29 March 2025 | 11:10AM HKT China Feihe Ltd. (6186.HK): First Take: In line 2024 topline growth, while NP behind on slower GPM expansion, higher S&D and lower Feihe reported 2024 results with revenue/reported net profit of Rmb20.7bn/3,570mn, implying 6.2%/5.3% yoy growth. The topline is largely in line with GSe at Rmb20.7bn and slightly below Visible Alpha consensus of Rmb20.9bn, while bottom line is lower than GSe at Rmb3,920mn and VA's Rmb3,874mn. In 2H24, revenue grew by 9% yoy (accelerated from 4% yoy i ...

Financial Performance - The group's revenue for the year ended December 31, 2024, was RMB 20,748.6 million, an increase of 6.2% compared to the previous year[2] - The group's gross profit for the same period was RMB 13,764.8 million, reflecting an 8.7% increase year-over-year[2] - The net profit for the year was RMB 3,654.1 million, which represents an 11.1% increase from the previous year[2] - Basic and diluted earnings per share were both RMB 0.39, up from RMB 0.37 in 2023[2] - The company reported a total comprehensive income of RMB 3,570.1 million for the year, compared to RMB 3,444.0 million in 2023[5] - The group’s profit before tax for 2024 was RMB 3,390,009,000, compared to RMB 3,570,125,000 in 2023, showing a decrease of approximately 5%[39] - The total tax expense for the year was RMB 1,895,606,000, an increase from RMB 1,559,940,000 in 2023, representing an increase of about 21%[35] - The group operated 42 Vitamin World USA retail stores in the U.S. as of December 31, 2024, employing 199 people, generating RMB 172.9 million in revenue from nutritional supplements[50] - Profit before tax increased by 14.4% from RMB 4,850.3 million in 2023 to RMB 5,549.7 million in 2024[66] - Net profit increased by 11.1% from RMB 3,290.4 million in 2023 to RMB 3,654.1 million in 2024[68] Dividends - The board proposed a final dividend of HKD 0.1632 per share, compared to HKD 0.1484 per share in 2023, totaling approximately HKD 1,479,775,000 (approximately RMB 1,351,924,000) for the interim dividend[2] - The company declared an interim dividend of HKD 0.1632 per share for 2024, up from HKD 0.1349 per share in 2023, which corresponds to approximately RMB 1.35 billion compared to RMB 1.14 billion in the previous year[36] - The dividend policy aims to distribute no less than 30% of the net profit for each fiscal year, depending on future investment plans[94] - The annual general meeting will be held on May 29, 2025, to discuss the proposed final dividend for 2024[95] - To qualify for the 2024 final dividend, all share transfer documents must be submitted by June 3, 2025[97] - The final dividend is expected to be paid to shareholders listed on June 5, 2025[97] Assets and Liabilities - Total assets less current liabilities amounted to RMB 29,134.7 million as of December 31, 2024, compared to RMB 28,812.4 million in 2023[6] - The company's non-current assets totaled RMB 13,477.1 million, slightly down from RMB 13,640.4 million in the previous year[6] - The company's cash and cash equivalents were RMB 9,321.2 million, down from RMB 10,440.9 million in 2023[6] - The total assets of the company as of December 31, 2024, were RMB 35,725,706, compared to RMB 36,194,678 in 2023, indicating a slight decrease[21] - The total liabilities for the year ended December 31, 2024, were RMB 8,318,321, a decrease from RMB 9,860,332 in 2023[21] Revenue Breakdown - Revenue from infant formula products reached RMB 19,061.6 million, accounting for 91.9% of total revenue, with a year-on-year growth of 6.6%[56] - Revenue from the mainland China market increased to RMB 20,545,954 in 2024, up from RMB 19,287,735 in 2023, representing a growth of 6.5%[23] - Sales to external customers in the raw milk segment amounted to RMB 154,290, while the dairy products and nutritional supplements segment generated RMB 20,594,260, contributing to a total of RMB 20,748,550[21] - The total revenue from e-commerce for 2024 was RMB 69,813,000, significantly up from RMB 21,659,000 in 2023, marking an increase of about 223%[32] Expenses - The cost of goods sold for 2024 was RMB 6,983,747,000, compared to RMB 6,868,850,000 in 2023, indicating an increase of about 1.7%[33] - Sales and distribution expenses increased by 7.0% to RMB 7,181.2 million, mainly due to higher advertising costs and online sales platform expenses[62] - Administrative expenses decreased by 4.6% to RMB 1,681.3 million, mainly due to reduced share-based payment expenses[63] - Other income and net gains decreased by 11.7% from RMB 1,659.5 million in 2023 to RMB 1,465.1 million in 2024, primarily due to reduced government subsidies[61] Market and Consumer Insights - The average disposable income in China reached RMB 41,314 in 2024, with a compound annual growth rate of 6.1% from 2019 to 2024, enhancing consumer purchasing power[43] - The number of newborns in China is projected to increase from approximately 9.5 million in 2024 due to supportive measures, despite a decline from 10.48‰ in 2019 to 6.77‰ in 2024[43] - The demand for high-end infant formula products is anticipated to grow, supported by rising disposable income and health awareness among consumers[43] - Urbanization and rising disposable income levels are expected to enhance consumer purchasing power, particularly in lower-tier cities and rural areas[43] Corporate Governance and Compliance - The company emphasizes its commitment to corporate governance and has adopted the corporate governance code as per the Hong Kong Stock Exchange[86] - The company has established an audit committee to oversee financial reporting and risk management, consisting of three members[91] - The company has confirmed compliance with the standards for securities trading by its directors during the reporting period[88] Strategic Initiatives - The company plans to continue expanding its overseas market presence, enhancing the global influence of the Feihe brand, and aims to position itself as a "global Feihe"[84] - The company is focusing on innovation in areas such as breast milk research, brain development research, and protein technology, aiming for breakthroughs in comprehensive nutrition[84] - The group is leveraging e-commerce platforms and its own website to directly sell products, targeting the younger generation of consumers[48] - The group aims to achieve an optimal balance of key components in infant formula by closely simulating the composition of breast milk from Chinese mothers[45]

2025-03-17 摘要 中国飞鹤 20250316 Q&A 中国飞鹤在当前市场环境下的表现如何？其经营改善的周期是什么样的？ 中国飞鹤近期股价表现强劲，主要受到生育政策落地的影响。然而，除了政策 催化因素外，飞鹤自身也迎来了经营改善加速的周期。自 2022 年上半年开始， 公司陆续进行调整，到 2024 年上半年，公司收入和利润增速同步实现转正。尽 管婴配粉行业面临新生儿人口下降的挑战，但飞鹤通过高端化逆势提升和龙头 份额集中，实现了结构性机会。 • 飞鹤通过高端化策略和龙头份额集中，在新生儿人口下降的背景下实现逆 势增长，2024 年上半年收入和利润增速均转正。卓睿大单品引领复苏，中 国消费者对婴幼儿食品安全的高要求推动了婴配粉市场的高溢价。 • 婴配粉行业品牌力和价格管控能力至关重要。飞鹤通过明星代言和线下活 动提升品牌形象，采用农村包围城市策略扩大市场份额。疫情期间，飞鹤 凭借灵活机制迅速抢占市场份额，2021 年达到高光时刻。 • 飞鹤通过横向扩张推出新国标产品，聚焦高端产品如卓睿系列，并优化超 高端新品结构以提升毛利率，目前毛利率可达 68%左右。同时，公司还通 过数字化门店推广和私域平台建设， ...

Financial Performance - Revenue for the six months ended June 30, 2024, reached RMB 10,094.9 million, a 3.7% increase compared to the same period in 2023[4] - Gross profit increased by 7.8% to RMB 6,852.5 million in the first half of 2024, up from RMB 6,359.3 million in 2023[4] - Net profit attributable to shareholders rose by 18.1% to RMB 1,911.5 million in the first half of 2024, compared to RMB 1,618.7 million in the same period last year[4] - Basic and diluted earnings per share increased by 10.5% to RMB 0.21 in the first half of 2024, up from RMB 0.19 in 2023[4] - Revenue increased by 3.7% to RMB 10,094.9 million in the first half of 2024 compared to RMB 9,735.2 million in the same period of 2023[14] - Gross profit rose by 7.8% to RMB 6,852.5 million, with gross margin improving from 65.3% to 67.9% due to growth in the Starry Flight product series[16] - Net profit attributable to shareholders increased by 18.1% to RMB 1,911.5 million, with a profit margin of 18.9%[13] - Pre-tax profit increased by 24.4% from RMB 2,435.0 million in the first half of 2023 to RMB 3,029.4 million in the first half of 2024[22] - Net profit for the period grew by 18.1% from RMB 1,618.7 million in the first half of 2023 to RMB 1,911.5 million in the first half of 2024[24] - Revenue for the six months ended June 30, 2024, increased to RMB 10,094,947 thousand, up 3.7% from RMB 9,735,225 thousand in the same period last year[88] - Gross profit rose to RMB 6,852,455 thousand, a 7.8% increase compared to RMB 6,359,266 thousand in 2023[88] - Net profit attributable to owners of the parent company reached RMB 1,875,011 thousand, up 10.6% from RMB 1,695,913 thousand in the previous year[88] - Total comprehensive income for the period was RMB 1,886,699 thousand, compared to RMB 1,747,812 thousand in 2023[89] - Earnings per share (basic and diluted) for the period were RMB 0.21, compared to RMB 0.19 in the same period last year[88] - The company's profit before tax for the six months ended June 30, 2024, was RMB 3,029,435,000, an increase from RMB 2,435,048,000 in the same period in 2023[93] - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 1,567,971,000, up from RMB 1,136,562,000 in the same period in 2023[93] - The company's pre-tax profit for the six months ended June 30, 2024, was RMB 3,242,492 thousand, compared to RMB 3,375,959 thousand in the same period in 2023, reflecting a decrease of 3.9%[108] - The company's profit attributable to ordinary equity holders for the six months ended June 30, 2024, was RMB 1,875,011 thousand, compared to RMB 1,695,913 thousand in the same period in 2023[115] Market and Industry Trends - The number of newborns in China decreased to approximately 9.0 million in 2023, down from 10.94‰ in 2018, with the number of children aged 0-3 dropping to 28.5 million[5] - China's per capita disposable income reached RMB 39,218 in 2023, with a compound annual growth rate of 6.8% from 2018 to 2023, driving demand for premium infant formula products[5] - The Chinese government's supportive policies, such as the "Three-Child Policy" and stricter national safety standards for infant formula, are expected to stabilize the market[6][7] - The premium infant formula segment is expected to grow due to urbanization, rising disposable income, and increased health awareness[5] Operational Highlights - The company's offline sales network generated 76.8% of total dairy product revenue, with over 2,800 distributors covering more than 80,000 retail outlets[9] - The company's production capacity reached over 363,000 tons annually, supported by 11 production facilities, including a newly licensed infant formula facility in Canada[10] - The company acquired over 1,430,000 new customers through approximately 460,000 face-to-face seminars held in the first half of 2024[11] - Nutritional supplement revenue from Vitamin World USA contributed RMB 81.3 million, accounting for 0.8% of total revenue[12] - Sales cost decreased by 4.0% to RMB 3,242.5 million, mainly due to lower raw material prices[15] - Sales and distribution expenses increased by 2.2% to RMB 3,535.4 million, driven by higher online and promotional activity costs[18] - Administrative expenses decreased by 2.5% to RMB 738.7 million, primarily due to reduced R&D costs[19] - The company's inventory decreased by RMB 102,725,000 in the six months ended June 30, 2024, compared to a decrease of RMB 14,134,000 in the same period in 2023[93] - Trade receivables and bills receivable decreased by RMB 123,240,000 in the six months ended June 30, 2024, compared to an increase of RMB 88,937,000 in the same period in 2023[93] - The company's depreciation of property, plant, and equipment increased to RMB 298,677,000 in the six months ended June 30, 2024, from RMB 259,403,000 in the same period in 2023[93] - The company's interest income increased to RMB 180,525,000 in the six months ended June 30, 2024, from RMB 151,047,000 in the same period in 2023[93] - The company's income tax paid increased to RMB 1,555,491,000 in the six months ended June 30, 2024, from RMB 1,317,360,000 in the same period in 2023[93] - Investment activities resulted in a net cash outflow of RMB 363.866 million in the first half of 2024, compared to a net cash inflow of RMB 2.311 billion in the same period of 2023[94] - The company purchased structural deposits worth RMB 4.645 billion in the first half of 2024, a significant increase from RMB 2.42 billion in the same period of 2023[94] - Redemption of structural deposits generated RMB 4.05 billion in cash inflow in the first half of 2024, down from RMB 5.263 billion in the same period of 2023[94] - The company's cash and cash equivalents decreased by RMB 203.744 million in the first half of 2024, compared to an increase of RMB 2.014 billion in the same period of 2023[94] - The company's cash and cash equivalents balance stood at RMB 7.21 billion as of June 30, 2024, down from RMB 7.581 billion as of June 30, 2023[94] - The company operates in two reportable segments: raw milk production and sales, and dairy products and nutritional supplements production and sales[98] - Total revenue for the six months ended June 30, 2024, reached RMB 10,094,947 thousand, compared to RMB 9,735,225 thousand in the same period in 2023, representing a 3.7% increase[99][104] - Revenue from external customers in Mainland China increased to RMB 9,987,364 thousand in 2024 from RMB 9,629,346 thousand in 2023, a 3.7% growth[102][105] - Revenue from the United States decreased to RMB 81,305 thousand in 2024 from RMB 105,879 thousand in 2023, a 23.2% decline[102][105] - Revenue from Canada was RMB 26,278 thousand in 2024, compared to no revenue reported in 2023[102][105] - Segment profit for the dairy products and nutritional supplements segment increased to RMB 2,894,421 thousand in 2024 from RMB 2,561,633 thousand in 2023, a 13% growth[99][101] - Total assets as of June 30, 2024, were RMB 35,609,185 thousand, slightly lower than RMB 36,194,678 thousand as of December 31, 2023[99][101] - Total liabilities as of June 30, 2024, decreased to RMB 8,565,478 thousand from RMB 9,860,332 thousand as of December 31, 2023, a 13.1% reduction[99][101] - Bank interest income increased to RMB 138,364 thousand in 2024 from RMB 112,069 thousand in 2023, a 23.5% increase[99][106] - Government grants related to income decreased to RMB 401,255 thousand in 2024 from RMB 517,622 thousand in 2023, a 22.5% decline[106] - The company recognized an impairment loss of RMB 85,925 thousand on property, plant, and equipment, and right-of-use assets due to losses incurred by a subsidiary[109] - Financial costs for the six months ended June 30, 2024, amounted to RMB 26,236 thousand, a slight decrease from RMB 27,347 thousand in the same period in 2023[110] - The company's tax expense for the six months ended June 30, 2024, was RMB 1,117,984 thousand, up from RMB 816,366 thousand in the same period in 2023[112] - The company acquired property, plant, and equipment worth RMB 332,733 thousand during the six months ended June 30, 2024, slightly lower than RMB 342,296 thousand in the same period in 2023[117] - The total number of dairy cows owned by the company as of June 30, 2024, was 109,696, an increase from 102,497 as of December 31, 2023[119] - The total value of dairy cows as of June 30, 2024, was RMB 2,304,520 thousand, compared to RMB 2,235,220 thousand as of December 31, 2023, showing an increase of RMB 69,300 thousand[123][124] - The value of lactating cows increased to RMB 1,230,810 thousand as of June 30, 2024, from RMB 969,000 thousand as of December 31, 2023, reflecting a growth of RMB 261,810 thousand[124] - The total inventory as of June 30, 2024, was RMB 2,139,247 thousand, a decrease from RMB 2,258,059 thousand as of December 31, 2023, primarily due to a reduction in feed and raw materials[128] - Trade receivables and bills receivable decreased to RMB 308,472 thousand as of June 30, 2024, from RMB 431,184 thousand as of December 31, 2023, indicating improved collection efficiency[129] - The fair value of biological assets classified as Level 3 was RMB 2,304,520 thousand as of June 30, 2024, compared to RMB 2,252,706 thousand as of December 31, 2023[127] - The company no longer held any dairy goats as of June 30, 2024, following the sale of a subsidiary, compared to a total of 4,752 dairy goats as of December 31, 2023[121][122] - The value of work-in-progress inventory increased significantly to RMB 1,054,892 thousand as of June 30, 2024, from RMB 676,838 thousand as of December 31, 2023, reflecting higher production activity[128] - The fair value change minus sales costs resulted in a loss of RMB 331,732 thousand for dairy cows in the first half of 2024, compared to a loss of RMB 731,461 thousand in the same period of 2023[124] - The company's trade receivables aged over three months decreased to RMB 33,058 thousand as of June 30, 2024, from RMB 25,766 thousand as of December 31, 2023, indicating better credit management[130] - Biological assets worth RMB 389,207 thousand were pledged for interest-bearing bank loans as of June 30, 2024, slightly down from RMB 391,283 thousand as of December 31, 2023[127] - Trade payables and bills payable decreased to RMB 1,642,060 thousand as of June 30, 2024, from RMB 1,838,223 thousand as of December 31, 2023[131] - Within trade payables and bills payable, 91.7% (RMB 1,505,086 thousand) were due within three months as of June 30, 2024[132] - Deferred revenue increased to RMB 672,501 thousand as of June 30, 2024, from RMB 632,893 thousand as of December 31, 2023[133] - Contract liabilities decreased to RMB 422,006 thousand as of June 30, 2024, from RMB 683,327 thousand as of December 31, 2023[133] - Capital commitments for construction and purchase of property, plant, and equipment increased to RMB 460,158 thousand as of June 30, 2024, from RMB 294,011 thousand as of December 31, 2023[136] - Sales of raw milk to companies controlled by the controlling shareholder increased to RMB 7,607 thousand in the first half of 2024, compared to RMB 3,183 thousand in the same period of 2023[137] - The total remuneration of key management personnel was RMB 21,913 thousand in the first half of 2024, slightly down from RMB 22,048 thousand in the same period of 2023[139] - Structured deposits increased to RMB 9,405,533 thousand as of June 30, 2024, from RMB 8,670,910 thousand as of December 31, 2023[140] - Interest-bearing bank and other borrowings decreased to RMB 1,267,805 thousand as of June 30, 2024, from RMB 1,377,750 thousand as of December 31, 2023[140] - The fair value of financial assets measured at fair value through other comprehensive income was RMB 1,800 thousand as of June 30, 2024, unchanged from December 31, 2023[143] - The fair value of structured deposits increased to RMB 9,405,533 thousand as of June 30, 2024, up from RMB 8,670,910 thousand as of December 31, 2023[143] - The fair value of interest-bearing bank and other borrowings decreased to RMB 1,260,282 thousand as of June 30, 2024, down from RMB 1,377,054 thousand as of December 31, 2023[145] - A 20% increase or decrease in the price-to-book ratio of comparable companies would result in a corresponding increase or decrease of approximately RMB 360,000 in the fair value of financial assets measured at fair value through other comprehensive income[144] Shareholder and Equity Information - Cold Youbin holds 587,516,458 shares, representing 6.48% of the company's total issued shares, through his controlled company Dasheng Limited[36][37] - Cold Youbin is deemed to have an interest in 3,889,911,881 shares held by Garland Glory Limited through the Cold Family Trust, representing 42.90% of the company's total issued shares[36][37] - Liu Hua holds 345,681,920 shares, representing 3.81% of the company's total issued shares, through the Liu Hua Family Trust[36][37] - Cai Fangliang holds 101,647,734 shares, representing 1.12% of the company's total issued shares, through his controlled company Adroit Shipping Limited[36][37] - Tu Fang'er holds 23,717,804 shares, representing 0.26% of the company's total issued shares, through the J.T. Living Trust[36][38] - Harneys Trustees Limited holds 4,461,740,357 shares, representing 49.21% of the company's total issued shares, as the trustee of the Cold Family Trust and Liu Hua Family Trust[41] - LYB International Holding Limited holds 3,889,911,881 shares, representing 42.90% of the company's total issued shares, through Garland Glory Holdings Limited[41] - Liu Shenghui holds 813,663,014 shares, representing 8.97% of the company's total issued shares, through controlled companies and as the founder of a discretionary trust[41] - Dasheng Limited holds 587,516,458 shares, representing 6.48% of the company's total issued shares, as the beneficial owner[41] - Harneys Trustees Limited holds interests in a total of 4,461,740,357 shares, including 3,889,911,881 shares held by the Leng Family Trust, 345,681,920 shares held by the Liu Hua Family Trust, and 226,146,556 shares held by the Liu Family Trust[42] - The company declared an interim dividend of HKD 0.1632 per share, totaling approximately HKD 1,479,775,478, to be paid by September 30, 2024[48] - The company maintains a dividend policy of distributing no less than 30% of the annual net profit to shareholders, subject to future investment plans[49] - The maximum number of shares that can be issued under the Pre-IPO Share Option Plan is 190,190,704 shares, representing approximately 2.10% of the company's total issued shares as of the date of this interim report

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

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].

Financial Performance - For the six months ended June 30, 2023, the company's revenue was RMB 9,735,225 thousand, a slight increase of 0.6% compared to RMB 9,672,823 thousand in the same period of 2022[7]. - Gross profit for the same period was RMB 6,359,266 thousand, representing a decrease of 2.7% from RMB 6,536,625 thousand year-on-year[7]. - The company's net profit for the period was RMB 1,618,682 thousand, down 28.8% from RMB 2,272,056 thousand in the previous year[7]. - Basic and diluted earnings per share were both RMB 0.19, a decrease of 24% compared to RMB 0.25 in the same period of 2022[7]. - Total comprehensive income for the period was RMB 1,747,812 thousand, compared to RMB 2,343,911 thousand in the prior year, reflecting a decrease of 25.5%[141]. - The group’s profit before tax for the six months ended June 30, 2023, was RMB 1,695,913,000, a decrease of 24.8% compared to RMB 2,255,887,000 for the same period in 2022[184]. - The total tax expense for the period was RMB 816,366,000, down 15.1% from RMB 962,692,000 in the prior year[181]. Market Trends - The Chinese infant formula market is expected to maintain stable retail sales value despite a declining birth rate, with the number of newborns projected to decrease at a slower rate from 2023 to 2027 due to supportive policies[9]. - Increased consumer confidence in the quality of domestic infant formula products is expected to drive production and sales, meeting diverse consumer needs[10]. - The high-end infant formula segment is anticipated to grow, driven by rising disposable income and health awareness, with per capita disposable income reaching RMB 36,883 in 2022[10]. - Urbanization and rising disposable income are expected to enhance purchasing power, allowing consumers in lower-tier cities and rural areas to afford higher-quality infant formula products[10]. Operational Highlights - The company held approximately 480,000 face-to-face seminars, acquiring over 1,120,000 new customers in the six months ended June 30, 2023[19]. - The company operates a distribution network with over 2,800 offline customers covering more than 94,000 retail points, generating 77.8% of total revenue from dairy products[14]. - The company has a designed annual production capacity of approximately 327,000 tons across its eleven production facilities as of June 30, 2023[16]. Expenses and Costs - Selling and distribution expenses rose by 10.1% to RMB 3,459.9 million, accounting for 35.5% of total revenue[21]. - The group's sales cost increased by 7.6% from RMB 3,136.2 million for the six months ended June 30, 2022, to RMB 3,376.0 million for the six months ended June 30, 2023, primarily due to changes in the product mix[24]. - Administrative expenses increased by 15.4% from RMB 656.7 million for the six months ended June 30, 2022, to RMB 757.5 million for the six months ended June 30, 2023, primarily due to higher R&D costs[29]. Cash Flow and Financial Position - As of June 30, 2023, the group had cash and cash equivalents of RMB 11,128.2 million, primarily consisting of cash on hand and bank deposits[38]. - The company reported a net cash inflow from financing activities of RMB (1,434,234) thousand, compared to RMB (90,931) thousand in the previous year, indicating a decline in financing cash flow[151]. - The total cash and bank balances were RMB 11,489,944 thousand, up from RMB 10,754,301 thousand year-over-year, marking an increase of approximately 6.83%[151]. Shareholder Information - As of June 30, 2023, the company has a total of 9,068,251,704 shares issued, with key executives holding significant stakes, including 42.90% by the founder through a family trust[57]. - The founder, Mr. Leng Youbin, holds 587,516,458 shares directly and through controlled entities, representing 6.48% of the total shares[60]. - Harneys Trustees Limited holds 4,461,740,357 shares, representing 49.20% of the company's equity[64]. Governance and Compliance - The board of directors has confirmed compliance with corporate governance codes during the reporting period, ensuring transparency and accountability[52]. - The company is dedicated to maintaining strong internal controls and effective governance practices to enhance operational integrity[51]. - The independent auditor's report was issued on August 28, 2023[138]. Future Plans and Investments - The company has no specific plans for significant investments or acquisitions of capital assets but will continue to seek new business development opportunities[46]. - The company aims to utilize the remaining net proceeds by December 31, 2025, as outlined in the prospectus[73]. - The company is focusing on developing a new generation of infant formula tailored for Chinese babies, leveraging active nutritional elements from the 47° North latitude milk source[48]. Stock Options and Share Awards - The 2020 stock option plan allows for a maximum of 134,000,100 shares to be granted, representing 1.48% of the total shares issued as of the report date[97]. - The 2023 Share Award Scheme was adopted on May 25, 2023, aimed at recognizing and rewarding contributions to the group's growth and attracting suitable talent[113][114]. - The maximum number of shares that can be awarded under the 2023 Share Award Scheme is capped at 10% of the company's issued share capital as of May 25, 2023, which equates to 906,825,170 shares[119].

Financial Performance - The group's revenue for the six months ended June 30, 2023, was RMB 9,735.2 million, an increase of 0.6% year-on-year[2] - The group's gross profit for the same period was RMB 6,359.3 million, a decrease of 2.7% year-on-year[2] - The group's profit for the period was RMB 1,618.7 million, a decrease of 28.8% year-on-year[2] - Basic earnings per share for the company were RMB 0.19, down from RMB 0.25 in the same period last year[3] - Total comprehensive income for the period was RMB 1,747.8 million, compared to RMB 2,343.9 million in the previous year[5] - The group reported a pre-tax profit of RMB 2,435,048 thousand for the six months ended June 30, 2023, compared to RMB 3,234,748 thousand in the same period of 2022, showing a decrease of about 24.7%[24] - The group's net profit decreased by 28.8% from RMB 2,272.1 million for the six months ended June 30, 2022, to RMB 1,618.7 million for the six months ended June 30, 2023[58] - Income tax expenses decreased by 15.2% from RMB 962.7 million for the six months ended June 30, 2022, to RMB 816.4 million for the six months ended June 30, 2023, due to the reduction in profit before tax[57] Assets and Liabilities - Non-current assets totaled RMB 13,428.8 million as of June 30, 2023, compared to RMB 13,286.1 million at the end of 2022[6] - Current assets amounted to RMB 21,543.8 million, a decrease from RMB 22,229.7 million at the end of 2022[6] - Current liabilities were RMB 6,755.5 million, down from RMB 7,459.7 million at the end of 2022[6] - The company's net asset value was RMB 25,830.8 million as of June 30, 2023, compared to RMB 25,474.9 million at the end of 2022[7] - The total assets of the group as of June 30, 2023, amounted to RMB 34,972,576 thousand, compared to RMB 35,515,773 thousand at the end of 2022, indicating a decrease of about 1.53%[18] - Total liabilities as of June 30, 2023, were RMB 9,141,784 thousand, down from RMB 10,040,830 thousand at the end of 2022, representing a reduction of approximately 8.95%[18] - The group's asset-liability ratio increased from 0.33 as of December 31, 2022, to 0.40 as of June 30, 2023[62] Revenue Breakdown - Revenue from external customers in mainland China was RMB 9,629,346 thousand for the six months ended June 30, 2023, compared to RMB 9,573,781 thousand in 2022, indicating an increase of about 0.58%[21] - For the three months ended June 30, 2023, the company reported revenue of RMB 1,583,551 thousand, compared to RMB 1,728,024 thousand for the same period in 2022, indicating a decrease of approximately 8.4%[35] - The retail sales value of the Chinese infant formula market is expected to remain stable despite the declining birth rate, driven by increased consumer confidence and preferences for quality products[36] Costs and Expenses - The cost of goods sold for the six months ended June 30, 2023, was RMB 3,375,959 thousand, up from RMB 3,136,198 thousand in 2022, reflecting an increase of approximately 7.65%[24] - The cost of sales increased by 7.6% to RMB 3,375.9 million from RMB 3,136.2 million, primarily due to changes in the product mix[49] - Selling and distribution expenses increased by 10.1% to RMB 3,459.9 million, mainly due to higher costs associated with offline activities and promotions[52] - Administrative expenses rose by 15.4% to RMB 757.5 million, primarily due to increased research and development costs[53] - Financial costs surged by 127.4% to RMB 27.3 million, attributed to increased interest-bearing loans from the parent company[55] Market and Industry Trends - The number of newborns in China decreased to approximately 9.6 million in 2022, down from 12.95‰ birth rate in 2016, reflecting a significant decline in the target demographic for infant formula[36] - The average annual disposable income in China reached RMB 36,883 in 2022, with a compound annual growth rate of 7.3% from 2017 to 2022, which is expected to drive demand for high-end infant formula products[37] - The Chinese government aims to maintain a self-sufficiency level of 60% for domestically produced infant formula, promoting local production and quality standards[38] - The new national safety standards for infant formula, effective from February 22, 2023, impose stricter regulations on protein, carbohydrates, and micronutrients, benefiting leading companies in the industry[39] - Urbanization and rising disposable income levels are enhancing consumer purchasing power, particularly in lower-tier cities and rural areas, which are increasingly able to afford higher-quality infant formula[37] Corporate Governance and Compliance - The company has adopted the corporate governance code as its own governance standard, ensuring transparency and accountability to shareholders[69] - The company emphasizes the importance of effective internal control measures to ensure compliance with applicable laws and regulations[69] - The audit committee has been established in accordance with listing rules, consisting of three members, including the chairman, Mr. Fan Yonghong[74] - The independent review of the interim financial information for the six months ended June 30, 2023, was conducted by Ernst & Young in accordance with the relevant standards[75] Future Plans and Strategies - The company is focusing on developing a new generation of infant formula that is more suitable for Chinese consumers, leveraging the unique resources from the 47° north latitude[68] - The company aims to expand into four major business areas: maternal and infant, children and adolescents, health food, and nutrition health, creating a comprehensive product family for all life stages[68] - The company has committed to a green and sustainable development model, actively contributing to rural revitalization and fulfilling social responsibilities[68] - The company is committed to enhancing its core capabilities, including unique resource endowments and integrated online and offline supply chain capabilities[68] Dividends - The company declared a final dividend of HKD 0.1721 per share, totaling approximately RMB 1.42 billion for the year ended December 31, 2022[29] - The company declared an interim dividend of HKD 0.1349 per share, totaling approximately HKD 1,223,021,059 (equivalent to about RMB 1,122,598,800) for the six months ended June 30, 2023[73] - The interim dividend represents 60% of the profit for the six months ended June 30, 2023, based on a policy to distribute no less than 30% of net profit for each financial year[73] - The company plans to maintain a dividend policy of distributing at least 30% of net profit for future financial years, depending on future investment plans[74]

Financial Performance - In 2022, China Feihe Limited reported revenue of RMB 21,310.9 million, a decrease of 6.4% from RMB 22,776.3 million in 2021[9]. - Gross profit for 2022 was RMB 13,950.6 million, down 12.9% from RMB 16,007.6 million in the previous year[9]. - Net profit decreased by 28.4% to RMB 4,948.1 million in 2022, compared to RMB 6,914.9 million in 2021[9]. - The company's revenue decreased by 6.4% from RMB 22,776.3 million in 2021 to RMB 21,310.9 million in 2022, primarily due to a decline in birth rates in mainland China and increased competition in the industry[36]. - The gross profit fell by 12.9% from RMB 16,007.6 million in 2021 to RMB 13,950.6 million in 2022, with the gross margin decreasing from 70.3% to 65.5%[41]. - Profit before tax decreased by 31.1% from RMB 9,672.3 million in 2021 to RMB 6,663.1 million in 2022[47]. - Income tax expenses decreased by 37.8% from RMB 2,757.4 million in 2021 to RMB 1,715.0 million in 2022, reflecting the decline in profit before tax[48]. - Other income and net gains decreased by 30.7% from RMB 1,974.0 million in 2021 to RMB 1,368.6 million in 2022, mainly due to reduced government subsidies[42]. - Administrative expenses rose by 27.1% from RMB 1,208.0 million in 2021 to RMB 1,535.0 million in 2022, primarily due to increased employee and R&D costs[44]. Assets and Equity - Total assets increased to RMB 35,515.8 million in 2022 from RMB 31,481.4 million in 2021[6]. - Total equity reached RMB 25,474.9 million in 2022, up from RMB 22,403.4 million in 2021[6]. - China Feihe's non-current assets amounted to RMB 13,286.1 million in 2022, reflecting growth from RMB 11,511.8 million in 2021[6]. - Cash and cash equivalents amounted to RMB 9,335.9 million as of December 31, 2022, primarily consisting of cash on hand and bank deposits[52]. Market Position and Strategy - The company maintained a strong market position, achieving 45 new product registrations for infant formula, leading the industry[10]. - The company aims to continue expanding its market presence and enhancing its brand value through strategic upgrades and innovation[8]. - The company is focused on creating a competitive brand and aims to become a century-old enterprise with international competitiveness[22]. - The company has a distribution network of over 2,700 offline customers covering approximately 94,000 retail points, generating 83.0% of total revenue from dairy products through offline sales[30]. - The company plans to expand its product range to cover four major business areas: maternal and infant nutrition, children's nutrition, adult nutrition, and health foods[21]. - The company aims to leverage the trend of Chinese modernization and expand its product offerings in the infant formula market, focusing on "fresh active nutrition" tailored for Chinese babies[63]. Research and Development - The company published 12 international SCI papers and received over 60 invention patent applications, demonstrating its commitment to R&D[10]. - China Feihe has been recognized for its research capabilities, leading the national "14th Five-Year" key research project on new infant formula technology based on Chinese breast milk[12]. - The company achieved a strategic upgrade to "fresh active nutrition," creating formula that better suits the physical constitution of Chinese babies[12]. - The company aims to innovate with a new generation of infant formula that focuses on the first 1,000 days of life, using active nutritional extracts from the 47° North golden milk source[21]. Corporate Social Responsibility and Sustainability - The company has implemented a green low-carbon development strategy, with three projects producing organic fertilizers that enhance soil quality over tens of thousands of acres[17]. - China Feihe's ESG rating was upgraded from BBB to A in 2022, marking the highest rating achieved by a Chinese food company[18]. - The company has initiated a public welfare campaign in collaboration with the Heilongjiang Provincial Education Department, benefiting 330,000 students[19]. - The company is committed to sustainable development and social responsibility, actively supporting rural revitalization and building a "common prosperity industrial chain" for higher quality growth[63]. Governance and Management - The board of directors includes experienced members such as Mr. Leng Youbin, who has over 30 years in the dairy industry and has been with the company since 2013[67]. - The company has a strong focus on financial management, with Mr. Liu Hua serving as CFO since 2013 and overseeing significant financing activities, including its listing on the NYSE in 2009[70]. - The company is set to re-elect several directors at the upcoming annual general meeting, ensuring continuity in leadership[65]. - The board of directors consists of eleven members, including four executive directors, three non-executive directors, and four independent non-executive directors, ensuring effective governance[192]. - The company has adopted corporate governance codes to promote effective internal controls and enhance transparency and accountability to shareholders[188]. Shareholder Information - Major shareholder Mr. Leng holds 4,477,428,339 shares, representing 49.29% of the company's equity[123]. - Harneys Trustees Limited, as a trustee, holds 4,461,740,357 shares, accounting for 49.12% of the equity[123]. - The percentage of shares held by the top five shareholders accounts for over 70% of the total equity, indicating concentrated ownership[123]. - The company has a diverse shareholder base, with multiple entities holding significant stakes, including Morgan Stanley entities with a combined total of 1,586,000,000 shares[123]. Future Outlook - The company has set a sales target of RMB 35 billion for 2023 and aims for a 15% compound annual growth rate from 2024 to 2028, although it anticipates challenges due to declining birth rates and increasing competition[50]. - The company plans to use HKD 2,621.9 million for offshore debt repayment, with an expected completion date by December 31, 2025[106]. - The company is focused on developing new products and technologies to meet consumer demands in the nutrition sector[72].