Core Viewpoint - Despite expectations of consumer recovery, Miao Ke Lan Duo, a leading cheese brand, is facing growth bottlenecks, as evidenced by its declining revenue and profit figures in the latest quarterly report [1][3]. Financial Performance - In Q1, Miao Ke Lan Duo reported revenue of 1.023 billion yuan, a year-on-year decrease of 20.47%, and a net profit of 24.2 million yuan, down 67.08% year-on-year [1]. - For the full year of 2022, the company experienced a revenue growth of only 7.84%, while net profit and non-recurring net profit fell by 12.32% and 45.14%, respectively [3]. - The company's stock price has halved in less than a year, reaching a historical low of 23.47 yuan per share [3]. Market Challenges - Miao Ke Lan Duo's cheese sales are increasingly difficult, with quarterly revenue growth rates declining from 35.2% to -25% over the past year [4]. - The company attributes its performance issues to logistics disruptions, rising raw material costs, intensified competition, and weak consumer demand [4]. - The cost of goods sold for the cheese business increased by 33.54% to 2.293 billion yuan, leading to a significant drop in gross margin by 7.78 percentage points to 40.48% [4]. Market Dynamics - The retail scale of China's cheese market grew to 14.294 billion yuan in 2022, but the growth rate slowed to 8.9%, indicating a shrinking incremental market for Miao Ke Lan Duo, which holds a 32.7% market share [4]. - A declining birth rate poses a long-term concern for cheese products aimed at children, as evidenced by a drop in birth rates from 18.83 million in 2016 to 10.62 million in 2021 [5]. Competitive Landscape - The cheese stick market has seen a price war since 2020, with discounts ranging from 50% to 80%, making it increasingly challenging for Miao Ke Lan Duo to sell its products [6]. - Despite maintaining a revenue growth of 16% in its cheese business in 2022, the core instant nutrition series saw a slight revenue decline of 0.6% [6]. - Miao Ke Lan Duo's sales expense ratio increased from 16.74% in 2018 to 25.24% in 2022, while revenue growth slowed from 63.2% in 2020 to 7.84% in 2022 [6]. Strategic Initiatives - To address market challenges, Miao Ke Lan Duo launched a line of ambient cheese sticks in 2021, aiming to expand its reach in lower-tier markets [7]. - The company is attempting to replicate the success of the ambient yogurt brand Mosliyan, which achieved significant sales growth before facing competition [7]. - Miao Ke Lan Duo's distribution network is limited compared to competitors like Yili, which has a much larger number of retail outlets and distributors [8]. Distribution and Channel Management - As of 2022, 71.7% of Miao Ke Lan Duo's revenue came from distribution channels, with a net decrease of 145 distributors during the year [8]. - In Q1 of the current year, the number of distributors further declined by 53, attributed to a strategic decision to optimize distributor quality [9]. - The management believes that specialized cheese distributors may perform better than those who also sell liquid milk, indicating a potential shift in channel strategy [9].

Core Viewpoint - The Chinese dairy industry is undergoing a deep adjustment period, with traditional liquid milk consumption growth slowing down, while cheese is emerging as a high-growth segment driven by consumption upgrades and policy support, becoming a new battleground for leading dairy companies [1][2]. Industry Overview - The dairy sector has shown significant differentiation in the capital market, with traditional liquid milk giants like Yili and Mengniu experiencing stock price declines of around 3% to 4%, while companies like China Feihe and Miaokelando in the cheese segment have seen stock price increases of over 5% and 64% respectively, indicating positive market expectations for cheese [1]. - The cheese market in China is still in its early development stage, with a current consumer penetration rate of less than one-third, significantly lower than that of low-temperature yogurt [2][4]. Company Performance - Miaokelando reported a revenue of 1.233 billion yuan in Q1, a year-on-year increase of 6.26%, with a net profit of 82.4 million yuan, marking a substantial year-on-year growth of 114.88% [4]. - The company aims to achieve a cumulative revenue of no less than 19.9 billion yuan and a net profit of no less than 990 million yuan from 2025 to 2027, reflecting confidence in consumer recovery and industry growth [6]. Market Dynamics - The current low price of raw milk presents a rare opportunity for companies to optimize their cost structures, with the average price of fresh milk in major production areas dropping to 3.06 yuan per kilogram, a decrease of 8.4% year-on-year [4][5]. - The dairy industry has entered a phase of oversupply since 2018, primarily due to a lack of product diversity and saturation in overall milk consumption [4]. Strategic Initiatives - Miaokelando is focusing on enhancing its cheese production capabilities, with plans for a new factory in Jilin expected to be operational next year to improve supply chain efficiency and cost competitiveness [2]. - The company is adopting a dual strategy targeting both B-end (industrial catering) and C-end (household consumption) markets, with C-end expected to contribute approximately 65% and B-end around 35% of its business by 2024 [7]. Retail Trends - The retail landscape is undergoing significant changes, with emerging channels like membership stores and snack retailers gaining traction, prompting Miaokelando to adapt its strategies to align with these trends [7]. - The company is committed to deepening its engagement with new retail channels and optimizing traditional e-commerce operations to capture market opportunities [8].