Summary of New Dairy Industry Conference Call Company Overview - New Dairy Industry has maintained positive growth in net profit attributable to shareholders over the past decade, with accelerated profit growth since the implementation of the five-year plan in 2023, indicating strong profitability and growth potential [2][3] Core Business and Market Position - The company's business is primarily focused on liquid milk, with low-temperature liquid milk accounting for over half of its sales. The DTC (Direct-to-Consumer) channel, including home delivery, convenience stores, and e-commerce, is continuously increasing, enhancing user loyalty and market share [2][4][5] - New Dairy Industry has expanded through acquisitions (e.g., Modern Dairy, Fuzhou Aoniu) and has shifted its strategy towards organic growth since 2023, focusing on improving profitability with support from its controlling shareholder, New Hope Group [2][6] Product Structure and Regional Layout - The product structure is heavily weighted towards low-temperature liquid milk, including fresh milk and yogurt. The company has subsidiaries in regions such as Southwest and East China, and it employs a strategy that combines national promotion with regional characteristics [4][9] - The company retains local legacy products while leveraging the DTC model to capture market share, with a growing membership system [4][10] Market Trends and Competitive Advantages - The low-temperature liquid milk market has shown significant growth despite pressures on the overall liquid milk market. The upgrade path includes improving physical and chemical indicators and better product concepts [7] - New Dairy Industry has established competitive advantages through its full-chain operations, enhancing gross margins and optimizing marketing strategies to capture consumer mindshare [8] Supply Chain and Management - The company ensures stable milk supply by holding shares in Modern Dairy, which provides a reliable national milk source. Additionally, its cold chain logistics service offers cost advantages [11] - Internal management employs a strict red-yellow light assessment mechanism for subsidiaries, focusing on profitability and product mix improvements [12] Future Profitability Expectations - The company is expected to achieve sustainable profit growth along the lines of its five-year strategic plan, with projected net profit corresponding to P/E ratios of 22 and 19 for 2025 and 2026, respectively, indicating a favorable valuation given an anticipated profit growth rate of over 25% [13]

Core Insights - New Dairy achieved revenue and net profit growth in the first half of 2025, with revenue reaching 5.526 billion yuan, a year-on-year increase of 3.01%, and net profit attributable to shareholders of 397 million yuan, up 33.76% [1] - The company maintained a sales net profit margin of 7.40%, an increase of over 1.72 percentage points year-on-year, and reduced its asset-liability ratio to 62.53%, down 2.08 percentage points from the beginning of the period [1] - The company’s commitment to its "fresh" core value and strategic iteration in response to market trends has driven stable growth, focusing on a three-pronged product strategy of "fresh sour drinks" [1][2] Financial Performance - In the first half of 2025, New Dairy's net profit after deducting non-recurring items was 411 million yuan, reflecting a year-on-year growth of 31.17% [1] - The total amount of interim and annual dividends for 2024 increased by 90% compared to the previous year [1] Product and Brand Strategy - New Dairy has multiple star brands such as "Asahi Weipin," "Xichang Sanmu," "Today's Fresh Milk Shop," "Huirun," and "Chuxin," which leverage their unique product and brand characteristics to enhance marketing innovation and user engagement [2] - The company is positioned as a "technology nutrition food enterprise," focusing on a three-part R&D system that includes a research institute, a global research network, and a technology transfer platform [2] Market Positioning and Future Outlook - 2025 is a pivotal year for New Dairy as it implements its new five-year strategic plan, emphasizing the "Fresh Cube Strategy" and the "fresh" value it offers to consumers [2] - The company recognizes the importance of safety, nutrition, taste, and emotional value to consumers, aiming to strengthen its core competitiveness through product innovation, technological advancements, and operational capabilities [2]