Summary of Conference Call Records Industry Overview: China Consumer Staples Key Themes and Trends 1. **Cautious Outlook for 2026**: The industry is observing a cautious outlook into 2026, with a focus on the trends surrounding the Chinese New Year (CNY) [2] 2. **Mixed Performance in Beverages**: - Nongfu and Eastroc maintained strong momentum with double-digit growth despite being in a slack season, driven by strong product cycles [1] - Tingyi and UPC beverages experienced a decline in December due to heightened competition, although subsidies for freshly-made drinks have retreated [1] 3. **Beer Demand**: - Overall beer demand remains subdued, particularly in on-trade channels, with Bud China seeing a deeper sequential decline [1] - CR Beer and Chongqing Brewery managed slight volume growth, while Tsingtao's volume increased by 12% on easier comparisons [1] 4. **Condiments and Frozen Foods Recovery**: - Haitian reported sustained growth in the mid-single to high-single digits, with a faster quarter-on-quarter growth in Q4 [1] - Anjoy's growth accelerated in December despite a higher base, indicating a favorable setup for Q1 [1] 5. **Dairy Sector Stabilization**: - Liquid milk demand is stabilizing after a period of destocking, with herd downsizing settling at a 4.5% year-over-year decline [1] - Raw milk prices held steady at approximately Rmb3.03/kg in December, with a 3.0% year-over-year decline in average prices for Q4 [1][24] Company-Specific Insights 1. **Yili**: - Management highlighted an improving raw milk supply-demand balance supported by herd downsizing, although demand remains lackluster [2] - The company is focusing on channel inventory discipline and targeted marketing to sustain performance [8] 2. **Haitian**: - Noted a sequential acceleration in Q4 and sees potential for consumption upgrading in chained restaurants [2] 3. **Anjoy**: - Resumed double-digit sales growth since September, driven by enhanced execution and channel strategies [8] 4. **CR Beer**: - Expects no incremental SG&A investment impact in 2026, focusing on maintaining margins amid cost pressures [8] Market Dynamics 1. **Expense Outlook**: - The expense outlook remains cautious, with a focus on margin expansion for beer, dairy, and food & beverage sectors amid diminishing cost benefits [8] 2. **Channel Health**: - Companies are making efforts to sustain channel health throughout 2025, which is expected to underpin recovery in 2026 [8] 3. **New Product Cycles**: - A sequentially improving outlook for both Yili and Mengniu is anticipated, supporting volume and margin accretion [8] Investment Preferences 1. **Preferred Sectors**: - Beverage, pet foods, and condiments/prepared foods are highlighted as sectors with potential for growth [9] 2. **Key Stock Ideas**: - Recommendations include Eastroc, Nongfu, Weilong for visible growth, and Haitian H-shares/Anjoy as early beneficiaries of on-trade recovery [9] Additional Insights 1. **Snacks Performance**: - Weilong sustained strong sales growth in December, with vegetable snacks up over 30% year-over-year [1] 2. **Pet Foods**: - China Pet Foods led in year-over-year growth in December, while other covered names weakened compared to previous months [32] This summary encapsulates the key points from the conference call records, providing insights into the current state and future outlook of the China consumer staples industry.

Core Viewpoint - Jilin Quanyuan Spring Co., Ltd. plans to participate in the establishment of the Changbai Mountain Specialty Beverage Industry Investment and M&A Fund with a total scale of 300 million yuan, contributing 15 million yuan for a 5% share in the fund [2][3] Summary by Sections 1. Overview of the Related Transaction - The company aims to support the development of the specialty beverage industry in Jilin Province, focusing on mineral water, ginseng beverages, and birch juice [3][4] - The fund will be established in collaboration with several partners, including Jilin Changbai Mountain Private Fund Management Co., Ltd. as the general partner [2][3] 2. Purpose of Establishing the Fund - The fund's establishment aligns with the Jilin provincial government's requirements for high-quality development of state-owned enterprises [4][15] - The fund will primarily invest in projects with high growth potential in the mineral water and health industries, enhancing the company's strategic competitiveness [4][16] 3. Investment Details - The fund's total capital is set at 300 million yuan, with Quanyuan Spring contributing 15 million yuan [2][14] - Other partners include Jilin Forest Industry Group and Yadong Investment, with significant contributions from these entities [14][15] 4. Decision and Approval Process - The investment decision was approved by the company's board of directors without the need for a shareholders' meeting [6][24] - The board's decision was made with the participation of independent directors, ensuring compliance with governance standards [6][24] 5. Impact on the Company - The investment is expected to facilitate the incubation of industry projects, potentially leading to positive financial returns [24][25] - The fund's operation will be transparent, benefiting the company's interests and ensuring fair information disclosure for investors [4][24] 6. Future Transactions and Relationships - The fund's establishment will not alter the company's consolidation scope, as it will hold only a 5% stake [25][26] - Future transactions with the fund will not constitute related party transactions, maintaining independence among the partners [26][27]