Group 1: Investment Opportunities under Childcare Subsidy Policy - The government work report for 2025 emphasizes the formulation of pro-natalist policies, issuance of childcare subsidies, and development of integrated childcare services, which will marginally impact the maternal and infant products, early education, and assisted reproduction industries [2][9] - Cash subsidies will directly reduce the cost of childbirth and strengthen the expectation of stabilizing birth rates, while the released purchasing power will prioritize activating essential maternal and infant consumption [2][9] - The integration of childcare services is expected to accelerate the expansion of early education supply and market segmentation [2][9] Group 2: Maternal and Infant Products - The maternal and infant products market is projected to grow continuously, with food, clothing, and daily necessities being the main consumption categories, reaching a market size of 4.68 trillion yuan by 2025, with a year-on-year growth rate exceeding 7% [3][13] - Despite a declining birth rate, the increase in disposable income and consumption capacity of maternal and infant families will sustain market growth [3][13] - The online maternal and infant consumption share is expected to rise from 33.8% in 2021 to 39.0% by 2025, indicating a shift in consumer behavior towards online shopping [13][20] Group 3: Early Education - The early education and childcare market is expected to expand due to policy support, with the market size projected to reach 151.81 billion yuan in 2024 and further increase to 232.31 billion yuan by 2030 [4][22] - The 2025 National Childcare Service Quality Improvement Action emphasizes the integration of medical and educational services, standardization, and talent cultivation, indicating strong government support for the childcare industry [4][22] - The focus on improving the quality of childcare services will enhance the overall market environment and growth potential [4][22] Group 4: Assisted Reproduction - The penetration rate of assisted reproduction services is gradually increasing, with the market size in China expected to grow from 140 billion yuan in 2014 to 496 billion yuan by 2023, reflecting a compound annual growth rate of 14.5% [5][27] - The global assisted reproduction services market is projected to grow from 20.4 billion USD in 2014 to 31.7 billion USD by 2023, driven by rising infertility rates and increased awareness of reproductive health [5][27] - The demand for assisted reproduction services is expected to rise as childcare subsidies potentially enhance overall fertility willingness [5][27]

Core Insights - Hohhot City has introduced unexpected child-rearing subsidy policies, with a subsidy of 100,000 for the third child [1] - As of May 18, 2,830 applications for child-rearing subsidies have been submitted, with 1,901 for the first child, 869 for the second child, and 60 for the third child and above [1] - The policy has received widespread acclaim, with 725 subsidies already disbursed and a significant increase in inquiries about relocating to Hohhot [1] Policy Implementation - The implementation of the child-rearing subsidy policy has met expectations, with a high level of public participation and positive feedback [1] - The local government will closely monitor the effects of population aggregation policies and adjust them based on fiscal and social support capabilities [1] Population Attraction - The child-rearing subsidy policy has enhanced the attractiveness of Hohhot for incoming populations, as indicated by the increased number of inquiries about relocating [1] - The city plans to introduce more policies to encourage childbirth and promote high-quality population development [1]

Investment Rating - The report assigns a "BUY" rating for the company, indicating a positive outlook based on expected improvements in demand and favorable policies [6][7]. Core Insights - The company forecasts a net profit for 2024 between RMB 0.5 billion and RMB 2.5 billion, a significant decrease from RMB 4.8 billion in the previous year [7]. - The report highlights a projected decline in revenue for 2024 due to weak demand, with liquid milk revenue expected to drop approximately 13% year-on-year in the first half [7]. - Despite the anticipated revenue decline, the company expects an improvement in gross margin and operating profit margin due to lower raw milk prices and efficiency measures [7]. - A substantial impairment loss is expected to impact the overall profit, primarily due to losses from the subsidiary Bellamy and the joint venture Modern Dairy, with total impairment losses estimated between RMB 3.8 billion and RMB 4 billion [7]. - The report anticipates a gradual recovery in dairy product demand in 2025, supported by potential local subsidy policies aimed at increasing birth rates, which could positively affect the company's milk powder business [7]. - The company expects net profits of RMB 1.2 billion, RMB 4.4 billion, and RMB 5.07 billion for 2024, 2025, and 2026, respectively, with significant growth projected for 2025 [7][9]. Financial Summary - The company's total revenue is projected to decline from RMB 98.6 billion in 2023 to RMB 85.9 billion in 2024, before recovering to RMB 92.5 billion in 2025 and RMB 98.4 billion in 2026 [9]. - The net profit for 2024 is forecasted at RMB 0.12 billion, a sharp decline from RMB 4.8 billion in 2023, followed by a rebound to RMB 4.4 billion in 2025 and RMB 5.07 billion in 2026 [9]. - The earnings per share (EPS) is expected to drop to RMB 0.03 in 2024, with a significant recovery to RMB 1.12 in 2025 and RMB 1.30 in 2026 [9]. - The price-to-earnings (P/E) ratio is projected to be 542 in 2024, decreasing to 15 in 2025 and 13 in 2026, reflecting improved profitability [9].

Investment Rating - The report maintains an "Overweight" rating for the industry, consistent with the previous rating [2]. Core Insights - The implementation of child-rearing subsidies in Hohhot is expected to benefit leading consumer brands, as the policy gradually takes effect [4]. - The report highlights three main investment themes: 1. **Children's Clothing Sector**: Recommended stocks include Semir Apparel (with the leading children's brand Balabala), HLA (with the English children's brand), and Jin Hong Group (operating the Teenie Weenie brand). The projected PE ratios for 2025 are 14X, 16X, and 9X respectively, with Semir and HLA both offering a dividend yield of 6% [8]. 2. **Personal Care Sector**: Recommended stocks are Weigao Medical (with the All Cotton Times maternal and infant product line) and Haoyue Care (offering both self-branded and OEM baby products), with projected PE ratios of 28X and 12X for 2025 [8]. 3. **Millet Economy**: Recommended stocks include leading toy brand Blokus (with a projected PE of 35X for 2025) and stationery leader Morning Glory (with a projected PE of 14X for 2025). Beneficiary stocks also include Chuangyuan Co., Guangbo Co., Qixin Group, and Mubang Gaoke [8]. Summary by Sections - **Policy Impact**: The new child-rearing subsidy program offers significant financial support, with subsidies of 10,000 CNY for the first child, 50,000 CNY for the second, and 100,000 CNY for the third, disbursed annually [8]. - **Market Outlook**: The gradual rollout of pro-natalist policies is expected to boost consumer demand in the children's clothing and personal care sectors, leading to a recovery in valuations for many consumer leaders currently trading at relatively low multiples [8]. - **Earnings Forecasts**: The report includes a table of earnings forecasts and valuations for listed companies, indicating expected earnings per share (EPS) and price-to-earnings (PE) ratios for 2024, 2025, and 2026 [9].

Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 22 CNY per share [1][6]. Core Insights - The company is expected to record a net profit of between 0.5 billion to 2.5 billion CNY for 2024, a significant decrease from 4.8 billion CNY in the previous year [7]. - The report highlights that while revenue is anticipated to decline due to weak demand, cost pressures are expected to ease, leading to improved gross and operating margins [7]. - A substantial impairment loss is projected, primarily due to the subsidiary Bellamy's expected losses and the joint venture Modern Dairy's impairments, which could impact profits by approximately 3.8 billion to 4 billion CNY [7]. - The report anticipates a gradual recovery in dairy product demand in 2025, supported by favorable policies and supply-demand improvements [7]. - The company is expected to maintain a stable dividend policy, with a dividend yield projected to remain above 2% [7]. Summary by Sections Company Overview - The company operates in the food and beverage industry, with a current H-share price of 18.16 CNY as of March 13, 2025 [2]. - The market capitalization is approximately 56.4 billion CNY, with major shareholder COFCO Group holding 24.14% [2]. Recent Performance - The company's stock price has seen a 15.82% increase over the past month, but a slight decline of 1.43% over the past year [2]. - The product mix is heavily weighted towards liquid milk (81.18%), with ice cream (7.55%), milk powder (3.66%), cheese (4.73%), and other products making up the remainder [3]. Financial Projections - For the years 2024 to 2026, net profits are projected to be 0.12 billion, 4.4 billion, and 5.075 billion CNY, respectively, with significant growth expected in 2025 and 2026 after a sharp decline in 2024 [9]. - The earnings per share (EPS) are forecasted to be 0.03 CNY for 2024, 1.12 CNY for 2025, and 1.30 CNY for 2026, reflecting a recovery trajectory [9]. - The price-to-earnings (P/E) ratio is expected to be 15 for 2025 and 13 for 2026, indicating potential value in the stock [9].