Core Viewpoint - The company reported a decline in revenue and net profit for FY 2024, but showed significant improvement in non-recurring net profit, indicating a potential recovery path for FY 2025 [1][5]. Financial Performance - FY 2024 revenue was 7.012 billion yuan, down 10.7% year-on-year; net profit attributable to shareholders was 55 million yuan, down 77.4%; non-recurring net profit was 30 million yuan, up 934.2% [1]. - Q4 2024 revenue was 1.620 billion yuan, down 4.5% year-on-year; net profit attributable to shareholders was -49 million yuan, down 518.2%; non-recurring net profit was -41 million yuan, down 83.2% [1]. - Q1 2025 revenue was 1.647 billion yuan, down 19.5% year-on-year; net profit attributable to shareholders was 88 million yuan, up 20.9%; non-recurring net profit was 83 million yuan, up 22.6% [1]. Product Performance - In FY 2024, revenue from liquid milk, solid milk, ice cream, and others was 4.411 billion, 963 million, 1.499 billion yuan, respectively, with changes of -8.8%, +3.5%, and -11.7% year-on-year [2]. - Q4 2024 revenue from liquid milk, solid milk, ice cream, and others was 1.052 billion, 288 million, 218 million yuan, with changes of -12.9%, +31.9%, and -6.5% year-on-year [2]. - Q1 2025 revenue from liquid milk, solid milk, ice cream, and others was 1.024 billion, 213 million, 360 million yuan, with changes of -15.2%, -13.3%, and -35.9% year-on-year [2]. Sales Model - In FY 2024, revenue from direct sales, distributors, and others was 2.243 billion, 3.840 billion, and 790 million yuan, with changes of -18.4%, -5.8%, and -8.2% year-on-year [3]. - Q4 2024 revenue from direct sales, distributors, and others was 592 million, 919 million, and 471 million yuan, with changes of -26.0%, +38.7%, and -73.7% year-on-year [3]. - Q1 2025 revenue from direct sales, distributors, and others was 595 million, 792 million, and 209 million yuan, with changes of -7.2%, -31.7%, and -1.3% year-on-year [3]. Regional Performance - In FY 2024, revenue from Beijing and outside Beijing was 3.436 billion and 3.437 billion yuan, with changes of -28.8% and +20.2% year-on-year [3]. - Q4 2024 revenue from Beijing and outside Beijing was 766 million and 791 million yuan, with changes of -22.5% and +21.3% year-on-year [3]. - Q1 2025 revenue from Beijing and outside Beijing was 779 million and 818 million yuan, with changes of -40.3% and +15.5% year-on-year [3]. Strategic Initiatives - The company is expanding its "fresh" strategy from Beijing to key regions nationwide, with a reported sales increase of 341% for low-temperature products [4]. - The company is optimizing its product structure, reducing costs, and focusing on high-margin products, leading to a ninefold increase in non-recurring net profit [5]. - The company is implementing a "dairy+" strategy, expanding its product matrix and entering new markets such as tea and coffee [9]. Organizational Efficiency - The company has streamlined its organizational structure, reducing headquarters departments from 21 to 14 and cutting personnel by 46% to enhance management efficiency [8]. - The company is investing in digital transformation across core business areas to improve operational capabilities [8]. Investment Outlook - Revenue forecasts for 2025-2026 have been adjusted, with expected revenues of 7.19 billion and 7.35 billion yuan, and net profits of 860 million and 1.05 billion yuan for the same period [10].

Core Viewpoint - Beijing Sanyuan Foods Co., Ltd. reported a decline in total revenue for 2024, but a significant increase in net profit, indicating a shift towards profitability despite overall revenue challenges [1][2]. Financial Performance - In 2024, the company had total assets of 8.834 billion yuan and total revenue of 7.012 billion yuan, a year-on-year decrease of 10.73%. However, the net profit attributable to the parent company was 29.82 million yuan, a year-on-year increase of 934.19% [1]. - For Q1 2025, total revenue was 1.647 billion yuan, down 19.45% year-on-year, while net profit attributable to the parent company was 87.82 million yuan, up 20.85% [1]. Market Position and Strategy - The low-temperature fresh milk market in China is expanding, with national penetration increasing from 28% in March 2018 to 39% in March 2024 [1]. - Sanyuan has established a leading position in the North China market, particularly in Beijing, where it holds the largest market share in liquid milk [1]. - The company is expanding its "fresh" strategy from Beijing to key regions nationwide, with a 341% increase in sales since introducing low-temperature products in the Pang Donglai system [2]. Product Development and Optimization - Sanyuan has launched a SKU reduction strategy, eliminating nearly 20% of inefficient SKUs and focusing on high-end products to drive revenue growth [3]. - The company has made significant investments in R&D, particularly in functional dairy products, to enhance its product offerings and increase value [3]. Brand Strategy and Market Positioning - Sanyuan's brand strategy emphasizes "freshness," targeting key markets and enhancing supply chain advantages while creating star products with differentiated features [4]. - The company is focusing on visual branding, using appealing packaging for children's products and a minimalist design for premium offerings to enhance consumer recognition and brand value [4].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 9.00, up from the previous target of RMB 8.41 [4][7]. Core Views - The company is expected to see improvements in revenue and profit margins as it continues to implement its "Fresh Strategy" and expand its low-temperature milk distribution nationwide [1][4]. - The company faced challenges in 2024, with a decline in revenue and net profit, but there are signs of recovery in early 2025 [1][4]. Revenue and Profit Analysis - In 2024, the company achieved revenue of RMB 24.28 billion, a decrease of 8.3% year-on-year, with a net profit attributable to the parent company of RMB 720 million, down 25.4% [1][6]. - The fourth quarter of 2024 saw a slight revenue increase of 0.8% year-on-year, but net profit decreased by 6.0% [1]. - For Q1 2025, revenue was RMB 6.37 billion, a slight decrease of 0.8% year-on-year, while net profit attributable to the parent company decreased by 18.2% [1][6]. Product and Regional Performance - In 2024, revenue from liquid milk, other dairy products, and livestock was RMB 14.17 billion, RMB 7.79 billion, and RMB 1.02 billion, respectively, with liquid milk revenue declining by 9.5% [2]. - The Shanghai region showed stable performance, while overseas revenue continued to expand [2]. Margin and Cost Management - The gross margin for 2024 was 19.2%, down 0.4 percentage points year-on-year, while the net profit margin attributable to the parent company was 3.0% [3]. - In Q1 2025, the gross margin decreased to 18.7%, but the net profit margin improved slightly to 2.2% [3]. Future Outlook - The company anticipates a gradual recovery in consumer demand and expects to reduce losses from culling cows in 2025 [4]. - The earnings per share (EPS) forecast for 2025 and 2026 has been raised to RMB 0.45 and RMB 0.48, respectively [4].