Core Viewpoint - The performance of Yili in 1H25 demonstrates its long-term competitive advantages, with a revenue growth of 3.4% year-on-year despite industry challenges and declining demand [1] Group 1: Revenue and Profitability - Yili's liquid milk revenue only decreased by 2.1% year-on-year, significantly less than major competitors [1] - Core operating profit increased by 26% year-on-year, with a core operating profit margin expanding by 2.4 percentage points, attributed to a decrease in raw milk prices and a reduction in overall expense ratios [1] - The contribution of new retail channels to liquid milk revenue was nearly 30%, while new product revenue contributed approximately 15% [2] Group 2: Competitive Advantages - Yili has stronger channel control, actively providing benefits to distributors to ensure their profitability, which motivates them to promote Yili products [1][2] - The company has a more balanced product structure compared to major competitors, with double-digit revenue growth in categories like milk powder, cheese, and ice cream, which collectively contributed over 40% to total revenue [2] - Yili has found a better balance between sales volume, price, and product structure, ensuring stable market share despite a slight decline in liquid milk revenue [2] Group 3: Future Outlook - Revenue trends are expected to maintain in 2H25, but profit margins may face pressure due to narrowing declines in raw milk prices, continued product structure decline, increased industry promotions, and strategic benefits to channels [3] - The company forecasts a 1.0 percentage point expansion in operating profit margin to 10.9% for the full year 2025, with net profit margin increasing by 2.2 percentage points to 9.5% [3] - Market sentiment is expected to improve, with an upgrade to "buy" rating due to Yili's stronger performance resilience compared to competitors, enhancing investor confidence [3]