of approximately 19.6%
  [1]

• The cumulative completion rate for the performance commitment period (2022-2024) is 93.32%
• The counterparty shall pay a performance compensation of approximately
  RMB 32.43 million
  , which will be deducted from the unpaid transaction consideration [1]

1. Clear Valuation Advantage
   : The PE ratio of 13.98x is significantly lower than the comparable company average of 23.41x, representing a discount of approximately 40%
2. Negotiated Discount
   : The actual consideration of RMB 500 million represents a discount of approximately 19.6% compared to the theoretical price of RMB 622 million
3. Sound Risk Control
   : The arrangement of share delivery before payment is set up, and the counterparty has pledged 40% of the equity to Bright Dairy [1]
4. Performance Compensation Binding
   : Approximately RMB 32.43 million in performance compensation will be deducted from the unpaid transaction consideration
5. Significant Strategic Value
   : Xiaoxiniu is the leader in the dairy industry in Qinghai, with liquid milk output accounting for more than 60% of Qinghai Province’s total [1]

1. Performance Decline After Commitment Period
   : Xiaoxiniu’s net profit excluding non-recurring gains and losses from January to August 2025 was RMB 34.58 million, a significant decrease compared to the full-year 2024 figure of RMB 104 million [1]
2. Performance Commitment Not Fully Met
   : 2024 net profit excluding non-recurring gains and losses of RMB 103.7 million did not meet the committed target of RMB 108.9 million
3. Goodwill Impairment Pressure
   : The 2021 acquisition resulted in goodwill of RMB 299 million, accounting for 48.83% of the initial consideration, with impairment risks [0]
4. Industry Environment Under Pressure
   : From January to September 2025, the national liquid milk market sales volume grew by -7.8%, and sales revenue grew by -8.6% [1]
5. Operating Impact Emerges
   : The uncertainty of the equity transaction has had a phased impact on Xiaoxiniu’s operations

1. Rationality of Consideration
   : From the perspective of valuation multiples, the RMB 500 million consideration corresponds to a PE ratio of 13.98x, placing the pricing within a reasonable range
2. Risk Warning
   : Attention should be paid to the risks of goodwill impairment, continuous performance decline, and the impact of downward industry sentiment
3. Subsequent Focus
   : Focus on tracking Xiaoxiniu’s business recovery and the realization of integration synergies

[0] 2024 Annual Report of Bright Dairy Co., Ltd. (https://static.cninfo.com.cn/finalpage/2025-04-30/1223413933.PDF)

[1] Sina Finance - Bright Dairy Responds to Shanghai Stock Exchange Regulatory Letter, Explaining the Rationality of Acquiring Minority Equity of Xiaoxiniu (https://finance.sina.com.cn/stock/aigc/weigui/2026-01-09/doc-inhftipm5769106.shtml)

[2] Notes to 2024 Financial Statements of Bright Food (Group) Co., Ltd. (http://static.cninfo.com.cn/finalpage/2025-04-30/1223447581.pdf)