(Yicai Global) July 12 -- Shares in Guangdong Yantang Dairy and New Hope Dairy surged today after the two Chinese dairy producers forecast profit to almost double in the first half from the same period last year on soaring demand for pasteurized fresh milk sales.

Yantang Dairy’s stock price [SHE:002732] leapt by the exchange-imposed daily limit of 10 percent to CNY25.18 (USD3.90) apiece, giving it a market valuation of CNY4 billion (USD617.7 million). New Hope Dairy’s share price [SHE:002946] advanced 7.98 percent to CNY14.89 (USD2.30), boosting its market capitalization to CNY12.9 billion (USD1.99 billion).

Smaller, regional dairy companies such as New Hope and Yantang have been able to seize market share from national giants in the area of fresh pasteurized milk as consumer awareness of its health benefits has increased during the Covid-19 pandemic, said Dong Guangyang, head of Huachuang Securities’ research institute.

Over half of New Hope’s income last year was from refrigerated fresh milk and this increased to 70 percent in the first quarter, said Secretary of the Board Zheng Shifeng.

National dairy giants such as Yili Industrial Group and China Mengniu Dairy, which dominate sales of long-life milk, are moving into the fresh milk sector but they will not knock out the competition at this stage, Dong said.

New Hope is estimating net profit of between CNY143 million (USD22.1 million) and CNY153 million in the six months ended June 30, the Chengdu-based firm said in its earnings forecast yesterday. This would be a between 87 percent jump and doubling from the same period last year, it said. Revenue should leap by over 60 percent, it added.

Yantang Dairy is anticipating net profit of between CNY108 million (USD16.7 million) and CNY120 million, up between 80 percent and double, the Guangzhou-based company said.

The two firms’ main markets are in the area where they are based. Almost half of New Hope’s revenue last year was from southwest China and 98 percent of Yantang’s earnings came from Guangdong province.

Hohhot, Inner Mongolia Autonomous Region-based Yili and Mengniu have yet to release their first-half financial results. Yili posted a two-and-a-half-time leap in profit in the first quarter from the same period last year to CNY2.8 billion (USD432 million) and a 32 percent jump in revenue to CNY27.4 billion (USD4.2 billion).

Editors: Dou Shicong, Kim Taylor