Core Viewpoint - China Feihe has issued a profit warning for the first half of 2025, reporting a significant decline in both revenue and net profit, marking the worst mid-year performance in five years [1] Group 1: Financial Performance - Revenue for the first half of 2025 is projected to be between 9.1 billion and 9.3 billion yuan, representing a year-on-year decline of 7.87% to 9.86% [1] - Net profit is expected to be between 1 billion and 1.2 billion yuan, down 37.17% to 47.64% year-on-year, also the lowest mid-year performance in five years [1] Group 2: Reasons for Performance Decline - The decline in performance is attributed to several factors: 1. The company has actively fulfilled its social responsibility by providing fertility subsidies to consumers, leading to a decrease in revenue [1] 2. The company has reduced channel inventory of infant formula to maintain product freshness and health, impacting sales [1] 3. There has been a reduction in government subsidies received by the company [1] 4. The company has made impairment provisions for whole milk powder products [1] Group 3: Core Business Insights - The core business of infant formula remains under pressure, with sales volume struggling and diversification efforts showing limited results [2] - In 2024, the infant formula segment generated 19.062 billion yuan in revenue, contributing 91.9% to total revenue, indicating its critical importance to the company [2] Group 4: Market Dynamics - The demand for infant formula is closely tied to the birth rate, which has been declining in China, despite recent policies aimed at increasing birth rates [4] - The government has announced cash subsidies for families, but there are reports of price increases for various baby products, including China Feihe's products, leading to consumer concerns [4][5] Group 5: Pricing and Distribution Challenges - There are discrepancies in pricing across different sales channels, with reports of significant price variations for the same product [6] - The company relies heavily on over 2,800 distributors, which accounts for 77.1% of its total revenue from dairy products, leading to potential issues with brand control and pricing consistency [5][6]
中国飞鹤业绩急剧下挫！育儿补贴后变相涨价？