Market Recovery - The milk powder business has shown significant signs of recovery, contrasting with the ongoing pressure in the liquid milk market [1][2] - In the first half of 2025, Yili's milk powder and dairy products achieved revenue of 16.578 billion yuan, a year-on-year increase of 14.26% [2] - Aoyou, a subsidiary of Yili, reported a revenue increase of 5.6% to 3.887 billion yuan and a net profit increase of 24.1% to 181 million yuan [2] - Mengniu's milk powder business also saw a slight revenue increase to 1.6756 billion yuan, up from 1.6353 billion yuan, with its share of total revenue rising from 3.7% to 4.0% [2] External Brand Performance - Foreign brands like a2 Milk Company reported a revenue increase of 13.5% to 1.902 billion NZD, with a 13.9% increase in revenue from China and other Asian regions [3] - FrieslandCampina's professional nutrition business in China grew by 18.1%, with operating profit surging by 61% [3] - The overall performance of foreign brands has outpaced domestic brands, leading to a decline in market share for domestic companies [3] Policy Support - The implementation of a child-rearing subsidy program starting January 1, 2025, is expected to boost consumer spending on infant formula [4] - The subsidy is set at 3,600 yuan per child per year, which may enhance disposable income and drive demand for mid-to-high-end products [4] Industry Dynamics - The infant formula market, despite being valued in the hundreds of billions, has faced growth challenges due to declining birth rates [5] - The market began to stabilize in 2024, with a slight increase in newborn numbers and the completion of the transition to new national standards [5][6] - Companies that implemented inventory and price control strategies have generally seen revenue and profit growth, while those engaging in price wars face operational difficulties [6] Strategic Moves - a2 Milk Company announced the acquisition of Mengniu's subsidiary, Yashili New Zealand Dairy Company, for approximately 282 million NZD to enhance production capacity [6][7] - This acquisition reflects different strategic considerations between domestic and foreign companies, with Mengniu focusing on optimizing its production capacity [6][7] - The industry is shifting towards a "whole family nutrition" approach, expanding beyond infant formula to include products for adults and seniors [7] - Aoyou's nutrition business revenue grew by 7.0%, and a2 Milk reported a 33.1% increase in revenue from its whole family nutrition products in Asia [7]