China Modern Dairy Holdings Ltd. provided group earnings guidance for six months ended June 30, 2023. For the period, the Group is expected to record a profit attributable to the shareholders of the Company in the range between RMB 200 million to RMB 220 million (2022 same period: RMB 508 million), representing a decrease of approximately 57% to 61% year-on-year. Nevertheless, it is expected that there will be a significant decrease in the profit attributable to shareholders of the Company for the Reporting Period as compared to the same period in 2022, mainly attributed to the following factors: The decrease in gross profit margin and lower gross profit of the raw milk business was mainly attributable to the prices of bulk raw materials remained at a high level as compared with the same period in 2022, and the downward trend of selling prices in the domestic raw milk market in mainland China, which resulted in a decrease in gross profit margin of the Group's raw milk business by approximately 4 percentage points as compared with that of the corresponding period in 2022.

The growth in total sales volume of raw milk during the Reporting Period could not fully offset the impact of the decrease in gross profit margin, resulting in a decrease in gross profit of the raw milk business by approximately RMB 120 million to RMB 180 million or 8% to 12% as compared with the same period in 2022; and The increase in loss arising from changes in fair value less costs to sell of dairy cows was mainly attributable to the decrease in market price of beef, the decrease in selling price of raw milk and the increase in feed costs during the Reporting Period, which resulted in an increase in loss arising from changes in fair value of less costs of dairy cows by approximately RMB 180 million to RMB 240 million, or an increase of 50% to 70%, as compared with the same period in 2022.