
Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 36.33 [7][8]. Core Views - The company's performance in Q1 2025 exceeded expectations, with significant improvements in gross sales margin and profitability [1][4]. - The liquid milk business has stabilized, while the infant formula segment continues to show strong growth, and the cold drink business is expected to recover as inventory adjustments are completed [2][3]. Summary by Sections Financial Performance - For 2024, the company reported revenues of RMB 115.78 billion, a decline of 8.2% year-on-year, with a net profit attributable to the parent company of RMB 8.45 billion, down 18.9% [1]. - In Q1 2025, revenues reached RMB 33.02 billion, a slight increase of 1.4% year-on-year, while net profit attributable to the parent company was RMB 4.87 billion, down 17.7% [1][2]. - The gross margin improved by 1.8 percentage points to 37.8% in Q1 2025, with a corresponding increase in net profit margin to 14.0% [3]. Business Segments - Revenue from liquid milk in 2024 was RMB 750.0 billion, down 12.3% year-on-year, while infant formula and dairy products generated RMB 296.8 billion, up 7.5% [2]. - In Q1 2025, liquid milk revenue decreased by 3.1%, cold drinks by 5.3%, but infant formula revenue increased by 18.6% [2]. Profitability and Forecasts - The company plans to achieve revenue of RMB 119.0 billion in 2025, representing a growth of 2.8%, and a total profit of RMB 12.6 billion, up 24.4% year-on-year [1][4]. - The report projects EPS for 2025 at RMB 1.73, with an upward revision of 2% from previous estimates [4]. Valuation Metrics - The target price of RMB 36.33 corresponds to a PE ratio of 21x for 2025, reflecting a favorable valuation compared to peers [4][7].