Overview - The demand for children's milk products in China is significantly increasing due to rising income levels and a focus on nutrition, safety, and quality. In 2024, the demand for children's milk is projected to reach 16.5 billion bottles (125ML each), with a market size of 39.89 billion yuan and an average price of approximately 2.4 yuan per bottle [1][11]. Market Policies - A series of policies have been implemented to support the dairy industry in China, including the "14th Five-Year Plan" for enhancing dairy competitiveness and various initiatives aimed at rural revitalization and high-quality development of the dairy sector. These policies create a favorable environment for the growth of the children's milk industry [4][6]. Industry Chain - The children's milk industry consists of upstream components such as milk sources (dairy cattle and sheep farming), auxiliary materials (sugar, fruit, grains), production equipment, and packaging materials. Downstream, it includes sales channels like supermarkets, convenience stores, and e-commerce platforms, with parents as the primary decision-makers for purchasing [7]. Consumer Demographics - The primary consumers of children's milk are children aged 0-14 and their parents. As of the end of 2024, the population of children aged 0-15 in China is approximately 239.99 million. Despite a recent decline in this demographic, the large base presents significant market potential. The evolving parenting styles of younger generations are leading to a more scientific and detailed approach to nutrition, driving demand for specialized children's milk products [9]. Competitive Landscape - The children's milk market in China is highly competitive, featuring both domestic brands like Yili, Mengniu, and various imported brands. Domestic brands dominate over 90% of the market share, leveraging their understanding of local consumer preferences and a diverse product range [13][16]. Key Players - **Yili Group**: Engaged in the processing and sales of various dairy products, Yili has a strong product lineup and reported a total revenue of 115.8 billion yuan in 2024, with a gross profit of 39.09 billion yuan and a gross margin of 33.88% [16]. - **Mengniu Dairy**: A leading player in the dairy industry, Mengniu reported a total revenue of 88.67 billion yuan in 2024, with a gross profit of 35.09 billion yuan and a gross margin of 39.57% [18]. Development Trends - The children's milk sector is expected to see a rise in high-end and functional products that cater to specific nutritional needs, such as those supporting cognitive development and immune health. Companies may utilize big data to create customized products based on children's individual characteristics, enhancing personalized nutrition solutions for parents [20].

Core Insights - The company achieved a total revenue of 115.78 billion yuan in 2024, maintaining its position as the leading dairy company in Asia [1] - The net profit, excluding goodwill impairment, was 11.539 billion yuan, representing a year-on-year growth of 12.2% [1] - The net cash flow from operating activities reached 21.74 billion yuan, an increase of 18.86% compared to the previous year [1] Industry Overview - The dairy consumption demand faced some suppression due to economic slowdown, low consumer confidence, and short-term imbalances in raw milk supply and demand [1] - Despite these challenges, dairy products are considered essential consumer goods, indicating a degree of inelastic demand [1] - The industry is expected to experience healthier and more sustainable development as raw milk supply and demand return to balance [1] Company Operations - The company is engaged in the production and sales of various dairy products and health drinks, including liquid milk, milk beverages, milk powder, yogurt, frozen drinks, cheese, and packaged drinking water [1] - The company holds the leading market share in liquid dairy products and adult milk powder, as well as maintaining its position as the top player in the ice cream market for 30 consecutive years [1] Innovation and R&D - The company adheres to the principle of "Yili means quality," focusing on consumer-centric approaches, accelerating technological and product innovation, and optimizing its business portfolio [2] - In 2024, the company's R&D expenditure was 870 million yuan, the highest among listed companies in the dairy industry [2] - The company continuously launches new products based on consumer demand, with new product revenue accounting for 15.1% of total revenue [5] Technological Advancements - The company initiated an AI application platform for breast milk research to enhance formula development efficiency and accelerate product iteration [5] - The deployment of generative AI capabilities includes the creation of the dairy industry's first large model product, YILI-GPT, and the establishment of a new intelligent platform, YILI-Agent, to support intelligent operations and innovation breakthroughs [5] Profit Distribution - The company announced a profit distribution plan, proposing a cash dividend of 1.22 yuan per share (including tax), with a total proposed cash dividend amounting to 7.726 billion yuan, representing 91.4% of the net profit for the period [5]