Investment Rating - The investment rating for the company is Neutral [3][7]. Core Insights - The company's high-end product series has driven profit margin improvements, but future profit growth may be limited. The company reported a revenue of 10.09 billion RMB in the first half of 2024, a year-on-year increase of 3.7%, while the infant formula industry experienced a double-digit decline. Gross margin improved by 2.6 percentage points to 67.9% due to product structure optimization and the continued growth of high-end series [1][2]. - 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% [1]. Summary by Sections Financial Performance - In the first half of 2024, the company achieved a net profit of 1.91 billion RMB, a year-on-year increase of 18.1%, corresponding to a net profit margin of 18.9%. Operating profit was 3.06 billion RMB, with an operating profit margin of 30.3%, up nearly 5 percentage points year-on-year [1][2]. - Revenue projections for the upcoming years are as follows: 20.8 billion RMB for 2024E, 22.2 billion RMB for 2025E, and 23.3 billion RMB for 2026E, with expected growth rates of 6.5%, 6.5%, and 5.0% respectively [3][8]. Market Dynamics - The growth drivers for the company include increasing consumer confidence in domestic infant formula quality, the release of new national standards raising industry entry barriers, and the growth of the high-end market segment [2]. - The company has been removing low-end product lines and focusing on high-end and ultra-high-end series, which has contributed to the significant increase in gross margin [2]. Valuation - The target price has been adjusted to 4.00 HKD, based on a price-to-earnings ratio of 7.7 times the 2025 earnings, reflecting a conservative outlook due to ongoing industry pressures and limited profit growth potential [2].
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