“The company once known as China’s No.1 baking oil stock is now struggling as its products become harder to sell.”

China’s “No.1 Baking Oil Stock” Struggles as Sales Slow and Costs Surge

During the first ten months of 2025, Nanchow Food—the company once known as China’s top baking oil enterprise—saw its net profit plunge by more than 80%. The sharp rise in raw material prices such as palm oil and coconut oil forced the company to accelerate expansion into new channels including tea beverage chains and supermarkets.

🔻Net Profit Fell Over 80% in October

According to the company’s monthly report released on November 20:

• October revenue: 235 million RMB, down 5.27% YoY
• Net profit attributable to shareholders: 1.7053 million RMB, down 82.28% YoY

The company attributed the decline to soaring raw material costs.

For the first three quarters of 2025:

• Revenue: 2.268 billion RMB, down 1.6%
• Net profit: 28.82 million RMB, down 80.82% (vs. 150 million RMB last year)
• Non-recurring net profit: 25.58 million RMB, down 81.69%

🔻Q3 Turned Loss-Making

In Q3 specifically:

• Revenue: 713 million RMB, down 3.51%
• Net profit: –7.14 million RMB
• Non-recurring net profit: –8.07 million RMB

The company explained that product price hikes lagged behind the surge in raw material prices, causing margins to deteriorate rapidly.

🔻Raw Materials Remain Expensive: Palm Oil, Coconut Oil & Dairy All Rising

Nanchow engages in the production of baking oils, whipping cream, fillings and other baking ingredients. Its core materials—palm oil, coconut oil and imported dairy—have all increased sharply:

• Palm oil: Average domestic prices rose 18.76% (H1) and 14.45% (Q3)
• Coconut oil: September 2025 import price reached USD 2,482.64/ton, up nearly 65% YoY
• Imported cream: Average price in the first three quarters of 2025 reached USD 8,086/ton, up 21.5% YoY

The combination of rising costs has put significant pressure on profitability.

🔻Company Seeks Solutions: Channel Expansion & Product Diversification

To respond to rising costs, Nanchow is advancing a strategy focused on “baking + foodservice + retail”:

• Launching new products for fast-growing coffee and tea chains
• Expanding its pre-baked product line
• Strengthening distributor networks and penetrating lower-tier cities
• Serving a broad customer base, including bakeries, hotels, restaurants, tea shops, coffee chains, and supermarkets

🔻Expansion Project Delayed

On August 11, Nanchow announced the completion date of its expansion and technology upgrade project would be postponed from September 2025 to June 2026.

• Total investment: 383 million RMB
• Investment completed: 303 million RMB (progress 79.29%)

The company said the delay allows better alignment with market conditions and optimized capacity planning.