Beingmate Baby & Child's share price has kicked back into life, partly reversing the downward spiral that has occurred since Fonterra bought a 18.8 per cent stake in the company early in 2015.
Shares in the Shenzhen-listed infant formula maker and distributor have rallied to their highest point in more than a year to RMB6.85 (NZ$1.49) on the back of that result.
The price is well short of Fonterra's entry price of RMB18 a share - but well up on October's low of RMB3.95.
Early this month, Beingmate said its operating revenue fell by 6.92 per cent to 2.47 billion yuan (NZ$541.79 million) in 2018 but its net profit was up 104 per cent to 40.92 million yuan (NZ$8.97m).
The bottom line performance reverses consecutive losses in 2016 and 2017 of 780m yuan (NZ$171m) and 1.057b yuan (NZ$232m) respectively.
Fonterra, which last year said it was reviewing its assets, has its New Zealand icecream business Tip Top up for sale.
The holding in Beingmate is also under review, as is a third - as yet unnamed - asset.
A progress report on Tip Top is expected at next Wednesday's result for the six months to January 31.
Various parties have been mentioned as possible buyers of Tip Top.
European giant R&R Ice Cream has been mentioned as a possible contender, a long with the usual line-up of Australian private equity companies.
Strong milk prices are likely to have put pressure on Fonterra's margins, but the market's attention is likely to centre more on the update rather than its financial report.
"The key focus point of the result will be about strategic planning - where to from here," Forsyth Barr analyst Chelsea Leadbetter said.
"Asset sales, and the balance sheet, will be top of mind," she said.
Fonterra last year wrote down the value of its Beingmate stake by $405 million, against its initial purchase price of $755m.
The writedown was a factor in Fonterra reporting its first ever loss - $196m - for the July year.
Chris Greenough, Fonterra's strategic portfolio management, told the Herald in December that "green shoots" were emerging at Beingmate.
Meanwhile Beingmate has made a deal to marketing distribute ASX-listed Bubs full portfolio of infant formula and organic food products in China, setting aside RMB10 million to set up the venture.
Charles Li, Bubs' chief operating officer for China, said the joint venture would present Bubs with an opportunity to fast track its development of the China market.
Bubs is the leading producer of goat dairy products in Australia, with exclusive milk supply from the largest milking goat the country.
The company says it its Australia's only vertically integrated producer of goat milk infant formula.
In last month's announcement, Fonterra said there would be no interim dividend and that its dividend policy was also under review.
At the same time, Fonterra cut its earnings forecast for the year to a range of 15-25 cents per share.
The full year dividend will depend on the co-op's full year earnings and balance sheet position.
At the time said it was feeling the impact of difficult trading conditions in Latin America, mainly due to geopolitical situations in some countries.
The co-op wants to reduce its debt by $800 million this financial year.
Fonterra's units, which give non-farming investors access to its dividend flow, last traded on the NZX at $4.50, up from last month's low of $4.18.