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 - Miaokelando (600882) has increased its overall cheese market share to over 39%, maintaining its industry leader position despite a revenue decline of 8.99% in 2024 [1] - The company reported a revenue of 1.233 billion yuan in Q1 2025, a year-on-year growth of 6.26%, and a net profit of 82.3967 million yuan, which surged by 114.88% [1] - Challenges such as imbalanced revenue structure, supply chain weaknesses, and insufficient R&D investment pose uncertainties for the company's future [1] Revenue Recovery and Concerns - Despite a strong performance in Q1 2025, the revenue recovery path for Miaokelando is fraught with challenges, including an 8.99% revenue decline in 2024 due to a strategic reduction in low-margin trading businesses and price wars affecting core products [2] - The company has seen a 14% year-on-year increase in revenue from its catering industrial series, providing customized solutions for leading brands like Nayuki [2] - Non-recurring gains, such as government subsidies of 13.728 million yuan accounting for 16.65% of net profit, raise concerns about the sustainability of profit growth [2] - The sales expense ratio has improved from 25.3% in 2022 to 16.3% in Q1 2025, with a 28% increase in online channel revenue [2] Supply Chain Challenges and Domestic Substitution - Miaokelando has faced significant challenges in its supply chain, including the termination of a joint venture project with Modern Dairy aimed at ensuring stable milk supply [3] - The company has initiated the "Golden Milk Source Belt Plan" to establish dedicated milk source bases in Inner Mongolia and Heilongjiang, achieving 30% domestic substitution for raw cheese materials [3] - The Longcheng raw cheese factory is expected to be operational by 2026, which will enhance local supply chain competition and mitigate risks from international milk price fluctuations [3] R&D Investment and Market Competition - Despite winning an industry technology advancement award for its "Mousse Cheese Key Technology," Miaokelando's R&D investment has decreased, with R&D expenses down 10.25% in 2024, representing only 1% of revenue [4] - The company faces intense competition from differentiated products like "High Calcium Low Salt" cheese from Cheese Doctor and imported brands like Kiri [4] - Market concentration is increasing, with Miaokelando's cheese market share exceeding 37% in 2024, while foreign brand Kiri's sales surpassed 500 million yuan [4] Financial Pressure and Strategic Balancing - The company's financial pressure is evident, with a rising debt ratio and a 30.91% year-on-year increase in short-term borrowings, leading to a 141.59% rise in financial expenses [5] - Management plans to apply for a credit line of 5 billion yuan while focusing on maintaining stable sales expenses and enhancing efficiency in marketing expenditures [5] - The company's transformation reflects a shift in the Chinese cheese industry from quantity growth to quality improvement, emphasizing supply chain control and product innovation [5]

Group 1: Industry Overview - The domestic dairy industry is transitioning from liquid to solid products, with current per capita cheese consumption remaining low, indicating significant growth potential [1] - The "Healthy China" policy and weight management needs are driving demand for high-quality protein and dairy fat, further enhancing cheese's role as a natural nutritional carrier [1] - The penetration rate of cheese in Western cuisine, tea and coffee, and baking is continuously increasing, with chain brands frequently using products like mozzarella, cheese sauce, mascarpone, and butter, which is educating consumers and boosting demand [1] Group 2: Market Opportunities - The synergy between B-end (business) and C-end (consumer) demand is expected to create a phenomenon-level product, propelling solid dairy products towards a trillion-level market segment [1] - The ongoing research by industry associations regarding the implementation of cheese policies in schools suggests a trend towards "high-protein dairy products in schools," which could create structural opportunities for cheese in student meals [1] Group 3: E-commerce Strategy - The company is integrating Mengniu cheese for online dual-brand layout and optimizing operations on traditional e-commerce platforms like JD, Tmall, and Pinduoduo, while also expanding into interest e-commerce platforms like Douyin and Kuaishou [2] - In 2024, the company's online sales reached 378 million yuan with a gross margin of 41.56%, and the company plans to continue enhancing collaborations with major platforms [2] - During the "618" shopping festival, the company's e-commerce business performed exceptionally well, ranking first in the cheese/dairy category across all platforms, with strong sales of new products [2] Group 4: IP Cooperation - The company signed an IP rights usage service contract with its controlling shareholder, Mengniu, committing to a total of 52 million yuan in pre-tax expenses from 2025 to 2027 for diverse IP cooperation and brand marketing activities [3] - The collaboration aims to leverage marketing planning, media investment, and consulting services from the controlling shareholder to enhance brand exposure and consumer recognition [3] - The company plans to improve the efficiency of sales expenses while maintaining overall scale stability, focusing on enhancing promotional effectiveness [3]