Feihe (06186) 2024 Annual Report: Technology Leading Revenue and Profit Double Increase, Overseas Layout Expanding Incremental Space

On March 28, CHINA FEIHE (06186) released its full year 2024 performance. The data shows that Feihe achieved a revenue of 20.75 billion yuan in 2024, a year-on-year increase of 6%, with a net profit of 3.65 billion yuan, a year-on-year increase of 11%. During the reporting period, Feihe plans to distribute a final dividend of 0.1632 Hong Kong dollars per share, with an expected total dividend distribution of 2.72 billion yuan for the year (including the 1.35 billion yuan already paid in the mid-year), continuing to create value for shareholders. In 2024, the Chinese infant formula industry welcomed a structural recovery opportunity. The increase in birth rates, combined with consumers' growing confidence in domestic infant formula and policy support, further expanded the market space for infant formula. Feihe's market position is stable, and according to Frost & Sullivan statistics, as of 2024, Feihe infant formula has been the top-selling infant formula in China for six consecutive years, and the top-selling globally for four consecutive years. Technological innovation leads the industry, accelerating the layout of full life-cycle products The double increase in Feihe's revenue and profit in the financial report is not only due to the industry recovery dividend but also benefited from the continuous investment in technological barriers that Feihe has built. Technological innovation has become the core engine for Feihe's high-quality development. In 2024, Feihe added 153 authorized patents both domestically and internationally, accumulating a total of 659 authorized patents both domestically and internationally. At the same time, with outstanding performance in innovation, Feihe once again won the manufacturing industry "Nobel Prize" TPM award. Feihe has been deeply cultivating the field of breast milk and early-life brain nutrition research for many years, leading research on brain development in the early stages of life for 1,000 days. It has cooperated with top scientific research teams such as Peking University Medical Department, Harvard BCH, and Peking University Institute of Neuroscience to systematically explore and apply early-life brain development and nutrition. As one of the first companies in China to start breast milk research, Feihe has established the largest breast milk database in China. Leveraging the "Fourteenth Five-Year Plan" national key research and development project, it has established a maternal and child health cohort covering six representative regions, 11 provinces, and 22 cities. In May of last year, Feihe cooperated with Tsinghua University Brain and Intelligence Lab to start the "Brain Development and Cognition" special project, promoting scientific research and results transformation in the field of brain development and cognition through industry-academia-research cooperation. In October of the same year, the first Tan Jiazhen Foundation-CHINA FEIHE Global Brain Development Science Summit was held, where Feihe announced the establishment of a global research and development platform, signed a strategic cooperation agreement with the Capital Medical University, and released the latest scientific research results including the first nutrition product to promote fetal brain development. As of now, Feihe has undertaken more than 40 national and provincial important scientific research projects and has taken the lead in undertaking relevant projects of the "Fourteenth Five-Year Plan" national key research and development program, leading the way in technology development for the next generation of dairy products. Based on global-leading research on breast milk and whey protein technology, Feihe accelerates scientific research transformation and layout of full life-cycle customized nutrition products, providing precise nutritional support for different life stages. In January of this year, Feihe released whey protein fresh extract technology, deeply unlocking the rich nutrition of whey protein, achieving not only domestic production of whey protein raw materials but also a leap in dairy product quality and opening a new era of functional nutrition. In addition, Feihe has launched new products such as "Supernova Superstar Cheese," meeting the personalized nutritional needs of all life stages and leading market upgrades. In terms of localization of core ingredients, Feihe has already established the first large-scale automated lactoferrin production line in China, a new generation of small-molecule hydrolyzed whey protein production line, and five large-scale production lines for industrial production of various important raw materials such as desalted whey and lactoferrin, completing technological reserves for important raw materials production such as lactose and osteocalcin. Deepening international layout to assist sustainable development of dairy industry After consolidating the domestic market, "going abroad" has become a strategic focus for Feihe in 2024. As global competition in the dairy industry enters a new stage of competition in the industry chain and innovation chain, Feihe aims to bring quality enhancements through innovation, aligning itself with top-tier companies and showcasing the strong capabilities of Chinese dairy industry brands in international markets. From obtaining the first infant formula milk production license in Canada in March of last year, to officially starting production in September, and then launching on the online Amazon platform in Canada and offline in over 1,100 stores of Walmart and Loblaws, Feihe's overseas expansion is stable and fast. It is reported that the Canadian factory built by Feihe over 8 years is the first and currently the only factory producing infant formula milk in Canada. The overseas layout continues to deepen. In April of last year, Feihes Canadian subsidiary Royal Secreto entered into a strategic partnership with the American infant and child product giant Munchkin. Feihe not only achieved double growth in revenue and profit but also drove Chinese dairy companies to innovate in functional dairy ingredients and industrialization development, demonstrating advantages in international competition and promoting China's transformation from a "milk source giant" to a "dairy industry power." As an industry leader, meeting people's growing nutritional and health needs sustainably is also a key aspect of Feihe's development. Achieving sustainable development in the dairy industry requires comprehensive optimization of the entire value chain. Feihe has always adhered to the philosophy of "doing what one can to benefit society," actively promoting industry sustainability through practical actions. In 2024, Feihe participated in drafting three national standards related to "green manufacturing," helping the country advance in green manufacturing system construction. At the same time, Feihe insists on building the industry chain into a "shared wealth chain," supporting rural revitalization. Leveraging the dairy industry cluster, Feihe has created 170,000 jobs, increased income for 160,000 farmers, and enhanced the value of over one million acres of farmland, promoting the coordinated development of related industries. In 2024, Feihe successfully entered the "2024 Annual ESG Excellence Practice Report" and once again ranked among the "China ESG Listed Companies Vanguard 100" list. "In the future, CHINA FEIHE will seize development opportunities, continue independent innovation, especially in breast milk research, brain development research, whey protein technology, and all-age nutritional research, making continuous breakthroughs. In terms of product innovation, we will deepen the layout of all-age nutrition to deliver love through nutrition, providing consumers with more comprehensive and precise 'all-age nutritional support'. In terms of market expansion...""We will continue to empower globalization through research and development, expand overseas markets continuously, enhance the global influence of the Feihe brand, and make CHINA FEIHE become 'Global Feihe'," said Liang Youbin, Chairman of Feihe Dairy."Bonjour, comment a va aujourd'hui?" "Hello, how are you today?" (Note: The original text is in French.)