Investment Rating - The report initiates coverage with a "Buy" rating for the company [12]. Core Insights - Miaokelan Duo has transitioned from a niche product leader to an industry trendsetter, focusing on cheese products while optimizing its product structure to enhance profitability [3][10]. - The company is expected to enter a phase of dual improvement in revenue and profit, driven by a higher proportion of high-margin cheese business and cost reductions [10]. Summary by Sections Company Overview - Miaokelan Duo, formerly Guangze Dairy, has been deeply engaged in the cheese sector since 2007 and has established itself as a leading player in China's C-end cheese market [6][19]. - The company has integrated with Mengniu Dairy to strengthen its competitive advantage and is expanding its product offerings across various cheese categories [6][19]. Market Development - The cheese market in China is projected to reach approximately 20.9 billion yuan by 2024, with a CAGR of 14.89% from 2010 to 2024 [8][45]. - Despite a recent decline in C-end product sales due to market fluctuations, the cheese stick product line is stabilizing, indicating potential for future growth [8][10]. Product and Capacity Strategy - The company has a comprehensive product matrix covering various cheese types, with a focus on cheese sticks leading the market [9][28]. - Miaokelan Duo operates five modern production bases across China, ensuring robust capacity to meet market demands [9][28]. Financial Performance - In 2024, the company reported total revenue of 4.844 billion yuan, a slight decrease of 8.99% year-on-year, while net profit surged by 89.16% to 114 million yuan [20]. - The cheese business accounted for 77.56% of total revenue, reflecting a strategic focus on high-margin products [24]. Shareholder Empowerment and Incentives - The company has introduced a dual-track incentive mechanism for its core team, including stock options and employee stock ownership plans, to align interests with shareholders [6][37]. - The incentive plan sets ambitious revenue and profit targets for the next three years, reinforcing the commitment to growth [37][38].

Core Insights - The Chinese cheese industry is experiencing significant growth, driven by consumer demand for high-quality, nutritious products and supported by favorable policies [2][3][4] - Miaokelan Duo aims to achieve cumulative revenue of 19.9 billion yuan over three years, focusing on product innovation and market penetration to elevate the cheese consumption trend in China [1][6] Group 1: Market Potential - As of 2023, China's retail cheese consumption has reached parity with Japan, yet per capita consumption remains low at 200 grams compared to 2000 grams in Japan, indicating substantial growth potential [2][3] - The cheese market in China is projected to exceed 30 billion yuan by 2025, supported by government initiatives and increasing consumer health awareness [2][3] Group 2: Company Strategy - Miaokelan Duo is implementing a dual-driven strategy (B+C) to enhance brand value and product matrix, aiming to lead the transition from milk consumption to cheese consumption [1][6] - The company has established a comprehensive supply chain and quality management system to ensure product safety and innovation in cheese production [1][5] Group 3: Financial Performance - In 2024, Miaokelan Duo reported revenue of 4.844 billion yuan, with a 6.92% increase in cheese business revenue and a significant net profit growth of 89.16% [6] - The company aims for a cumulative revenue of no less than 19.9 billion yuan and a net profit of at least 990 million yuan from 2025 to 2027 [6][7] Group 4: Industry Trends - The cheese segment is recognized as a rapidly growing and active market within the dairy industry, with retail cheese product sales growing at an annual rate of 21% from 2015 to 2022 [3][4] - The industry is shifting towards high-value, refined processing of dairy products, with a focus on original cheese production and innovative snack products [2][5]

Group 1 - The domestic cheese industry is gradually moving out of the price war impact of cheese sticks and is beginning to regain growth through transformation towards snackification and entering the B-end market [1][3] - Major cheese companies in China are shifting their growth strategies towards new snack scenarios and the B-end market, particularly in response to the challenges faced during the price wars [3][5] - In 2024, Miaokelando reported a revenue of 4.84 billion yuan, a decrease of 9% year-on-year, but a net profit attributable to shareholders of 110 million yuan, an increase of 89.2% [3][5] Group 2 - The ready-to-eat nutrition series, including cheese sticks, saw significant revenue declines in 2022 and 2023 due to market competition, but in 2024, this segment's revenue grew by 3.2% to 2.05 billion yuan [5] - The retail cheese market's sales decreased by 8.7% in the first quarter of 2025, but the decline is narrowing, with adult snack cheese showing high growth [5][6] - Companies are expanding their product offerings to cover all age groups and new consumption scenarios, including office snacks and fitness supplements [5][6] Group 3 - The cheese market in China is expected to follow trends seen in Japan, where cheese consumption has increased significantly due to aging demographics and the rise of Western-style dining [7] - The competition is shifting to the supply chain level, with domestic cheese companies relying heavily on imported raw materials, which poses new challenges [8][10] - In the first four months of 2025, China imported 63,000 tons of cheese, a year-on-year increase of 10.6%, primarily from New Zealand and Australia [8][10] Group 4 - Domestic dairy companies are exploring the production of raw cheese to reduce reliance on imports, with Miaokelando constructing a raw cheese factory expected to be operational by 2026 [10][11] - The construction of raw cheese factories can help stabilize the cyclical fluctuations of the dairy industry by converting excess fresh milk into high-value cheese products [10][11] - The long-term economic viability of domestic raw cheese production remains uncertain due to fluctuating milk prices [11]

Core Insights - The article discusses the innovative development of crispy cheese snacks by Yili, which aims to break the traditional perception of cheese as a children's snack and expand its consumption scenarios [3][4]. Group 1: Product Innovation - Yili's new crispy cheese product, "Miao Zhi," has been developed over three years using vacuum microwave drying technology, creating a unique "crunch" sound and texture [3][4]. - The crispy cheese retains the nutritional benefits of cheese, with a cheese content of at least 76%, providing approximately seven times the protein and eleven times the calcium of regular milk per 100g [4]. Group 2: Market Trends - The cheese category is experiencing rapid innovation and iteration, with a significant number of new SKUs introduced in the market, indicating a vibrant product development environment [5]. - Despite challenges in market share and pricing, industry participants remain optimistic about the future of the cheese category [5][7]. Group 3: Sales and Distribution - Yili's cheese products have seen a steady increase in market share, with a reported 19.1% market share in the 2C business, up 1.5 percentage points from the previous year [9]. - The company aims for a growth target of over 15% for its cheese division this year, focusing on product innovation and strengthening local supply chains [9].