Company Reports

We will discontinue analyst coverage of China Feihe on or about Sept. 1, 2026.

We review our forecasts for China Feihe ahead of its interim results in August.

China Feihe's 2025 net profit declined 43% year on year due to falling revenue, increased sales and marketing expenses, and new-birth subsidies offered to consumers.

China Feihe strives to be a topnotch domestic infant milk formula producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distribution and retail outlet network in the country.

China Feihe's revenue in the second half remained pressured by channel inventory adjustments and a declining birth rate. According to the United Nations Department of Economic and Social Affairs, new births in China are expected to fall to around 8.7 million in 2025, versus 9.5 million in 2024.

China Feihe strives to be a top-notch domestic infant milk formula producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distribution and retail outlet network in the country.

China Feihe's first-half revenue fell by 9% year on year, while net income declined by 36%, affected by price discounts associated with inventory clearance and childbirth subsidies for consumers.

China Feihe strives to be a top-notch domestic infant milk formula producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distribution and retail outlet network in the country.

China Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.

China Feihe expects first-half 2025 revenue to fall by 8%-10% year on year, with net profit projected to decline by 37%-47%. The primary factors behind this downturn are channel inventory destocking, consumer subsidies, and raw milk impairment.

Narrow-moat China Feihe’s 2024 earnings fell 15% short of our expectations, largely due to a lower-than-anticipated operating margin, driven by increased marketing expenses aimed at addressing heightened industry competition. We reduced our 2025-26 earnings estimates by 7%-12% accordingly. However, we retain our fair value estimate of HKD 6.10 per share as we left our longer-term forecasts unchanged. Our valuation implies 13 times 2025 price/earnings, 7 times enterprise value/EBITDA, and a 5.6% dividend yield. We see the shares as fairly valued and our preferred pick in the China dairy sector is Yili.

China Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.

We review our assumptions for China Feihe and increase our 2025-28 net income estimates by 2%-5%. We also raise our stage II EBI growth rate assumption from 2.0% to 3.5%, as we think China Feihe has continued to deliver progress in product mix improvement and, more importantly, maintaining pricing stability in the retailer level, which should support better gross margin over the long run. We assume Feihe is able to continue gaining share in the broader infant milk formula, or IMF, market from small domestic brands and foreign brands. Consequently, we raised our fair value estimate to HKD 6.10 per share from HKD 5.40, which implies 11 times 2025 price/earnings and 6.0% dividend yield. The stock has experienced a 40% rally year to date, and we consider its shares as fairly valued now.

China Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.

China Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.

Narrow-moat China Feihe’s first-half revenue and net income exceeded our estimates thanks to the strong momentum of the new premium products. Management noted that channel inventory has returned to a healthy level and is optimistic about faster revenue growth in the second half. This is directionally consistent with our expectations, but we still raised our second-half sales and net income projections by 2% and 9%, respectively, to account for the better-than-expected performance of its premium lineups.

We maintain our 2024 revenue and net income projections for narrow-moat China Feihe after reviewing our assumptions ahead of the release of its interim results. We retain our fair value estimate at HKD 5.40 per share, which implies 12 times 2024 price/earnings, 7 times EV/EBITDA, and a 5.5% dividend yield. We continue to see shares as undervalued as earnings headwinds from the industry downturn and pricing disorder should have been largely priced in, while the dividend yield remains attractive.

China Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.

Narrow-moat China Feihe’s 2023 results were mixed but in line with its preliminary profit guidance. Revenue of CNY195.3 million was slightly short of our estimate of 196.3 million while operating margin was in line. Higher nonoperating income drove better-than-expected net profit. Management’s focus in 2024 is to maintain the price stability of its flagship classic Astrobaby products following the inventory clearance last year. We moderately trim our 2024-27 revenue projections to account for a softer 2023 number but raise our net profit estimates by 1%-6% to factor in slightly higher margins from 2025 onward as Feihe executes on digitalizing its distribution network to achieve better efficiencies and lower expenses ratio.

Feihe strives to be a topnotch domestic infant milk formula, or IMF, producer in China. It has been able to price its products at a premium comparable with imported products, and is marketed as tailored for Chinese babies. The company has invested considerably in building out its sales network in maternity stores across China, as the category is mainly sold through this channel. Feihe possesses a scalable distributing and retail outlet network in the country.