Investment Rating - The investment rating for the company is Neutral [3][8]. Core Views - The company's high-end product series has driven profit margin improvements, but future profit growth may be limited [2][3]. - In the first half of 2024, the company achieved a revenue of 10.09 billion RMB, a year-on-year increase of 3.7%, while the infant formula milk powder industry experienced a double-digit decline [2][3]. - The gross margin increased by 2.6 percentage points to 67.9%, and operating profit reached 3.06 billion RMB, with an operating profit margin up nearly 5 percentage points to 30.3% [2][3]. - Net profit returned to growth in the first half of 2024, increasing by 18.1% year-on-year to 1.91 billion RMB, corresponding to a net profit margin of 18.9% [2][3]. - The company plans to distribute an interim dividend of 0.1632 HKD per share, a year-on-year increase of 21%, with a payout ratio of 72% [2][3]. Summary by Sections Revenue and Profitability - The company has been restructuring its product line by removing low-end products and focusing on high-end and ultra-high-end series, which has led to a significant increase in gross margin [2][3]. - Future growth drivers include increasing consumer confidence in domestic infant formula quality, the impact of new national standards raising industry entry barriers, and growth in the high-end market segment [2][3]. Pricing Strategy - The company has been consistently raising product prices, with a price increase of approximately 40 RMB per can for its high-end series [2][3]. - Current pricing for high-end products is already at a high level, which may limit future price increases [2][3]. Target Price Adjustment - The target price has been adjusted to 4.00 HKD based on a 7.7 times 2025 price-to-earnings ratio, reflecting a conservative outlook due to ongoing industry pressures and limited profit growth potential [2][3].
中国飞鹤：高端系列带动利润率提升，但未来利润增长空间或有限；维持中性