2025-12-25 08:45Investment Rating - The report initiates coverage with an OUTPERFORM rating, indicating a positive outlook for the company compared to the market [2]. Core Insights - The company's profitability is continuously improving, driven by new channels and scenarios contributing to growth [1]. - The company has a well-established brand in the food and beverage industry, with a diversified product range including rice snacks, dairy beverages, and leisure foods [3]. - The company is actively expanding its marketing efforts and enhancing brand recognition through innovative advertising and product development [48]. Financial Performance - Revenue projections for FY2025-2027 are estimated at RMB 240.5 billion, RMB 246.5 billion, and RMB 252.7 billion, reflecting year-on-year growth rates of 2.3%, 2.5%, and 2.5% respectively [49]. - Net profit forecasts for the same period are RMB 41.7 billion, RMB 44.1 billion, and RMB 46.1 billion, with changes of -3.8%, +5.7%, and +4.6% respectively [49]. - The diluted EPS is expected to be RMB 0.35, RMB 0.37, and RMB 0.39 for FY2025, FY2026, and FY2027 respectively [49]. Business Segments - The dairy beverage segment is expected to grow steadily, contributing over 50% of total revenue, with a projected CAGR of approximately 3.7% from FY2018 to FY2024 [4]. - The rice snack business is anticipated to recover growth driven by new products and channels, with expected revenue growth rates of 3.5%, 2%, and 2% for FY2025-2027 [4]. - The leisure food segment, particularly candy, is projected to grow at rates of 5%, 4%, and 4% for FY2025-2027, benefiting from strong demand [4]. Market Dynamics - The food and beverage industry is experiencing a shift towards health-conscious products, with the dairy beverage market expected to reach RMB 1,697 billion by 2027, growing at a CAGR of 4.65% [25]. - The candy market is entering a low-growth phase, with expected growth rates stabilizing between 2% and 3% in the coming years [19]. - The overall market for leisure foods is projected to reach RMB 605.8 billion by 2028, with a CAGR of 4.4% [13]. Operational Efficiency - The company has implemented measures to control raw material costs and optimize operational efficiency, leading to an expected EBIT margin of 23.8%, 23.9%, and 24.1% for FY2025-2027 [5]. - The gross profit margin is projected to improve due to cost reductions in raw materials, particularly full-fat milk powder, which has seen a significant price decline [37][39]. Strategic Initiatives - The company is focusing on expanding new channels and enhancing marketing strategies to drive brand growth, including leveraging e-commerce and innovative product placements [41][47]. - The company has established overseas operations, with a factory in Vietnam contributing to growth in the Southeast Asian market [47].