Core Viewpoint - Yili's revenue has slightly increased while net profit has declined, indicating ongoing pressure in its core liquid milk business, despite growth in milk powder and ice cream segments. The industry faces challenges from weak consumption and a declining population dividend, raising questions about the sustainability of Yili's growth logic and whether investors should continue to hold or reassess their positions [2][3][4]. Financial Performance - In the first three quarters of 2025, Yili achieved revenue of 905.64 billion yuan, a year-on-year increase of 1.71%, while net profit was 104.26 billion yuan, down 4.07% [3]. - The revenue growth rate has slowed, with Q1 at 1.46%, Q2 rebounding to 5.77%, and Q3 showing a decline of 1.63% [3]. - The company announced a dividend plan of 0.48 yuan per share, totaling approximately 30.36 billion yuan, which represents 29.12% of net profit [4]. Industry Context - The overall dairy industry is under pressure, with over 60% of A-share listed dairy companies facing revenue declines. Yili remains the industry leader with 903.41 billion yuan in revenue and 104.26 billion yuan in net profit [5]. - The third quarter saw a decline in revenue and net profit, with Q3 revenue at 285.64 billion yuan, down 1.63%, and net profit at 32.26 billion yuan, down 3.35% [5]. Cost and Expense Management - Yili has been cautious with sales expenses, which decreased by 5.5% in Q3 to 52.2 billion yuan, while management expenses rose by 10.58% to 11.39 billion yuan [6]. - R&D expenses increased by 15.1% to 2.47 billion yuan, reflecting ongoing investment in product innovation [6]. Cash Flow and Inventory - Operating cash flow decreased by 32.23% to 94 billion yuan, attributed to a decline in pre-received payments from distributors, indicating potential inventory buildup and weakened market confidence [7]. Business Segment Analysis - The liquid milk segment is the main drag on Yili's overall performance, with revenue down 4.5% to 549.4 billion yuan in the first three quarters [8]. - The milk powder and dairy products segment showed strong growth, with revenue of 242.61 billion yuan, up 13.74%, and the ice cream segment also performed well with a 13% increase in revenue [10][11]. Market Outlook - The dairy industry is experiencing an oversupply of raw milk, with a projected surplus of 636,000 tons in 2024, indicating ongoing challenges for the sector [12]. - The long-term outlook is complicated by a declining birth rate, which is expected to shrink the market for infant formula, a key growth area for Yili [14]. Investor Sentiment - Following the earnings report, Yili's stock price reacted negatively, reflecting market skepticism about the company's future performance [12][15]. - Despite past profit growth, the company's market valuation has not increased, indicating a "valuation kill" phenomenon [15]. Future Prospects - Yili expresses confidence in benefiting from a potential industry turnaround as raw milk prices stabilize and consumer demand gradually recovers [16].

Investment Rating - The report maintains a "Buy" rating for the company [2][8] Core Views - The company reported a revenue of 7.79 billion yuan for the first three quarters of 2025, a year-on-year increase of 12.31%, and a net profit attributable to shareholders of 2.09 billion yuan, up 16.49% year-on-year. In Q3 alone, revenue reached 2.62 billion yuan, growing 24.53% year-on-year, with a net profit of 658 million yuan, an increase of 30.60% year-on-year [5][8] - The demand for excavators in both domestic and overseas markets is on the rise, with a total of 174,039 units sold from January to September, reflecting an 18.1% year-on-year growth. Domestic sales increased by 21.5% to 89,877 units [8] - The company is successfully advancing its linear actuator business, having launched over 50 new products in the first half of the year, which have all entered mass production [8] Financial Data and Profit Forecast - The company expects total revenue to reach 10.53 billion yuan in 2025, with a year-on-year growth rate of 12.2%. The net profit attributable to shareholders is projected to be 2.82 billion yuan, reflecting a growth rate of 12.6% [7][9] - The gross margin for the first three quarters of 2025 was 41.96%, an increase of 0.50 percentage points year-on-year, while the net margin was 26.85%, up 0.98 percentage points year-on-year [8] - The report forecasts net profits of 2.82 billion yuan, 3.28 billion yuan, and 3.86 billion yuan for 2025, 2026, and 2027 respectively, with corresponding PE ratios of 46X, 39X, and 33X [8][9]

Investment Rating - The report maintains a "Positive" investment rating for the transportation industry [8] Core Insights - The travel chain is experiencing a recovery in demand, with ticket prices showing a positive trend and a clear inflection point in revenue [2][5] - The shipping sector is witnessing a seasonal surge in freight rates due to peak season and geopolitical factors [6] - The logistics sector is seeing a year-on-year increase in unit prices for major express delivery companies, with a second round of price hikes initiated [6] Summary by Sections Aviation - Demand recovery is evident, with business travel gradually increasing since September, leading to improved revenue margins. The industry is expected to benefit from a tightening supply side and lower fuel costs, resulting in a resonance of income and costs [5][17] - The introduction of new aircraft is expected to remain slow in 2025, with engine maintenance squeezing capacity. The industry is projected to reach historical highs in capacity utilization [5][17] Shipping - Oil shipping rates are on the rise, with the average VLCC-TCE increasing by 8.7% to $86,000 per day. Geopolitical events and OPEC+ production increases are expected to support the oil shipping market [6][22] - The SCFI index for foreign trade shipping has risen by 12.9% to 1,310 points, driven by increased demand and tariff adjustments [6][22] - The BDI index for bulk shipping has increased by 6.9% to 2,069 points, supported by stable overseas mining shipments [6][22] Logistics - The express delivery sector is seeing a year-on-year increase in unit prices, with a second round of price hikes underway. The overall performance of the sector is expected to improve in Q4 and next year [6][36] - The average daily collection volume for postal express services has decreased by 0.7% year-on-year, indicating seasonal effects and price adjustments [6][36]

Investment Rating - The report assigns a positive investment rating, indicating a reversal trend in the company's performance [1]. Core Views - The company achieved a significant increase in net profit in Q1 2025, with a year-on-year growth of 183.69%, while total revenue slightly decreased by 0.92% [1][3]. - The report highlights that the company's plant extraction business showed strong performance, with revenue growth of 13.78%, while the cottonseed business experienced a decline of 9.49% [3]. - The gross profit margin improved to 14.16%, an increase of 5.95 percentage points year-on-year, driven by changes in product mix and lower raw material costs [3]. - The report anticipates a continued recovery in the company's profitability, particularly in the cottonseed business, which is expected to turn profitable [3]. Financial Summary - For Q1 2025, the company reported total revenue of 1.716 billion yuan, with a net profit of 109 million yuan and a non-recurring net profit of 95.92 million yuan [1]. - The projected revenues for 2025-2027 are 6.722 billion yuan, 7.347 billion yuan, and 8.392 billion yuan, respectively, with corresponding net profits of 346 million yuan, 421 million yuan, and 563 million yuan [4]. - The report indicates a significant increase in earnings per share (EPS) from 0.72 yuan in 2025 to 1.17 yuan in 2027, reflecting a positive growth trajectory [4].

Investment Rating - The investment rating for Yili Co., Ltd. is "Accumulate" with a target price of 35.00 RMB, up from the previous forecast of 33.53 RMB [2][13]. Core Views - The dairy industry is expected to reach a turning point in 2025, benefiting leading companies like Yili to increase market share. The company is projected to experience healthy growth in liquid milk, with other business segments contributing to revenue growth. Profit elasticity is anticipated to be released following a reduction in impairments, and policy-driven improvements in liquid milk market conditions are expected to act as a catalyst [3][13]. Financial Summary - **Revenue Forecast**: - 2022A: 123,171 million RMB - 2023A: 126,179 million RMB - 2024E: 120,414 million RMB - 2025E: 124,520 million RMB - 2026E: 132,564 million RMB - Revenue growth rates: 11.4% (2022A), 2.4% (2023A), -4.6% (2024E), 3.4% (2025E), 6.5% (2026E) [4]. - **Net Profit (Attributable to Parent)**: - 2022A: 9,431 million RMB - 2023A: 10,429 million RMB - 2024E: 11,826 million RMB - 2025E: 11,099 million RMB - 2026E: 12,499 million RMB - Net profit growth rates: 8.3% (2022A), 10.6% (2023A), 13.4% (2024E), -6.1% (2025E), 12.6% (2026E) [4]. - **Earnings Per Share (EPS)**: - 2022A: 1.48 RMB - 2023A: 1.64 RMB - 2024E: 1.86 RMB - 2025E: 1.74 RMB - 2026E: 1.96 RMB [4]. - **Return on Equity (ROE)**: - 2022A: 18.8% - 2023A: 19.5% - 2024E: 21.0% - 2025E: 19.0% - 2026E: 20.6% [4]. Market Data - **Current Price**: 29.75 RMB - **Market Capitalization**: 189,386 million RMB - **52-week Price Range**: 21.37 - 30.23 RMB [5]. Industry Outlook - The dairy industry is expected to face challenges in 2024 due to oversupply, weak demand, and high inventory levels, leading to a decline in fresh milk prices. However, the report suggests that the worst phase for the industry has passed, with expectations for stabilization in milk prices by Q3 2025, which could improve the competitive landscape [13]. - Yili is expected to achieve healthy growth in liquid milk and other segments, with infant formula benefiting from a slight rebound in birth rates and adult formula focusing on functional product development [13]. - The report emphasizes that cost reductions and lower impairment losses are expected to enhance profit elasticity, with a maintained target net profit margin of 9% for 2025 [13].

Investment Rating - The report maintains a "Positive" investment rating for the aviation industry [8] Core Insights - The aviation industry is expected to benefit from a recovery in demand and tightening supply, leading to improved pricing and profitability. The report highlights that most companies are currently valued in the top 20% historical percentile, indicating strong investment appeal [2][7] - The report recommends A-share private airlines (Jixiang, Spring Airlines, and Huaxia) and the three major Hong Kong airlines, with a particular focus on the three major A-share airlines if PMI indicators show significant reversal [2][7] Demand Trends - The 2025 Spring Festival travel season shows a shift from explosive demand to moderate growth, with domestic passenger volume increasing by 5% compared to 2024, and international passenger volume rising by 33% [4][15] - The report identifies three key demand trends: active return home travel, a surge in tourism, and delayed resumption of work. The return home travel demand is particularly strong due to the early start of the Spring Festival travel season [5][29] - The average tourism spending during the Spring Festival is reported to have recovered to 109% of the 2019 level, indicating a strong recovery in consumer spending [5][36] Supply Changes - The report notes that the supply of aircraft is tightening, with a significant number of A320NEO aircraft grounded due to engine issues, which further constrains capacity. The grounded aircraft represent about 2.6% of the total industry capacity [6][58] - The aircraft utilization rate has returned to pre-pandemic levels, with narrow-body aircraft utilization exceeding 104% of 2019 levels during the Spring Festival travel season [6][52] - Future supply growth is expected to remain low, with projections indicating a supply growth rate of only 2.3% in 2025 and 1.5% in 2026, leading to a favorable supply-demand balance [6][69] Outlook for 2025 - The report anticipates that the aviation industry's odds will become increasingly attractive due to a combination of recovering demand, tightening supply, and improving cost structures. The industry is poised for a cyclical rebound [2][7] - The report emphasizes that the industry is accumulating upward momentum, suggesting a potential reversal in the current cycle [2][7]