Financial Performance - The group's revenue for the six months ended June 30, 2024, was RMB 10,094.9 million, an increase of 3.7% year-on-year[4]. - The group's gross profit for the same period was RMB 6,852.5 million, reflecting a year-on-year increase of 7.8%[4]. - The group's profit for the period was RMB 1,911.5 million, representing an 18.1% increase compared to the same period last year[4]. - Basic earnings per share for the company were RMB 0.21, up from RMB 0.19 in the previous year[4]. - The total comprehensive income for the period was RMB 1,886.7 million, compared to RMB 1,747.8 million in the prior year[6]. - The company reported a net profit margin of approximately 18.9% for the reporting period[4]. - The company's net income for the six months ended June 30, 2024, was RMB 862,259 thousand, slightly down from RMB 869,592 thousand in the previous year[25]. - Profit before tax increased by 24.4% to RMB 3,029.4 million, compared to RMB 2,435.0 million for the same period in 2023[62]. - The total tax expense for the period was RMB 1,117,984 thousand, compared to RMB 816,366 thousand for the same period in 2023, indicating an increase of 36.9%[31]. - The company's profit attributable to equity holders for the six months ended June 30, 2024, was RMB 1,875,011,000, compared to RMB 1,695,913,000 for the same period in 2023, representing an increase of approximately 10.6%[36]. Expenses and Costs - The group’s sales and distribution expenses increased to RMB 3,535.4 million, compared to RMB 3,459.9 million in the previous year[5]. - The company recorded other income and gains of RMB 862.3 million, slightly down from RMB 869.6 million in the previous year[5]. - The group’s administrative expenses were RMB 738.7 million, a decrease from RMB 757.5 million year-on-year[5]. - Selling and distribution expenses increased by 2.2% to RMB 3,535.4 million, attributed to higher costs for online activities and promotional events[58]. - Financial costs for the six months ended June 30, 2024, were RMB 26,236 thousand, a decrease from RMB 27,347 thousand in the same period of 2023[29]. - The company's financial costs, excluding lease liabilities, were RMB 24,268 thousand for the six months ended June 30, 2024[18]. Assets and Liabilities - Non-current assets increased from RMB 13,213,200 thousand in June 2023 to RMB 13,640,407 thousand in June 2024, reflecting a growth of approximately 3.2%[8]. - Current assets rose from RMB 22,395,985 thousand in June 2023 to RMB 22,554,271 thousand in June 2024, indicating an increase of about 0.7%[8]. - Total liabilities increased from RMB 6,712,617 thousand in June 2023 to RMB 7,382,230 thousand in June 2024, representing a growth of approximately 10%[8]. - Non-current liabilities rose significantly from RMB 1,852,861 thousand in June 2023 to RMB 2,478,102 thousand in June 2024, marking an increase of around 33.7%[9]. - The company's net asset value decreased from RMB 27,043,707 thousand in June 2023 to RMB 26,334,346 thousand in June 2024, a decline of about 2.6%[9]. - Cash and cash equivalents increased from RMB 9,667,497 thousand in June 2023 to RMB 10,440,941 thousand in June 2024, showing a growth of approximately 8%[8]. - The total current liabilities increased from RMB 6,712,617 thousand in June 2023 to RMB 7,382,230 thousand in June 2024, reflecting a rise of about 10%[9]. - The company's long-term bank deposits increased from RMB 300,000 thousand in June 2023 to RMB 540,000 thousand in June 2024, indicating an increase of 80%[8]. - The total assets as of June 30, 2024, amounted to RMB 35,609,185 thousand, compared to RMB 36,194,678 thousand as of December 31, 2023[18][20]. - The total liabilities as of June 30, 2024, were RMB 8,565,478 thousand, a decrease from RMB 9,860,332 thousand as of December 31, 2023[20]. Market and Industry Trends - The average disposable income in China reached RMB 39,218 in 2023, with a compound annual growth rate of 6.8% from 2018 to 2023, which is expected to drive demand for premium infant formula products[44]. - The number of newborns in China decreased to approximately 9.0 million in 2023, down from 10.94‰ birth rate in 2018 to 6.39‰ in 2023, reflecting a significant demographic shift[43]. - The Chinese government has introduced favorable industry policies aimed at increasing the proportion of domestically produced infant formula, targeting a self-sufficiency level of 60%[44]. - The market for premium infant formula is expected to grow due to rising urbanization and increasing disposable income among consumers in China[44]. - The new national safety standards for infant formula, effective February 22, 2023, impose stricter regulations on protein, carbohydrates, and micronutrients, benefiting leading companies in the infant formula sector[45]. Strategic Initiatives - The company anticipates continued growth in revenue and profit for the next fiscal period, driven by market expansion and new product development strategies[4]. - The group plans to continue innovating and optimizing its product portfolio to boost consumer confidence and expand growth opportunities in the dairy sector[78]. - The group has increased its production capacity to over 363,000 tons, primarily due to enhancements in liquid milk production facilities[48]. - The group conducted approximately 460,000 face-to-face seminars, acquiring over 1,430,000 new customers as of June 30, 2024[49]. - The company has implemented a policy requiring customers to pay in advance for product sales, except for certain major customers with established credit terms[37]. Dividends and Shareholder Returns - The company declared a final dividend of HKD 0.1484 per share, totaling approximately RMB 1.25 billion for the year ended December 31, 2023[32]. - The company declared an interim dividend of HKD 0.1632 per share, totaling approximately HKD 1,479.8 million, which represents about 70% of the profit for the six months ending June 30, 2024[85][87]. - The company plans to maintain a dividend policy of distributing no less than 30% of net profit for each financial year, depending on future investment plans[87].

Financial Performance - Revenue decreased by 8.3% year-on-year from RMB 21,310.9 million in 2022 to RMB 19,532.2 million in 2023[8] - Gross profit decreased by 9.2% year-on-year from RMB 13,950.6 million in 2022 to RMB 12,663.4 million in 2023[8] - Net profit decreased by 33.5% year-on-year from RMB 4,948.1 million in 2022 to RMB 3,290.4 million in 2023[8] - Total revenue decreased by 8.3% to RMB 19,532.2 million in 2023 from RMB 21,310.9 million in 2022[33] - Infant formula products revenue declined by 10.3% to RMB 17,876.8 million, accounting for 91.5% of total revenue[33] - Gross profit decreased by 9.2% to RMB 12,663.4 million, with a gross margin of 64.8% in 2023[37] - Net profit attributable to shareholders dropped by 33.5% to RMB 3,290.4 million in 2023[46] - Revenue decreased by 8.3% from RMB 21,310.9 million in 2022 to RMB 19,532.2 million in 2023, primarily due to low birth rates in China and intense industry competition[32] - Gross profit margin decreased from 65.5% in 2022 to 64.8% in 2023, with gross profit declining by 9.2% to RMB 12,663.4 million[30] - Net profit for the year dropped by 33.5% to RMB 3,290.4 million, with a net profit margin of 16.8% in 2023 compared to 23.2% in 2022[30] - Sales and distribution expenses increased by 2.5% to RMB 6,709.1 million, representing 34.3% of total revenue in 2023[30] - Administrative expenses rose by 14.8% to RMB 1,762.0 million, accounting for 9.0% of total revenue in 2023[30] - Other income and gains increased by 21.3% to RMB 1,659.5 million, contributing 8.5% to total revenue in 2023[30] - Sales and distribution expenses increased by 2.5% to RMB 6,709.1 million, mainly due to higher advertising and promotional costs[39] - Administrative expenses rose by 14.8% to RMB 1,762.0 million, driven by increased employee and R&D costs[41] - Net cash generated from operating activities decreased to RMB 4,145.3 million in 2023 from RMB 6,279.1 million in 2022[54] - Capital expenditures amounted to RMB 1,510.1 million, primarily for property, plant, and equipment[56] - The company's asset-liability ratio increased to (0.36) as of December 31, 2023, compared to (0.33) in the previous year[52] - Total asset mortgages decreased by RMB 1,195.2 million to RMB 418.9 million as of December 31, 2023[58] Assets and Equity - Total assets increased to RMB 36,194.7 million in 2023 from RMB 35,515.8 million in 2022[6] - Total equity increased to RMB 26,334.3 million in 2023 from RMB 25,474.9 million in 2022[6] - Cash and cash equivalents stood at RMB 10,440.9 million as of December 31, 2023[49] - The company's distributable reserves as of December 31, 2023, amounted to approximately RMB 11,323.6 million, with RMB 1,220.9 million proposed for the final dividend distribution[108] Research and Development - Launched the "14th Five-Year Plan" national key R&D project, leading the development of China's next-generation infant formula[10] - Established a research platform and foundation with Peking University and Harvard Boston Children's Hospital for brain development strategy[10] - China Feihe plans to focus on the "brain development" strategy and expand its product offerings across life cycle nutrition services[13] - The company will focus on developing next-generation infant formula products tailored to Chinese babies' needs, leveraging advanced "fresh-locking" technology and expanding into four major business areas: pregnant women and infants, children and students, health foods, and nutritional health[63] Awards and Recognition - Won 11 "World Dairy Innovation Awards" at the Global Dairy Congress[10] - China Feihe's three factories were recognized as national-level "Green Factories" in 2023[12] Market and Industry Trends - The number of newborns in China decreased to approximately 9.0 million in 2023, down from 10.94‰ in 2018 to 6.39‰ in 2023[16] - China's per capita disposable income in 2023 was RMB 39,218, with a CAGR of 6.8% from 2018 to 2023[17] - The high-end infant formula market is expected to drive growth in China's infant formula industry due to rising disposable incomes and urbanization[17] - The Chinese government's policies, such as the "Three-Child Policy," aim to slow the decline in birth rates and support the infant formula market[20] Distribution and Production - The company operates through a distribution network of over 2,800 offline customers, covering more than 83,000 retail outlets, contributing to 79.6% of total dairy product revenue[24] - The company's production capacity reached 327,000 tons annually across 11 production facilities as of December 31, 2023[25] - The company acquired 2.8 million new customers in 2023 through approximately 950,000 face-to-face seminars[27] - Revenue from nutritional supplements, primarily through Vitamin World USA, amounted to RMB 231.7 million, accounting for 1.2% of total revenue[28] Sustainability and Social Responsibility - The company is committed to sustainable development and contributing to China's dual carbon goals[14] - The company will continue to innovate green and circular development models, contribute to rural revitalization, and fulfill social responsibilities to achieve higher-quality sustainable development[63] - The group's charitable donations for the year ending December 31, 2023, totaled approximately RMB 27,044,000[108] Corporate Governance and Leadership - Chairman and CEO Leng Youbin, along with three other directors, will retire by rotation at the upcoming annual general meeting but are eligible and willing to stand for re-election[67] - Liu Hua, aged 51, serves as the Executive Director, Vice Chairman, Chairman of the Environmental, Social and Governance Committee, member of the Remuneration Committee, authorized representative under the Listing Rules, and Chief Financial Officer of the company[72] - Cai Fangliang, aged 55, serves as the Executive Director and President of the company, focusing on the group's marketing management and overall business development[73] - Tu Fang'er, aged 48, serves as the Executive Director, member of the Environmental, Social and Governance Committee, Vice President, Company Secretary, and authorized representative under the Listing Rules, extensively involved in the group's international business development and capital market matters[74] - Gao Yu, aged 50, serves as a Non-Executive Director and has extensive experience in investment banking and private equity, previously holding senior positions at Morgan Stanley[76] - Chen Guojin, aged 47, serves as a Non-Executive Director and is the co-founder and Managing Director of Guan Yan Asset Management (Hong Kong) Limited, with a background in investment banking and private equity[77] - Zhang Guohua, aged 59, serves as a Non-Executive Director and has a rich background in the nutrition and beverage industry, previously holding senior positions at Nestlé and Wyeth Nutrition[79] - Jacques Maurice LAFORGE, aged 68, was appointed as an independent non-executive director in June 2019, effective from October 2019, bringing extensive experience in the Canadian dairy industry[86] - Leng Youbin, aged 55, serves as the executive director, chairman, and CEO, responsible for the overall development strategy and business planning of the company since August 21, 1996[88] - Liu Hua, aged 51, serves as the executive director, vice chairman, and CFO, responsible for the company's audit, accounting, and financial management since November 6, 2000[88] - Cai Fangliang, aged 55, serves as the executive director and president, responsible for the overall management and business development of the company since November 22, 2010[88] - Tu Fang'er, aged 48, serves as the executive director, vice president, and company secretary, responsible for the company's international business development, capital market matters, and legal affairs since October 1, 2006[88] - Fan Yonghong, aged 56, was appointed as an independent non-executive director in June 2019, effective from October 2019, with extensive experience in financial management and served as the chairman of the audit committee[84] - Liu Jinping, aged 52, was appointed as an independent non-executive director in June 2019, effective from October 2019, and currently serves as the chairman of the remuneration committee and a member of the nomination and ESG committees[81] - Song Jianwu, aged 60, was appointed as an independent non-executive director in June 2019, effective from October 2019, and currently serves as a member of the nomination committee[82] - The board of directors is pleased to present the annual report and the audited financial statements for the year ended December 31, 2023[90] - Laforge Environmental Inc. and Laforge Holsteins Ltd., companies operated by Jacques Maurice LAFORGE, are involved in waste-to-energy facilities and mixed farming in Canada[86] Dividends and Shareholder Returns - The company plans to distribute no less than 30% of its net profit as dividends to shareholders each fiscal year, subject to future investment plans[96][100] - The proposed final dividend for the year ended December 31, 2023, is HK$0.1484 per share, totaling approximately HK$1,345,580,000 (equivalent to approximately RMB 1,220,923,000)[99] - The company paid an interim dividend of HK$0.1349 per share in September 2023, totaling approximately HK$1,223,021,000 (equivalent to approximately RMB 1,136,522,000)[99] - The final dividend for 2023 represents 70% of the profit for the six months ended December 31, 2023, based on the company's dividend policy[99] Share Capital and Share Options - The company's authorized share capital as of December 31, 2023, is $50,000, divided into 2,000,000,000,000 shares with a par value of $0.000000025 per share[104] - The Pre-IPO Share Option Plan allows for the issuance of up to 190,190,704 shares, representing approximately 2.10% of the company's total issued shares as of the report date[149] - All Pre-IPO share options granted to Dasheng Limited (totaling 190,190,704 shares) were exercised on September 29, 2022[155] - The 2020 Share Option Plan allows for the issuance of up to 134,000,100 shares, representing approximately 1.48% of the company's total issued shares as of the report date[159] - The maximum number of shares that can be issued under the 2020 Share Option Plan is limited to 1% of the total issued share capital[160] - The 2020 Share Option Plan allows the Board to grant share options to selected participants within a 10-year period starting from June 22, 2020[161] - Participants must pay HKD 1.00 as consideration for the grant of 2020 share options, and the payment is non-refundable[162] - The exercise price of the 2020 share options cannot be lower than the highest of: (a) the closing price on the grant date, (b) the average closing price over the 5 trading days before the grant date, or (c) the nominal value of the shares[165][166] - As of December 31, 2023, 28,044,000 share options granted in February 2021 remained unexercised, with an exercise price of HKD 23.80[168] - As of December 31, 2023, 7,712,900 share options granted in July 2021 remained unexercised, with an exercise price of HKD 16.84[168] - As of December 31, 2023, 7,442,000 share options granted in January 2022 remained unexercised, with an exercise price of HKD 11.769[168] - The company has 80,696,300 share options available under the 2020 Share Option Plan, representing approximately 0.89% of the total issued shares as of the reporting date[169] - The 2023 Share Award Plan has a maximum grant limit of 10% of the company's issued share capital as of May 25, 2023, which is 906,825,170 shares[178] - The 2023 Share Award Plan has a service provider sub-limit of 0.5% of the company's issued share capital as of May 25, 2023, which is 45,341,258 shares[178] - The 2023 Share Award Plan is valid for 10 years from May 25, 2023, and no further share awards can be made after the 10-year period[176] - Any share award to directors, key executives, or major shareholders exceeding 0.1% of the issued shares within a 12-month period requires shareholder approval[179] - The 2023 Share Award Plan aims to reward and retain eligible participants for their contributions to the company's growth and development[172] - Eligible participants for the 2023 Share Award Plan include employees, associated entities, and service providers[173] - The 2023 Share Award Plan is managed by the board or committee in accordance with the plan's terms and the trust deed[177] - The trustee cannot exercise voting rights for any shares held under the 2023 Share Award Plan until the shares are vested[182] - The 2023 Share Award Plan includes provisions for the trustee to purchase shares on the stock exchange or over-the-counter using group funding and other distributions[175] - The company repurchased a total of 1,000,000 shares at a total cost of approximately HKD 4.7 million during the reporting period[187] - As of December 31, 2023, the company had 9,554 full-time employees, an increase from 9,489 in the previous year[191] - The company's total issued shares as of December 31, 2023, were 9,067,251,704 after the repurchased shares were canceled[187] - The company's 2023 Share Award Plan will terminate on the 10th anniversary of its adoption on May 25, 2023, or on an earlier date determined by the Board[185] - The company believes the share repurchase reflects confidence in its market-leading position and long-term business prospects[188] - The company's public shareholding complies with the requirements of Listing Rule 8.08 as of the annual report date[186] - The company provides competitive compensation packages, including bonuses and promotions, to incentivize outstanding employee performance[192] - The company adheres to corporate governance principles, including effective internal controls and high ethical standards[194] - The company's 2023 Share Award Plan has not granted any share awards since its adoption on May 25, 2023[185] - The company's related party transactions disclosed in the financial statements are exempt from shareholder approval and annual review under Listing Rule 14A[189] - The company has adopted a standard code of conduct for directors and employees regarding securities transactions, ensuring compliance with regulatory standards[195] - The consolidated financial statements for the year ended December 31, 2023, were audited by Ernst & Young, and a resolution will be proposed at the upcoming annual general meeting to reappoint Ernst & Young as the company's auditor[196] - The company was not involved in any significant litigation or arbitration during the reporting period, and the directors are not aware of any pending or threatened litigation or claims that are material to the company[197] - The company is not aware of any specific tax relief granted to shareholders due to their interests in the company's securities[198] - The company has allocated sufficient resources to ensure continuous compliance with laws and regulations and maintains good relationships with regulatory authorities through effective communication[200] Shareholder Structure - Cold Youbin holds 587,516,458 shares (6.48%) through Dasheng Limited, which he controls with a two-thirds stake[129][130] - Cold Youbin's family trust holds 3,889,911,881 shares (42.90%) through Harneys Trustees Limited[129][130] - Liu Hua holds 345,681,920 shares (3.81%) through his family trust managed by Harneys Trustees Limited[129][131] - Cai Fangliang holds 101,647,734 shares (1.12%) through Adroit Shipping Limited, which he fully owns[129][131] - Harneys Trustees Limited holds a total of 4,461,740,357 shares (49.21%) across various trusts, including Cold Youbin's and Liu Hua's family trusts[136][137] - Liu Shenghui holds 813,663,014 shares (8.97%) through Dasheng Limited and his family trust[136][138] - Dasheng Limited holds 587,516,458 shares (6.48%), with Cold Youbin and Liu Shenghui owning two-thirds and one-third stakes respectively[136][138] - Tu Fang'er holds 23,717,804 shares (0.26%) through the J.T. Living Trust[129][131] - Gao Yu holds 7,536,151 shares (0.08%) as a result of allocations from Morgan Stanley Private Equity Asia III, LLC and related entities[132] - Chen Guojin holds 3,368,918 shares (0.04%) as a result of allocations from Morgan Stanley Private Equity Asia and related entities[132] Debt and Financial Instruments - The company did not issue any debt securities during the year ended December 31, 2023[140] - No equity-linked agreements were entered into during the year ended December 31, 2023[142] - The company did not provide any financial assistance or guarantees to its affiliates during the

Investment Rating - The report upgrades China Feihe (6186 HK) to a "Buy" rating with a target price of HKD 4 65 based on an 11x 2024 P/E and a total return of 21% including dividends [1] - The target price implies a potential upside of 13 3% from the current price of HKD 4 11 [2] Core Views - China Feihe has overcome its most challenging phase with improved channel inventory management stable brand momentum and stabilized gross margins for key products [1] - The company's free cash flow is expected to turn positive year-over-year and its dividend yield for 2024 is projected to rise to 7 7% among the highest in the consumer sector [1] - Enhanced channel and terminal price management will benefit long-term sustainable development despite potential short-term negative impacts on demand [1] - Short-term revenue growth remains uncertain but long-term market share growth is expected driven by improved terminal pricing and healthy inventory levels for core products [1] - Free cash flow is expected to improve in 2024 supporting further increases in dividend payouts [1] Financial Performance and Forecasts - Revenue for 2024E is projected at RMB 19 451 million a slight decline of 0 4% year-over-year with a gradual recovery expected in 2025E and 2026E [4] - Net profit attributable to shareholders is forecasted to grow by 2 9% in 2024E reaching RMB 3 489 million with further growth expected in subsequent years [4] - Gross margin is expected to remain stable at around 64 5% in 2024E with operating margin projected at 29 2% [6] - Free cash flow is anticipated to improve in 2024 driven by better profitability reduced working capital and lower capital expenditures [1] Channel and Inventory Management - China Feihe has implemented digital store management electronic fencing and a distribution system to optimize terminal inventory and price management [1] - These measures are expected to improve dealer profitability reinforce the premium positioning of Feihe products and create room for future ex-factory price increases [1] - Current inventory levels for core products such as Classic Star Flyer and Zhuorui are healthy at less than one month ensuring alignment between shipments and terminal sales [1] Dividend Policy - In 2023 China Feihe paid a dividend of RMB 2 36 billion representing 89% of free cash flow and a payout ratio of 69 6% up from 45 5% in 2022 [1] - Management has committed to increasing the absolute dividend amount in 2024 barring extreme adverse conditions [1] Market and Competitive Position - Despite weak market demand due to declining birth rates and consumer spending China Feihe aims for at least 5% revenue growth in 2024 [1] - The company's focus on premium products and improved pricing strategies is expected to help it gain market share in the long term [1]

公司研究 | 动态跟踪 中国飞鹤 06186.HK 单品强势+国产替代，看好公司发展稳中向 买入（维持） 好 股价（2024年02月02日） 3.57港元 目标价格 4.90港元 52周最高价/最低价 6.96/3.53港元 总股本/流通H股（万股） 906,725/906,725 H股市值（百万港币） 32,370 核心观点 国家/地区 中国 行业 食品饮料 ⚫ 卓睿增势强劲，预计库存合理。分产品来看，卓睿增长势头强劲；我们预计星飞帆 报告发布日期 2024年02月05日 销量同比延续下滑趋势，主要因公司在数字化过程中主力产品由700g转换为900g 规格包装，渠道仍需时间适应；整体来看，卓睿占比持续提升，符合公司产品规 1周 1月 3月 12月 划。公司严格控制渠道库存，预计当前公司产品整体渠道库存保持在合理水平，有 绝对表现% -5.56 -14.39 -27.59 -48.86 利于24年轻装上阵。此外，公司积极推进客户营销活动，组织面对面研讨会，包括 相对表现% -2.94 -6.91 -17.74 -19.6 妈妈的爱研讨会、嘉年华及路演；截至23年6月末，公司共举办约48万场面对面 恒生指数% ...

交银国际研究 公司更新 消费 收盘价 目标价 潜在涨幅 2024年4月3日 港元3.87 港元3.40 -12.1% 中国飞鹤 (6186 HK) 销售复苏取决于数字化零售和高端产品的成功  2023年净利润同比下降31%，与盈利预警一致：飞鹤2023年销售额同比 个股评级 下降 8.3%至 195 亿元人民币，净利润同比下降 31%至 33.90 亿元人民币 中性 （比交银国际预期高5%），与盈利预警一致。由于1）出生率下降；2） 价格竞争；3）零售网点关闭；4）渠道去库存，销售额从2023年上半年 同比增长 1%放缓至下半年同比下降 16%。下半年的毛利率稳定在 64.3%， 1年股价表现 但由于去杠杆化和 7.5 亿元人民币的生物资产净值损失（原生态牧业）， 经营利润率/净利润率分别下降了 308/420 个基点。 6186 HK 恒生指数 5% 0%  产品：高端化策略以抵消销量下滑：2023 年，超高端/高端/普通婴幼儿配 -5% 方奶粉占销售额的 64%/22%/7%，销售额分别同比下降 1%/24%/32%。旗 -10% -15% 舰产品星飞帆卓睿的收入贡献从 8%上升到 2023 年的 2 ...

Investment Rating - The investment rating for China Feihe (6186.HK) is "Buy" with a target price of 4.9 HKD, indicating a potential upside of 33% from the current price of 3.68 HKD [3][8]. Core Insights - The worst period for the industry is expected to be over, with a projected recovery in birth rates in 2024, which may positively impact the company's performance [1]. - In 2023, the company's revenue was 19.5 billion RMB, a decline of 8.3% year-on-year, primarily due to intensified competition and a decrease in birth rates [1][14]. - The net profit for 2023 was 3.29 billion RMB, down 33% year-on-year, with a net profit margin of 16.8% [1][14]. - The company is focusing on digital sales strategies and inventory management to navigate the challenging market conditions [1]. Financial Performance Summary - Revenue for 2023: 19.5 billion RMB, down 8.3% YoY [1][14]. - Net profit for 2023: 3.29 billion RMB, down 33% YoY [1][14]. - Gross margin for 2023: 64.8%, a decrease of 0.7 percentage points YoY [1][14]. - Sales expense ratio: 34.3%, an increase of 3.6 percentage points YoY [1][14]. - Management expense ratio: 9%, an increase of 1.8 percentage points YoY [1][14]. - Cash and cash equivalents at the end of 2023: 19.6 billion RMB, with a debt ratio of 27% [1][14]. Earnings Forecast - Projected net profit for 2024: 3.55 billion RMB, with an EPS of 0.43 HKD [1][14]. - Projected net profit for 2025: 3.71 billion RMB, with an EPS of 0.45 HKD [1][14]. - Projected net profit for 2026: 3.89 billion RMB, with an EPS of 0.47 HKD [1][14]. Valuation Analysis - The average P/E ratio for comparable companies in the dairy sector is estimated at 10x, leading to a target price of 4.9 HKD based on a combination of comparable company and DCF valuation methods [8][10].

Investment Rating - The report maintains a "Buy" rating for China Feihe (6186.HK) [4] Core Views - The company experienced a revenue decline of 8.3% year-on-year in 2023, with total revenue reaching 19.53 billion yuan and a net profit of 3.39 billion yuan, down 31.4% year-on-year [2][3] - The decline in revenue is attributed to a continuous drop in birth rates, intensified industry price competition, and the closure of some retail stores [2] - Despite the challenges, China Feihe remains the leading player in the Chinese infant formula market, holding market shares of 20.2% in all channels, 22.8% offline, and 14.4% online as of January 2024 [2] - The company plans to upgrade its channel digitalization to enhance control over retail terminals and stabilize pricing [2] Financial Performance Summary - In 2023, the company's revenue from infant formula was 17.88 billion yuan, down 10.3% year-on-year, with the ordinary product segment experiencing the most significant decline [2] - Other dairy products saw a revenue increase of 23.4% to 1.42 billion yuan, while health products generated 232 million yuan, up 2.8% [2] - The gross margin for the company was 64.8%, a decrease of 0.6 percentage points, primarily due to a shift in product mix towards lower-margin adult milk powder [3] - The net profit margin fell to 17.4%, down 5.8 percentage points year-on-year, influenced by increased sales and management expenses [3] Earnings Forecast and Valuation - The net profit forecasts for 2024 and 2025 have been revised down to 3.545 billion yuan and 3.739 billion yuan, respectively, reflecting a 1.9% and 4.4% decrease from previous estimates [3] - The report introduces a 2026 net profit forecast of 3.864 billion yuan, with expected EPS of 0.39, 0.41, and 0.43 yuan for 2024, 2025, and 2026, respectively [3] - The current stock price corresponds to a PE ratio of 9x for 2024, 8x for 2025, and 8x for 2026 [3]

Financial Performance - The group's revenue for the year ended December 31, 2023, was RMB 19,532.2 million, a decrease of 8.3% compared to the previous year[2]. - The group's gross profit for the same period was RMB 12,663.4 million, down 9.2% year-on-year[2]. - The net profit for the year was RMB 3,290.4 million, representing a decline of 33.5% compared to the previous year[2]. - Basic and diluted earnings per share were both RMB 0.37, down from RMB 0.55 in 2022[2]. - The group reported a total comprehensive income of RMB 3,444.0 million for the year, down from RMB 5,110.0 million in 2022[5]. - Revenue from customer contracts for 2023 was RMB 19,532,203 thousand, a decrease of 8.4% from RMB 21,310,933 thousand in 2022[35]. - Revenue from dairy products was RMB 19,298,143 thousand, while revenue from raw milk was RMB 234,060 thousand for 2023[36]. - The group reported a pre-tax profit of RMB 6,868,850 thousand for 2023, down from RMB 7,360,333 thousand in 2022[40]. - Profit before tax decreased by 27.2% from RMB 6,663.1 million in 2022 to RMB 4,850.3 million in 2023[76]. - Net profit fell by 33.5% to RMB 3,290.4 million, down from RMB 4,948.1 million in 2022[78]. Dividends - The board proposed a final dividend of HKD 0.1484 per share, compared to HKD 0.1721 per share in 2022[2]. - The interim dividend declared was HKD 0.1349 per share, amounting to approximately RMB 1.14 billion, compared to RMB 0.1131 per share and RMB 0.9 billion in 2022[45]. - The proposed final dividend for 2023 is HKD 0.1484 per share, totaling approximately RMB 1.22 billion, down from RMB 1.37 billion in 2022[45]. - The company plans to maintain a dividend policy of distributing no less than 30% of net profit for each financial year, depending on future investment plans[110]. Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 41,446.7 million, compared to RMB 40,315.8 million in 2022[7]. - The company's total equity increased to RMB 26,334.3 million from RMB 25,474.9 million in the previous year[8]. - The company reported a total liability of RMB 9,860,332 thousand for the year ended December 31, 2023, which is a slight decrease from RMB 10,040,830 thousand in 2022[26][28]. - Non-current liabilities totaled RMB 2,478.1 million, a slight decrease from RMB 2,581.1 million in 2022[8]. - The asset-liability ratio increased from 0.33 in 2022 to 0.36 in 2023[85]. Cash Flow - The company's cash and cash equivalents increased to RMB 10,440.9 million from RMB 9,335.9 million in the previous year[7]. - The net cash flow from operating activities for 2023 was RMB 4,145.3 million, a decrease from RMB 6,279.1 million in 2022[86]. - The group generated a net cash flow from investing activities of RMB 386.7 million in 2023, down from RMB 4,803.7 million in 2022[86]. Segment Performance - The segment performance for the raw milk division reported a loss of RMB 325,738 thousand, while the dairy products and nutritional supplements segment achieved a profit of RMB 4,756,742 thousand, leading to a total adjusted profit before tax of RMB 4,850,292 thousand[26]. - Revenue from infant formula products was RMB 17,876.8 million, accounting for 91.5% of total revenue, down 10.3% from RMB 19,932.3 million in 2022[66]. - Revenue from the nutritional supplement segment, operated through Vitamin World USA, amounted to RMB 231.7 million, representing 1.2% of the company's total revenue for the year ending December 31, 2023[60]. Market and Industry Trends - The average disposable income in China reached RMB 39,218 in 2023, with a compound annual growth rate of 6.8% from 2018 to 2023[53]. - The number of newborns in China decreased to approximately 9 million in 2023, down from 10.94‰ birth rate in 2018 to 6.39‰ in 2023[52]. - The market for high-end infant formula is expected to grow due to increased disposable income and health awareness among consumers[53]. - The retail sales value of the infant formula market in China is expected to remain stable despite the declining birth rate[52]. Compliance and Governance - The financial statements are prepared in accordance with International Financial Reporting Standards and presented in Renminbi (RMB), with amounts rounded to the nearest thousand (RMB thousand)[13][14]. - The group’s financial reporting is subject to the disclosure requirements of the Hong Kong Companies Ordinance[13]. - The company confirmed compliance with the corporate governance code throughout the reporting period[99]. - The company has established a strong internal control system to ensure compliance with applicable laws and regulations[100]. Strategic Focus - The company plans to focus on developing a new generation of infant formula that emphasizes active nutrition, targeting the early life stage of 1,000 days[96]. - The company aims to expand into four major business areas: maternal and infant, children, health food, and nutrition health[96]. - The company has a designed annual production capacity of approximately 327,000 tons across 11 production facilities as of December 31, 2023[58]. - The company offers a diversified product portfolio to meet a wide range of customer needs, including ultra-high-end and high-end categories[56]. Shareholder Actions - The company repurchased a total of 1,000,000 shares at a total cost of approximately HKD 4.7 million during the reporting period[102]. - The total number of issued shares is 9,067,251,704 after the cancellation of repurchased shares[102]. - The company believes that the share repurchase reflects confidence in its current and long-term business prospects[102].

Investment Rating - The report maintains a "Buy" rating for China Feihe (6186.HK) [4] Core Views - The company is expected to face significant pressure in 2023, with projected revenue of 19.66-19.89 billion yuan, a decrease of 6.7%-9.5% year-on-year, and a net profit of 3.13-3.43 billion yuan, down 30.6%-36.7% year-on-year [2][3] - The decline in birth rates and intensified industry competition are major factors contributing to the revenue drop [2] - Despite the challenges, China Feihe remains the market leader in the infant formula sector, holding the top position in China for five consecutive years and globally for three years [2] Summary by Sections Revenue and Profit Forecast - For 2023, the company anticipates revenue of 19.66-19.89 billion yuan, with a net profit of 3.13-3.43 billion yuan, reflecting a significant decline compared to previous years [2][3] - The expected net profit margin for 2023 is projected to be 16.2%-17.3%, a decrease of 6.0-7.0 percentage points year-on-year [2] Market Conditions - The infant formula industry is under pressure due to a declining birth rate, with 2023 birth numbers reported at 9.02 million, a further drop from 2022 [2] - The company is expected to see a revenue decline in the second half of 2023, with estimates of 9.56-10.14 billion yuan, down 12.8%-17.8% year-on-year [2] Competitive Position - China Feihe continues to lead the infant formula market in China, with a strong brand presence and market share despite the overall industry contraction [2] - The report suggests that as competitors exit the market, the industry concentration may improve, potentially benefiting the company in 2024 [3] Earnings Estimates - The net profit estimates for 2023-2025 have been revised downwards to 3.29 billion, 3.61 billion, and 3.91 billion yuan respectively, reflecting a reduction of 25.7%-27.8% from previous forecasts [3] - The expected earnings per share (EPS) for 2023-2025 are projected at 0.36, 0.40, and 0.43 yuan [3]

交银国际研究 公司更新 消费 收盘价 目标价 潜在涨幅 2024年3月11日 港元3.76 港元3.40↓ -9.6% 中国飞鹤 (6186 HK) 下半年销售额和利润率下滑，导致 2023 年净利润不及预期  2023年净利润远低于市场一致预期：飞鹤预计净利润为31.3-34.3亿元人民 个股评级 币，同比下降31-37%（低于市场一致预期的-9%），对应2023年下半年净 中性 利润同比下降31-43%（远低于市场一致预期的+12.5%）。2023年收入同比 下降 6.7-9.5%至 193.0-198.8 亿元人民币（低于市场一致预期的同比增长 +2%），对应2023年下半年同比下降13-18%（远低于市场一致预期的同比 1年股价表现 增长+2%），2023年下半年收入低于预期。这意味着2023 年下半年的净利 6186 HK 恒生指数 润率为15-17%，延续了上半年（净利润率为17.4%）的疲软态势，而非市 5% 0% 场预期的恢复至2022年约23-24%的水平。 -5% -10% -15%  国标过渡后竞争比预期激烈：飞鹤将其疲软的业绩归因于“中国出生人口 -20% -25% 下降及行业竞争 ...