Investment Rating - The report maintains a "Buy" rating for China Feihe (6186.HK) [4] Core Views - The company experienced a revenue decline of 8.3% year-on-year in 2023, with total revenue reaching 19.53 billion yuan and a net profit of 3.39 billion yuan, down 31.4% year-on-year [2][3] - The decline in revenue is attributed to a continuous drop in birth rates, intensified industry price competition, and the closure of some retail stores [2] - Despite the challenges, China Feihe remains the leading player in the Chinese infant formula market, holding market shares of 20.2% in all channels, 22.8% offline, and 14.4% online as of January 2024 [2] - The company plans to upgrade its channel digitalization to enhance control over retail terminals and stabilize pricing [2] Financial Performance Summary - In 2023, the company's revenue from infant formula was 17.88 billion yuan, down 10.3% year-on-year, with the ordinary product segment experiencing the most significant decline [2] - Other dairy products saw a revenue increase of 23.4% to 1.42 billion yuan, while health products generated 232 million yuan, up 2.8% [2] - The gross margin for the company was 64.8%, a decrease of 0.6 percentage points, primarily due to a shift in product mix towards lower-margin adult milk powder [3] - The net profit margin fell to 17.4%, down 5.8 percentage points year-on-year, influenced by increased sales and management expenses [3] Earnings Forecast and Valuation - The net profit forecasts for 2024 and 2025 have been revised down to 3.545 billion yuan and 3.739 billion yuan, respectively, reflecting a 1.9% and 4.4% decrease from previous estimates [3] - The report introduces a 2026 net profit forecast of 3.864 billion yuan, with expected EPS of 0.39, 0.41, and 0.43 yuan for 2024, 2025, and 2026, respectively [3] - The current stock price corresponds to a PE ratio of 9x for 2024, 8x for 2025, and 8x for 2026 [3]
2023年年度业绩点评：市场压力仍较大，建议关注渠道数字化升级进展