China Shengmu boosts milk powder sourcing with new agreement

China Shengmu Organic Milk Limited, through its wholly-owned subsidiary Shengmu High-tech, has entered into a new milk powder purchase framework agreement with Yiyingmei Dairy. The agreement, effective from August 28, 2025, to December 31, 2026, supersedes an existing agreement. The company anticipates increased demand for milk powder, particularly to support its expanded milk powder export trade business from August 2025.

Yiyingmei Dairy, a non-wholly owned subsidiary of Dabeinong Group, is considered a connected person of China Shengmu. The transactions under this new agreement constitute continuing connected transactions, subject to annual review, reporting, and announcement requirements under Chapter 14A of the Listing Rules, but are exempt from circular and independent shareholder approval.

The proposed annual caps for milk powder purchases are RMB 115m for the year ending December 31, 2025, and RMB 115m for the year ending December 31, 2026. This compares to historical transaction amounts of RMB 1.5m from March 28, 2024, to December 31, 2024, and RMB 8.1m for the seven months ended July 31, 2025. The purchase price will be determined on an arm's length basis, referencing prevailing market prices from at least two independent suppliers.