Core Viewpoint - Yili Group has been awarded the China Quality Award Nomination for three consecutive sessions, reflecting the industry's recognition of its quality management and the historical leap of China's dairy industry from "catching up" to "surpassing" [1][8]. Group 1: Quality Management Models - Yili Group has developed the "Self-Prevention Three-Line Zero Defect" quality management model, which emphasizes self-prevention and safety assurance through a structured approach involving goal trees, responsibility trees, and tool trees [3][5]. - The model's execution core includes three lines: design line, assurance line, and operation line, ensuring quality through design, safety standards, and risk management [4][5]. Group 2: Technological Advancements - The company utilizes advanced technology in its operations, such as intelligent milking robots and automated production systems, to enhance efficiency and ensure product quality [7][8]. - Yili Group has established a robust food safety database and digital monitoring system, enabling real-time risk alerts and product traceability from source to consumer [7][8]. Group 3: Quality Achievements - The average bacterial count in Yili's raw milk has been significantly lower than the EU standard, achieving less than 10,000 CFU/mL, marking a substantial improvement in quality management [8]. - The implementation of the new quality management model has led to a reduction in product development cycles by an average of three months and a saving of 17,024 research and development hours annually [6].

Core Viewpoint - The company has demonstrated resilience and confidence in improving business performance through product innovation and channel expansion, as evidenced by its steady growth in the third quarter report [1][2]. Financial Performance - The company reported a revenue of 90.564 billion yuan, a year-on-year increase of 1.71%, and a net profit of 10.103 billion yuan, up 18.73% year-on-year [2]. - The liquid milk segment continues to expand, achieving a revenue of 54.939 billion yuan in the first three quarters [2]. Product Innovation - The introduction of new products such as "Chew Lemon" yogurt and "Classic Fresh" milk has redefined market expectations and contributed to significant growth in the yogurt category [3][5]. - The company has launched a range of high-quality, cost-effective products in the deep processing sector, including cheese and lactoferrin, which have seen over 20% growth in the cheese division [4][5]. Market Strategy - The company is focusing on the infant formula market, with a revenue of 24.261 billion yuan in the first three quarters, marking a year-on-year increase of over 13.74% [5]. - The company is also expanding its adult nutrition product line, targeting functional products that meet the health needs of the aging population [6]. Channel Management - The company has successfully adjusted its channel strategies, leading to improved operational confidence and stability in market share for liquid milk products [2][3]. - The company is actively collaborating with various food service channels to introduce customized products, enhancing its market presence [4]. Growth Opportunities - The company anticipates continued growth in the infant formula sector due to favorable demographic trends and government subsidies, with a projected increase in newborns [6]. - The company is exploring international expansion opportunities, particularly in Southeast Asia and other high-potential markets, to enhance its global footprint [6]. Non-Dairy Business - The non-dairy segment, particularly the "Yike Huoquan" brand, has seen a significant increase in new product launches, achieving a growth rate of 70% [7]. Industry Positioning - The company is setting a standard for navigating through economic cycles in the fast-moving consumer goods sector, leveraging its early investments in high-potential categories [8].

Investment Rating - The report maintains a "Buy" rating for Yili Co., Ltd. (600887.SH) [6] Core Views - Yili Co., Ltd. reported a total revenue of 115.78 billion yuan for 2024, a decrease of 8.24% year-on-year, and a net profit attributable to shareholders of 8.45 billion yuan, down 18.94% year-on-year [1] - The company experienced a net loss of 2.42 billion yuan in Q4 2024, compared to a profit of 1.05 billion yuan in the same period of 2023, indicating significant challenges in the last quarter of the year [1] - In Q1 2025, Yili's revenue increased by 1.35% year-on-year to 33.02 billion yuan, while the net profit attributable to shareholders decreased by 17.71% year-on-year to 4.87 billion yuan [1] Revenue and Profitability Summary - Liquid milk revenue for 2024 was 75.00 billion yuan, down 12.32% year-on-year, primarily due to weak terminal demand and inventory destocking [2] - The milk powder and dairy products segment saw revenue growth of 7.53% in 2024 and 18.65% in Q1 2025, with significant contributions from the premium infant formula segment [2] - The overall gross margin for 2024 was 34.10%, with a notable increase in Q1 2025 to 37.82% due to lower raw milk prices [3] Financial Forecast and Valuation - The net profit forecasts for 2025 and 2026 have been revised down to 10.81 billion yuan and 11.65 billion yuan, respectively, reflecting a 6.1% and 5.4% reduction from previous estimates [4] - The estimated earnings per share (EPS) for 2025-2027 are projected at 1.70 yuan, 1.83 yuan, and 2.05 yuan, respectively, with corresponding price-to-earnings (P/E) ratios of 17, 16, and 15 times [4]

Core Insights - The company reported a decline in revenue and net profit for the year 2024, with total revenue of 115.78 billion yuan, down 8.24% year-on-year, and a net profit of 8.45 billion yuan, down 18.94% year-on-year [1] - The fourth quarter of 2024 saw a significant net loss of 2.42 billion yuan, compared to a profit of 1.05 billion yuan in the same period of 2023 [1] - The first quarter of 2025 showed a slight revenue increase of 1.35% year-on-year, with a net profit decline of 17.71% [1] Revenue Breakdown - Liquid milk revenue for 2024 was 75.00 billion yuan, down 12.32% year-on-year, primarily due to weak terminal demand and inventory reduction [1] - The milk powder and dairy products segment saw revenue growth of 7.53% in 2024 and 18.65% in Q1 2025, with significant growth in the premium infant formula segment [2] - Ice cream products experienced a revenue decline of 18.41% in 2024 and 5.25% in Q1 2025 [2] Profitability Metrics - The company's gross margin for 2024 was 34.10%, with a quarterly gross margin of 31.00% in Q4 2024 and 37.82% in Q1 2025, indicating an improvement due to lower raw milk prices [2] - Selling expense ratios decreased to 18.99% for 2024, 18.06% for Q4 2024, and 16.92% for Q1 2025, reflecting reduced promotional expenses [2] - The net profit margin for 2024 was 7.30%, with a significant net loss margin of -9.03% in Q4 2024, while Q1 2025 showed a recovery to 14.76% [3] Future Outlook - The company anticipates improved sales performance in Q2 2025 due to a low base effect and expects a reduction in promotional expenses, which may enhance profitability [3] - The net profit forecasts for 2025 and 2026 have been revised down to 10.81 billion yuan and 11.65 billion yuan, respectively, with a new forecast for 2027 at 13.04 billion yuan [4] - The projected earnings per share (EPS) for 2025-2027 are 1.70 yuan, 1.83 yuan, and 2.05 yuan, respectively, with corresponding price-to-earnings (P/E) ratios of 17, 16, and 15 times [4]

Investment Rating - The report maintains a "Buy" rating for Yili Co., Ltd. (600887.SH) [4][6] Core Views - Yili Co., Ltd. reported a decline in revenue and net profit for 2024, with total revenue of CNY 115.78 billion, down 8.24% year-on-year, and a net profit attributable to shareholders of CNY 8.45 billion, down 18.94% year-on-year [1] - The company is experiencing a recovery in its low-temperature product category and good growth in its milk powder business, with milk powder revenue increasing by 7.53% in 2024 and 18.65% in Q1 2025 [2] - The gross margin improved due to declining raw milk prices, with a gross margin of 34.10% for 2024, up from 32.8% in 2023 [3] Summary by Sections Financial Performance - In 2024, Yili Co., Ltd. achieved total revenue of CNY 115.78 billion, a decrease of 8.24% from the previous year, and a net profit of CNY 8.45 billion, down 18.94% year-on-year [1] - For Q4 2024, the company reported a revenue of CNY 26.74 billion, a decline of 7.07% year-on-year, and a net loss of CNY 2.42 billion [1] - In Q1 2025, revenue was CNY 33.02 billion, an increase of 1.35% year-on-year, while net profit was CNY 4.87 billion, down 17.71% year-on-year [1] Product Performance - Liquid milk revenue in 2024 was CNY 75.00 billion, down 12.32% year-on-year, while low-temperature products showed growth [2] - Milk powder and dairy products generated revenues of CNY 29.68 billion in 2024 and CNY 8.81 billion in Q1 2025, reflecting growth rates of 7.53% and 18.65% respectively [2] - Ice cream products saw a revenue decline of 18.41% in 2024 and 5.25% in Q1 2025 [2] Profitability and Cost Management - The gross margin for 2024 was 34.10%, with a significant improvement in Q1 2025 to 37.82% [3] - Selling expense ratio decreased to 18.99% in 2024, while management expense ratio was 3.86% [3] - The net profit margin for 2024 was 7.30%, with a significant loss in Q4 2024 primarily due to goodwill impairment [3] Earnings Forecast and Valuation - The net profit forecast for 2025 and 2026 has been revised down to CNY 10.81 billion and CNY 11.65 billion, respectively [4] - The estimated EPS for 2025-2027 is projected at CNY 1.70, CNY 1.83, and CNY 2.05, with corresponding P/E ratios of 17, 16, and 15 [4]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The report highlights that the company has shown a significant improvement in Q1 2025 performance, with a revenue increase of 1.35% year-on-year, despite a decline in net profit by 17.71% [2][5] - The company is expected to continue its recovery trajectory, driven by a rebound in demand for dairy products and effective cost management strategies [5] Financial Performance Summary - In 2024, the company achieved a total revenue of 115.78 billion yuan, a decrease of 8.24% year-on-year, and a net profit of 8.45 billion yuan, down 18.94% year-on-year [2][4] - For Q1 2025, the company reported a revenue of 33.02 billion yuan, with a net profit of 4.87 billion yuan, reflecting a year-on-year increase in revenue and a decrease in net profit [2][4] - The gross margin for Q1 2025 improved to 37.82%, up 1.80 percentage points year-on-year, attributed to a higher proportion of high-margin products [4][5] Segment Performance - In Q4 2024, the liquid milk segment saw a revenue decline of 13.08%, while the milk powder segment experienced an increase of 8.72% [4] - For Q1 2025, the liquid milk revenue decreased by 3.06%, while the milk powder segment grew by 18.65% [4] Future Outlook - The company plans to achieve a total revenue of 119 billion yuan in 2025, with a profit target of 12.6 billion yuan [4][5] - The earnings per share (EPS) forecast for 2025-2027 is projected to be 1.67 yuan, 1.83 yuan, and 1.99 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 18X, 16X, and 15X [5][6]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The report highlights that the company achieved a revenue of 115.78 billion yuan in 2024, a year-on-year decrease of 8.24%, and a net profit attributable to shareholders of 8.45 billion yuan, down 18.94% year-on-year. The first quarter of 2025 showed a revenue increase of 1.35% year-on-year to 33.02 billion yuan, with a net profit of 4.87 billion yuan, down 17.71% year-on-year [2][4] - The company is expected to see a recovery in performance, driven by a rebound in demand for dairy products and cost reduction efforts. The projected earnings per share (EPS) for 2025-2027 are 1.67, 1.83, and 1.99 yuan, respectively, with corresponding price-to-earnings (P/E) ratios of 18X, 16X, and 15X [5] Financial Summary - In 2024, the company reported total revenue of 115.78 billion yuan, with a year-on-year growth rate of -8.24%. The net profit attributable to shareholders was 8.45 billion yuan, reflecting a year-on-year decline of 18.94%. The gross profit margin was 34.1% [6] - For 2025, the expected total revenue is 119.20 billion yuan, with a projected growth rate of 3.0%. The net profit is anticipated to be 10.64 billion yuan, representing a year-on-year increase of 25.9% [6] - The company plans to distribute dividends of 7.726 billion yuan in 2024, with a payout ratio of 91.4%, resulting in a dividend yield of 4.08% based on the latest closing price [4]