Investment Rating - The report maintains a "Strong Buy" rating for the company [5][9]. Core Views - The company is expected to recover from a challenging 2024, with a projected revenue of 119 billion yuan for 2025, indicating a cautious but optimistic outlook for demand [2][9]. - The company has effectively reduced inventory levels, leading to a potential recovery in quarterly revenue [1][2]. - The brand maintains a strong market position, with the highest market share in various product categories, including liquid milk and infant formula [3][4]. Financial Performance Summary - For 2024, the company reported a revenue of 115.78 billion yuan, a decrease of 8.24% year-on-year, and a net profit of 8.45 billion yuan, down 18.94% [1]. - The gross margin improved to 33.88%, an increase of 1.30 percentage points year-on-year, while the net profit margin was 7.33%, a slight decrease of 0.84 percentage points [1]. - In Q1 2025, the company achieved a revenue of 33.02 billion yuan, a year-on-year increase of 1.35%, with a net profit of 4.87 billion yuan, down 17.71% [2]. Market Position and Strategy - The company has a diversified product portfolio, including liquid milk, dairy beverages, and infant formula, which has shown resilience in a challenging economic environment [3]. - The company is focusing on inventory reduction and optimizing product freshness to enhance sales performance [2][3]. - The company plans to continue its high cash dividend policy, proposing a total cash dividend of 7.73 billion yuan for 2024, which represents 91.40% of its net profit [4]. Future Outlook - The company anticipates a gradual improvement in the supply-demand balance for raw milk in 2025, particularly in the third quarter due to seasonal demand [2]. - Revenue projections for 2024, 2025, and 2026 are 118.7 billion yuan, 124 billion yuan, and 130.2 billion yuan, respectively, with expected net profits of 10.7 billion yuan, 11.3 billion yuan, and 11.7 billion yuan [9][10].

Group 1 - Yili has launched three new infant formula products under the Jinlingguan brand in Hong Kong, marking its entry into the Hong Kong market and accelerating its global expansion strategy [1] - The infant formula and dairy products business, represented by Jinlingguan, has entered a steady expansion phase, achieving a revenue of 29.675 billion yuan, a year-on-year growth of 7.53%, with a gross margin of 41%, which is approximately 10 percentage points higher than the liquid milk business [1] - Jinlingguan's revenue has seen double-digit growth, with its retail market share increasing by two percentage points compared to the previous year [1] Group 2 - The declining birth rate in China presents challenges for the infant formula market, with expectations of further declines in the birth rate by 2025 [2] - Despite the challenges, there are structural opportunities in the market, and the infant formula industry is expected to enter a period of integration and structural adjustment by 2025 [2] - Yili will continue to focus on high-end positioning and innovation in its product offerings, responding to the increasing consumer demand for high-quality and scientifically formulated products [2] Group 3 - Yili has allocated a total subsidy of 1.6 billion yuan to provide at least 1,600 yuan in subsidies to eligible pregnant families across the country, including eight free nutritional products during pregnancy [3] - The subsidy program aims to support maternal and infant health, reflecting the company's commitment to social value and long-term brand investment [3] - The initiative is seen as a strategic investment in the future of maternal and infant health in China, benefiting many pregnant families in the short term while fostering a healthier environment for scientific parenting in the long term [3]

Core Viewpoint - The dairy industry is undergoing a capacity adjustment and destocking process, with a clear direction influenced by policy support, leading to potential stabilization of milk prices in the second half of the year [1] Group 1: Milk Price Cycle - The milk price cycle is influenced by multiple factors including capacity, demand, and imports, creating a cyclical relationship where milk prices affect farming profits, which in turn influence capacity [1] - Since 2008, the milk price has experienced three downward cycles and two upward cycles, with significant events like the melamine incident in 2008 impacting prices [1] Group 2: Industry Losses and Capacity Adjustment - The fresh milk price decline in 2024 has led to severe losses for farms, with a continuous destocking trend observed [2] - In 2024, the total raw milk production is projected to be 40.79 million tons, a decrease of 2.8% year-on-year, with a 4.5% decline in the number of Holstein cows [2] Group 3: 2025 Outlook - The current milk price adjustment cycle has lasted over three years, with over 80% of the industry facing losses, indicating a more severe situation than previous cycles [3] - Despite ongoing losses, policies such as fertility subsidies and student milk promotions are expected to marginally boost dairy product demand, leading to a potential stabilization of raw milk prices in the second half of 2025 [3] Group 4: Milk Price and Dairy Company Stock Performance - Historical data shows a high correlation between milk price fluctuations and stock price movements of upstream dairy companies, with stock prices often reacting ahead of milk prices [4] - During periods of rising milk prices, upstream companies are expected to benefit directly, while downstream dairy companies may experience stock price changes driven by their product structure upgrades and market expectations [4]

Investment Rating - The report rates the food and beverage industry as "Overweight" [1] Core Insights - The dairy price is expected to stabilize in the second half of 2025 after a prolonged adjustment cycle lasting over three years, with over 80% of the industry facing losses [6][60] - The report highlights the cyclical nature of raw milk prices influenced by production capacity, demand, and imports, with significant historical fluctuations noted [6][19] - The report emphasizes the correlation between raw milk prices and the stock prices of upstream dairy companies, suggesting that stock prices may react ahead of milk prices during cyclical changes [6][35] Summary by Sections 1. Raw Milk Price Cycle - The raw milk price is influenced by multiple factors including production capacity, demand, and imports, creating a cyclical pattern [6][19] - The dairy industry is characterized by a long breeding cycle for dairy cows, leading to delayed responses in production capacity adjustments [18][19] - Historical data shows three downward cycles and two upward cycles in raw milk prices since 2008, with significant events impacting demand and prices [19][26] 2. 2025 Outlook - The industry is currently facing severe losses, with a continued trend of dairy cow capacity reduction expected [60][62] - Policy support is anticipated to improve dairy product demand, contributing to a gradual stabilization of milk prices in the latter half of 2025 [60][64] - The report forecasts that as the supply-demand balance improves, raw milk prices may stabilize, benefiting upstream dairy companies [60][62] 3. Correlation Between Milk Prices and Dairy Company Stocks - The report notes a high correlation between raw milk prices and the stock prices of upstream dairy companies, indicating that stock prices may respond more quickly to changes in market conditions [6][35] - The performance of downstream dairy companies is also influenced by their product structure and market expectations, which can affect their stock prices during different price cycles [6][35] 4. Investment Recommendations - The report suggests focusing on leading dairy companies such as Modern Dairy and Yurun Dairy, as well as major dairy enterprises like Yili and New Dairy, which are expected to benefit from the stabilization of milk prices [6][60]

Core Viewpoint - The announcement details the pledge of shares by Hohhot Investment Co., Ltd., which holds 538,535,826 shares of Inner Mongolia Yili Industrial Group Co., Ltd., accounting for 8.51% of the company's total share capital [2][3] Summary of Key Points Share Pledge Details - Hohhot Investment Co., Ltd. has pledged a total of 186,800,000 shares, which represents 34.69% of its total holdings [2][3] - The specific pledge involves 3,510,000 shares, with no restrictions on the sale of these pledged shares [2] Shareholding Structure - Before the pledge, Hohhot Investment Co., Ltd. had 183,290,000 shares pledged, which is 34.69% of its total holdings [3] - After the current pledge, the total pledged shares amount to 186,800,000, leaving 351,826,826 shares unpledged [3] Legal Assurance - The board of directors of Inner Mongolia Yili Industrial Group Co., Ltd. guarantees that the announcement contains no false records, misleading statements, or major omissions, and they bear legal responsibility for the content's authenticity, accuracy, and completeness [2]

本公司董事会及全体董事保证本公告内容不存在任何虚假记载、误导性陈述或 者重大遗漏，并对其内容的真实性、准确性和完整性承担法律责任。 重要内容提示： 呼和浩特投资有限责任公司持有内蒙古伊利实业集团股份有限公 司（简称"公司"）股份538,535,826股，占公司总股本的8.51%，所持 公司股份累计质押数量（含本次）186,800,000股，占其持股总数的 34.69%。 公司于2025年5月22日接到股东呼和浩特投资有限责任公司函告，获 悉其所持有本公司的部分股份被质押，具体情况如下： | 股东 | 是否为 | 本次质押 | 是否 为限 | 是否 补充 | 质押 | 质押 | 质权人 | 占其所 持股份 | 占公司 总股本 | 质押融 资资金 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 名称 | 控股股东 | 股数（股） | 售股 | 质押 | 起始日 | 到期日 | | 比例（%） | 比例 （%） | 用途 | | 呼和浩特 投资有限 责任公司 | 否 | 3,510,000 | 否 | 否 | 2025 ...

Core Viewpoint - The announcement reveals that Hohhot Investment Co., Ltd. holds 539 million shares of Yili Industrial Group Co., Ltd., accounting for 8.51% of the total share capital, with a cumulative pledge of 187 million shares, representing 34.69% of its total holdings [1] Summary by Relevant Sections - Shareholding Details - Hohhot Investment Co., Ltd. holds 539 million shares, which is 8.51% of Yili's total share capital [1] - Pledge Information - The cumulative number of pledged shares is 187 million, which is 34.69% of Hohhot Investment's total holdings [1] - On May 21, 2025, Hohhot Investment pledged 3.51 million shares, with the pledge starting on the same date and expiring on April 17, 2026 [1] - Financing Purpose - The pledged financing is intended for production and operation purposes [1]

New Consumption Overview - Stella Rosa launched a new watermelon and chili flavored wine, expanding its spicy series [2] - Nestlé Coffee has refreshed its American coffee family with three new products using Yunnan Arabica coffee beans [5] - Aldi opened its first store in Kunshan, focusing on zero membership fees and low-priced small packaging [5] - Yili introduced a new crispy cheese product, utilizing a vacuum microwave process developed over three years [5] - Nestlé launched a new Absolute Dark Tea Coffee series, featuring a blend of coffee and tea polyphenols [5] Investment and Financing - Autonomous robot company completed A round financing of several hundred million yuan, led by Meituan [7] - Spanish second-hand platform Percentil was acquired for €610,000, avoiding bankruptcy [9] - Steve Madden established a joint venture to re-enter the Chinese market, marking its third attempt [9] - E-bike manufacturer Tezos secured Pre-A round financing of 50 million yuan for product development and market expansion [10] - Snack brand Farmley raised $40 million in C round financing, bringing total funding to $54.7 million [10] Major Company Developments - Taiping Bird announced a new brand positioning aimed at high-quality development in the apparel industry [13] - Unilever decided to close its clean beauty brand Ren due to internal factors and market challenges, with plans to shut down by Q3 2025 [13] - Qeelin announced Chinese table tennis player Wang Chuqin as its brand ambassador [13] - Neta Auto closed its first dealership in Indonesia as part of a strategic decision to adjust operations [13] - Meituan plans to invest $1 billion in its food delivery service Keeta in Brazil over the next five years [15]

Group 1: Product Launch and Market Entry - Yili Group launched three new infant formula products in Hong Kong, including Jinlingguan Zhenhu Platinum, Jinlingguan Tofier Minyi, and Jinlingguan Tofier Minyi Initial [2] - The Jinlingguan Zhenhu Platinum infant formula is produced at Yili's "Yili Health Valley" facility in Hohhot, Inner Mongolia, which is recognized as a global benchmark for intelligent manufacturing in infant formula [2] - Yili has entered into a strategic partnership with Mannings, Hong Kong's largest health retail chain, to sell its products in over 200 Mannings stores and online [2][8] Group 2: Research and Development - Yili's Vice President Zhang Yipeng emphasized the company's commitment to quality, innovation, and internationalization, aiming to leverage Hong Kong as a global window for opportunities [4] - The "2025 Key Findings of Breast Milk Research" was released, showcasing 13 significant research outcomes, including the precise analysis of amino acid composition in Chinese breast milk [4][6] - Yili has obtained 28 invention patents in the HMO (Human Milk Oligosaccharides) field, enhancing its competitive edge in the nutrition and health sector [6] Group 3: Financial Performance and Market Expansion - In 2024, Yili achieved a total revenue of 115.78 billion yuan, with revenue from milk powder and dairy products reaching 29.675 billion yuan, marking a year-on-year growth of 7.53% [6] - The overseas business of infant formula experienced a remarkable growth of 68%, with Yili maintaining the top position in overall milk powder sales in the Chinese market [6]

Group 1 - The company announced a profit distribution plan for the year 2024, proposing a cash dividend of 1.22 yuan per share (including tax), with a total share capital of 6,365,900,705 shares as of April 8, 2025, resulting in a total cash dividend of approximately 7,716,940,013.74 yuan, which represents 91.40% of the net profit attributable to shareholders [1][2] - Following the share buyback, the total share capital was adjusted to 6,325,360,667 shares, but the per-share distribution ratio remained unchanged, leading to a revised total cash dividend amount that corresponds to 91.29% of the net profit attributable to shareholders [2] - The company will maintain the per-share distribution ratio even if there are changes in total share capital between the announcement of the profit distribution plan and the record date for the equity distribution [1]