CSC SECURITIES (HK) LTD·2025-09-08 12:14Investment Rating - The report assigns a "Trading Buy" rating to the company, indicating a potential upside of 5% to 15% from the current price [5][9]. Core Insights - The company experienced a revenue decline of 7% year-on-year in the first half of 2025, with total revenue reaching RMB 41.57 billion and a net profit of RMB 2.05 billion, down 16.4% year-on-year [5][8]. - The gross margin improved by 1.4 percentage points to 41.7%, while the operating profit margin increased by 1.5 percentage points to 8.5% [5][8]. - The report anticipates a recovery in revenue in the third quarter due to seasonal effects from the National Day and Mid-Autumn Festival, with specific product categories like fresh milk and cheese expected to perform well [8]. Summary by Sections Company Overview - The company operates in the food and beverage industry, with a current stock price of HKD 15.02 and a target price of HKD 17 [1][5]. - Major shareholder is COFCO Corporation, holding 24.24% of shares [1]. Financial Performance - In the first half of 2025, liquid milk revenue was approximately RMB 32.2 billion, down 11.2% year-on-year, while ice cream revenue increased by 15% to RMB 3.88 billion [8]. - The company expects net profits of RMB 3.92 billion, RMB 4.695 billion, and RMB 5.206 billion for 2025, 2026, and 2027 respectively, with significant growth anticipated in 2025 due to a low base from the previous year [7][8]. Market Position - The company maintains a leading market share in the liquid milk segment, with strong performance in low-temperature and fresh milk products [8]. - The report highlights the importance of refined management practices that have contributed to improved efficiency and cost control [8].