The fruit main business has turned from losses to profits, and Baiguoyuan (02411) has "spilled over" its capabilities into new battlefields.

The offline fresh produce retail sector is undergoing a profound reshuffling. The industry's price wars have intensified, ineffective store closures are accelerating, and profitability continues to be under pressure. The common dilemma for most brands has almost become increased revenue but difficult to boost profits, expansion difficult without improving quality. In this headwind, maintaining a solid foundation has proven challenging, let alone finding a breakthrough. However, the leading fruit retailer Baiguoyuan (02411) has chosen to deliver a robust performance during this industry adjustment period: In the first half of 2026, the company achieved revenues of 5.008 billion yuan, a year-on-year increase of 14.5%; the net profit attributable to shareholders was 34 million yuan, turning from a loss of 342 million yuan in the same period last year to a profit; there was a net increase of 372 stores, raising the total to 4,758. All three core indicatorsrevenue, profit, and store openingsshowed significant upward trends, indicating a rare simultaneous improvement. This is not a mere weak rebound but a strong testament to the comprehensive recovery of operational quality. Unlike many brands in the industry that passively defend their positions and follow the trend of internal competition, Baiguoyuan actively seeks innovation and change after stabilizing its main business: it not only breaks through the ceiling of a single fruit category through business model innovation but also pushes its supply chain and AI digital capabilities outward, pursuing a high-quality recovery path of internal quality improvement and external boundary expansion. This comprehensive repair has marked a turning point for growth. Baiguoyuan uses this mid-term report to declare that the deep adjustments of the past two years are over, and true value reassessment is just beginning. Deepening internally: clearing ineffective capacity and strengthening the core business through refined operations It must be said that the underlying support for this round of comprehensive performance recovery is clearly related to Baiguoyuan's proactive self-reform over the past two years. During the previous phase of extensive industry expansion, many offline stores in the market suffered from serious homogenization, low efficiency per unit area, and high losses, compounded by the impact of industry price wars, resulting in continuous pressure on businesses. In response, Baiguoyuan chose not to follow blindly but to actively "enhance internal capabilities" and begin comprehensive operational optimization. On one hand, Baiguoyuan has continued optimizing the structure of its national store network, clearing ineffective capacity. Specifically, during the reporting period, the company continued systematic reviews of its national store network, closing stores that were poorly located, inefficient, and operating at a loss, while retaining high-quality core locations. After two years of clearing ineffective stores and network iterations, the quality of store operations has significantly improved, resulting in a net increase of 372 retail stores in the first half of 2026, bringing the total to 4,758 stores, officially returning to a path of sustainable scaled expansion. At the same time, clearing ineffective capacity has completely resolved the previous issues of being "big but weak, with many stores but thin profits," laying a solid foundation for profitability in the new round of expansion. On the other hand, Baiguoyuan has implemented refined management across the entire supply chain, achieving significant cost reduction and efficiency gains. On the product side, Baiguoyuan has continually optimized its fresh SKU structure, eliminating low-turnover and high-loss categories, while increasing the proportion of high-cost-performance and high-repeat-purchase core fruit categories; on the supply side, it has continually refined collective purchasing, warehousing, and distribution systems to reduce losses in circulation and logistics costs; on the management side, it strictly controls all expense expenditures, achieving meticulous cost reduction; at the same time, the company has fully implemented AI ordering systems, AI store operation diagnostic tools, and proprietary large models for the fruit industry, using intelligent algorithms to accurately predict customer flow, optimize order quantities, and reduce fresh produce losses, significantly improving profitability through multiple measures. During this period, the companys gross profit increased by 182.5% year-on-year to 609 million yuan, with gross profit margin rising to approximately 12.2%. When every link of operational optimization takes effect, reversing profits is no longer an accident but a natural outcome. From optimizing store structures to reducing costs and increasing efficiency across the entire supply chain, from in-depth empowerment through AI technology to ongoing improvements in individual store models, Baiguoyuan's profit recovery is driven not by short-term policy benefits or irregular factors, but by the systematic upgrade of its operational model. This profitability resilience forged from within is the most solid starting point for Baiguoyuan's new growth cycle. Actively seeking change: from "fruit specialty" to the new battlefield of "fruit+" It is worth mentioning that as the foundation of the main business stabilizes, Baiguoyuan has not stopped at merely repairing its existing operations but has actively stepped beyond the limitations of a single fruit specialty track, avoiding the never-ending low-price internal competition in the industry, and initiated business model innovation and boundary expansion to create a new growth curvethis is also the fundamental driving force behind the company's high-quality growth. Specifically, facing a new landscape in the retail industry, Baiguoyuan has established a new development strategy of "fruit+", breaking the ceiling of a single category. In the first half of 2026, Baiguoyuan partnered with seven regional retail brands located in Inner Mongolia, Shaanxi, Henan, Jiangsu, Hunan, Jiangxi, and Guizhou (referred to as the "Seven Star Alliance"), actively laying out innovative store formats such as fruit+snacks, all-category discount supermarkets, and community fresh retail stores to meet the high-frequency, real-time fresh food consumption needs of community residents for five meals a day. From a business logic perspective, as a high-frequency essential category in the community, fruit has a strong attraction to drive customer traffic, able to stabilize daily in-store visits; snack categories, on the other hand, have higher gross margins, lower losses, and more stable consumption cycles. The two customer groups highly overlap, and their consumption scenarios complement each other, perfectly compensating for the shortcomings of pure fruit stores with a single profit structure and significant performance fluctuations. As of the report release date, there are a total of 1,951 stores operating under the Seven Star Alliance model. More symbolically, on July 18, 2026, Baiguoyuan opened its first innovative integrated store in Shenzhen. This new store type, named "Moon Store," spans about 150 square meters and breaks the limitations of traditional fresh fruit retail. The store integrates six business formats: selected fresh fruits, freshly prepared fruit beverages, specialty fruit coffee, fruit baked goods, premium fruit gifts, and a leisure social space. To adapt to different consumption scenarios, Baiguoyuan has established a three-tiered store matrix of Star Store + Moon Store + Sun Store. Star Stores are community standard small shops of around 50 square meters, serving as the basic traffic foundation for the brand; Moon Stores range from 150 to 200 square meters, focusing on commercial streets, office buildings, and mature communities, balancing consumer experience with store profitability; in the future, larger Sun flagship stores will be launched, situated in urban core business districts, serving as brand image showrooms. It is clear that the expansion from a single fruit to a composite business model including snacks, fruit beverages, and baked goods, as well as the innovative store formats of Moon and Star Stores, represents an upgrade in both revenue efficiency and profitability capability with each boundary Baiguoyuan expands. This also means that when the new battlefield of fruit+ is fully rolled out, Baiguoyuan is not only expanding the imagination of store models but also opening up a certain growth channel for continued revenue and profit expansion. Capability spillover: comprehensive supply chain opening to build an industry-level service platform With the main business foundation firmly established, a deeper strategic dimension for Baiguoyuan has emerged: capability spillover. In 2026, the company formally announced the comprehensive opening of its supply chain capabilities. Chairman Yu Huiyong has also set the direction for this strategic transformation: from being a "channel brand" serving its own stores to transitioning into a "supply chain platform + category brand incubator" that empowers the entire industry. This means that Baiguoyuans core capabilities accumulated over more than twenty years in purchasing, quality control, cold chain, and operations will shift from reducing internal costs and improving efficiency to comprehensive empowerment externally. This is not just a concept but a systematic project that is already being implemented. At the supplier conference in May 2026, Baiguoyuan released a systematic empowerment plan covering the entire chain from planting, seed industry, agricultural inputs, post-harvest handling, to fulfillment. On the planting end, the company launched the BLOF ecological harmony planting technology, variety licensing empowerment, and standardized agricultural input guarantees; on the circulation end, through quality control and post-harvest research and development, along with full-chain cost-effective fulfillment services, the key links to enhance fruit freshness and value have been connected; on the supporting end, AI and digital tools are deeply embedded in all links of the supply chain. Baiguoyuans relationship with its partner suppliers has also fully upgraded from a traditional "buy-sell relationship" to a new type of partnership characterized by "system integration, shared standards, data sharing, and value co-creation." Data is the best touchstone. In the first half of 2026, Baiguoyuan fully opened its supply chain, and its Ban Guo platform has established nine main warehouses and 694 city warehouses nationwide, further enhancing supply chain efficiency and expanding its market share in the 2B field. During this period, the total sales revenue from Ban Guo reached 1.4 billion yuan, a year-on-year increase of 21.9%; the revenue from direct sales of fruit and other foods amounted to 701 million yuan, a year-on-year increase of 0.1%. Category brand incubation has also been implemented alongside, further amplifying the value of the industrial platform. In the first half of the year, Baiguoyuan continued to deepen the differentiation of its signature fruits and has launched a total of 56 proprietary product brands in the market, accounting for 11.2% of the total retail sales of stores. Moreover, the company continues to promote strategies combining "high-traffic large single products" and seasonal products with extreme cost performance, while also launching marketing activities such as Good Fruits Repay Kindness. During this period, for high-traffic single products like durian, it organized the first Malaysia Durian Festival and the 10th Thailand Fruit Festival, leading to a year-on-year sales growth of approximately 7.5% for durians. In addition, Baiguoyuan's digital capabilities are also accelerating their spillover. Its AI ordering system, smart store diagnostic tools, and large models for the fruit industry are being externally shared, further helping partner merchants reduce fresh produce losses and enhance operational efficiency. During this period, the workload diversion from AI customer service reduced labor costs for the customer service team by 44%, and the efficiency of remotely monitoring stores improved fivefold compared to traditional monitoring. From the supply chain to category brands and digital tools, Baiguoyuan's systematic capabilities are stepping beyond the boundaries of its own stores. Conclusion In summary, it is clear that from the exploration of the composite business model of Moon Stores to the category collaborative layout of "fruit+snacks," and further to the opening of the supply chain and industrial depth of category brand incubationBaiguoyuan is employing a combination of strategies to break out of the price competition of fruit retail and actively define a new battlefield. Today, Baiguoyuan possesses the full brand potential on the C-end, a mature supply chain system on the B-end, and the platform-level category incubation capabilities, having long surpassed the single identity of a traditional fruit retailer, completing a profound leap from terminal channels to an industrial platform. In terms of the fruit industry, Baiguoyuan's industry voice and market share will see significant changes. In the future, as Baiguoyuan's operational turning point is gradually established and its growth boundaries continue to expand, its valuation logic will experience systematic reconstruction, and a new round of value reassessment is expected to accelerate.