Summary of Yili Co., Ltd. Conference Call Company Overview - **Company**: Yili Co., Ltd. - **Date**: September 22, 2025 Key Points Industry and Market Strategy - Yili's strategy for the Mid-Autumn Festival and National Day is cautious, focusing on channel health without forcing inventory on distributors, with stock preparation starting later than last year, primarily completed by the end of September [2][3][4] - The company maintains its annual operational targets, expecting low single-digit revenue growth and a net profit margin of 9%, despite weak recovery in the ambient liquid milk segment [2][8] Performance Insights - Performance across product categories is mixed; cold drinks are less affected by inventory cycles, while yogurt products, particularly the upgraded versions, are performing well [2][9] - The milk powder segment achieved double-digit growth in the first half of the year, with cash rebates for childbirth subsidies expected to drive future repurchase rates [2][12] Market Share and Competitive Landscape - Yili's market share in the ambient liquid milk segment remains stable, benefiting from rising costs among smaller dairy companies, with a focus on maintaining a stable pricing structure [2][16] - The cheese business also saw double-digit growth, with an increasing share of B2B sales driven by the recovery of the catering market [2][17][20] Financial Outlook - The company expects a slight improvement in gross margins in the second half of the year, although not as significant as in the first half, with a commitment to a dividend payout ratio of no less than 70% [4][30][25] - The impact of childbirth subsidies on financials is minimal, with expectations of increased revenue from infant formula due to potential repurchase growth [12][31] Consumer Trends and Product Development - The gifting market has diversified, with a growing preference for health-oriented dairy products over traditional gifts like mooncakes, indicating a shift in consumer behavior [10] - Yili is expanding its B2B market presence by collaborating with new channels such as tea and coffee chains, while also focusing on customized product offerings [18][20] Challenges and Risks - The company faces challenges in maintaining profitability due to potential price competition and the need for promotional activities, especially during peak sales periods [28][29] - The outlook for raw material costs is cautiously optimistic, with signs of supply-demand balance emerging, although precise timing for cost changes remains uncertain [24] Additional Insights - The company is preparing for the launch of a deep processing production line aimed at enhancing customization capabilities for B2B clients [21][23] - Yili's cheese product sales structure currently shows a 60% share in B2B and 40% in B2C, indicating a strong focus on the B2B segment [19] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Yili's operational strategies, market performance, and future outlook in the dairy industry.