Ge Long Hui·2025-08-30 19:04Group 1 - The company's revenue decreased by 4% in volume and low single digits in price, resulting in a total revenue of 41.57 billion RMB, with a year-on-year decline in net profit attributable to shareholders of 16.4% to 2.05 billion RMB [1] - Despite revenue pressure, the company's profitability improved, with gross margin increasing by 1.4 percentage points to 41.7% due to falling raw milk prices, and operating profit margin rising by 1.5 percentage points to 8.5% [1] - The management indicated that terminal demand remains weak, expecting a continued decline in volume and price in the second half of the year, leading to a downward revision of the full-year guidance [1] Group 2 - The core liquid milk business saw a revenue decline of 11.2% to 32.19 billion RMB, reflecting weak terminal demand and intense price competition, while other categories like ice cream (+15.0%), cheese (+12.3%), and milk powder (+2.5%) showed positive growth [2] - The cheese business benefited from synergies with Miaokelan, expanding into snack and family meal scenarios, while infant formula experienced double-digit growth, indicating a positive trend [2] - Management aims for an annual improvement of 30-50 basis points in operating profit margin over the next three years, despite the current weak terminal demand [2] Group 3 - The company has lowered its revenue forecasts for 2025-2027 by 8-14% due to the performance in the first half and the recent weak terminal demand, with uncertainty surrounding the recovery of liquid milk sales [2][3] - Based on more conservative operating profit margin predictions, the company has adjusted its profit forecasts for 2025-2027 down by 11-19% for operating profit and 9-27% for net profit attributable to shareholders [3] - The target price has been revised down to 21.51 HKD based on a 15 times expected price-to-earnings ratio for 2026, while maintaining a buy rating [3]