Summary of Key Issues
Jiabiyou (now known as ST Jiabiyou) experienced a nearly complete halt in its core operations due to the ARA product controversy at the beginning of 2026. The EU imposed stricter regulations on ARA oils used in infant formula milk powder, leading to a 82% decline in revenue for the first half of the year to just 55 million yuan, and the company incurred a net loss of 100 million yuan. As a result, it was assigned the ST designation by the Shanghai Stock Exchange (indicating additional risk warnings). Even after resuming trading, its stock price plummeted by 20% (the daily limit down for the STAR Market). Although the company is attempting to restore supply to some customers and expand into new businesses, these new ventures account for a very small portion of its revenue. If annual revenue falls below 100 million yuan, it may face even more severe delisting threats (*ST).
Detailed Analysis
Why Did It Suddenly Become ST Jiabiyou? – Production Halts for Over 3 Months
The Shanghai Stock Exchange requires that if a company's operations are severely affected and it is unlikely to recover within three months, it must be given the ST designation to alert investors to potential risks. Jiabiyou met this criterion because its ARA business was impacted by EU regulations, preventing it from selling products and resuming production. Although the stock remained tradable after being labeled as ST, investors became more cautious, which is evident from the 20% drop on the first day of trading (the daily limit down for the STAR Market is 20%).
The ARA Controversy Was a Fatal Blow – Core Revenue was Cut Off
ARA is a nutritional component added to infant formula milk powder, similar to DHA, which aids in baby development. Jiabiyou generated 70% of its revenue from selling ARA. In early 2026, the EU tightened regulations on ARA oils, causing overseas customers to stop purchasing Jiabiyou’s products. This had a devastating impact: ARA accounted for 70% of the company's revenue in 2025, but by the first quarter of 2026, revenue plummeted by 92.9%, leading to a significant decline in overall performance.
How Bad Were the Financial Results? – Revenue Reduced by 80%, Net Loss of 100 Million Yuan
Compared to the same period last year, revenue dropped from 310 million yuan to 55 million yuan (a 82% decrease), and while there was a profit in the previous year, this year there was a net loss of 100 million yuan (a 193% decline).
On a quarterly basis, the first quarter was even worse: revenue was just 11 million yuan (a 92.9% drop), resulting in a loss of over 43 million yuan; revenue slightly recovered in the second quarter to around 44 million yuan, but losses increased to 57 million yuan—indicating that costs remained high and sales did not cover expenses.
Rescue Measures: Seeking New Customers and Expanding into New Areas
The company has stated that it has resumed supplying products to key customers in the health industry (such as health supplement companies), although the exact proportion of this business is unknown and likely small. It is also exploring new areas such as animal nutrition (adding nutrients to feed), cosmetics (skin care ingredients), and synthetic biology. However, these new businesses contributed only 3.3% of revenue in 2025 and are still in their initial stages, unable to make up for the loss from ARA.
The Biggest Risk: Annual Revenue Below 100 Million Yuan Could Lead to Delisting
If annual revenue in 2026 falls below 100 million yuan, the company will be assigned the *ST designation, indicating a higher level of delisting risk. With only 55 million yuan in the first half of the year, it would need to earn at least another 45 million yuan in the second half to reach this threshold. Given the slow recovery of its business, achieving this goal is very challenging, posing a significant threat.
Conclusion
Jiabiyou’s problem lies in its over-reliance on the ARA business; without it, the entire company is vulnerable. Current rescue efforts have not yet shown success. Whether it can generate enough revenue for the year remains critical, as failing to meet this requirement could result in delisting. For ordinary investors, stocks with the ST designation carry high risks, and caution is advised.