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Equity Bottom-Up

Inner Mongolia Yili Industrial Group (A) / Equity Bottom-Up

<ul>
 <li>
Market Leader Facing Headwinds: Inner Mongolia Yili is the largest dairy producer in China, commanding a significant market share. However, recent financial performance indicates revenue pressures and margin compression due to softer domestic demand and intense competition.</li>
 <li>
Strong Cash Flow and Shareholder Returns: Despite profitability challenges, the company demonstrates robust free cash flow generation, allowing for consistent and attractive dividend payouts. This financial resilience is a key pillar of the investment thesis.</li>
 <li>
Strategic Focus on Premiumization and Expansion: Yili is actively pursuing growth through product innovation in higher-margin segments like organic milk and cheese, and is expanding its international footprint to diversify revenue streams and secure premium raw material sources.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  
Market Leader Facing Headwinds: Inner Mongolia Yili is the largest dairy producer in China, commanding a significant market share. However, recent financial performance indicates revenue pressures and margin compression due to softer domestic demand and intense competition.
  
Strong Cash Flow and Shareholder Returns: Despite profitability challenges, the company demonstrates robust free cash flow generation, allowing for consistent and attractive dividend payouts. This financial resilience is a key pillar of the investment thesis.
  
Strategic Focus on Premiumization and Expansion: Yili is actively pursuing growth through product innovation in higher-margin segments like organic milk and cheese, and is expanding its international footprint to diversify revenue streams and secure premium raw material sources.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: Inner Mongolia Yili Industrial Group (A) (600887 CH) - Sep 2025

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Yeeper Nutrition Technology (Qingdao) Group / Equity Capital Markets

Yeeper Nutrition Technology (Qingdao) Group

<ul>
<li>Many companies enter the goat/sheep milk powder market due to higher gross margin than cow milk powder, but after years of development, this market has been in a shrinking trend.</li>
<li>With a closed-loop capability in full internal control, production and supply of core ingredients of demineralized goat and sheep whey, Yeeper has supply chain advantage, thus with higher pricing power.</li>
<li>Yeeper’ has shown the characteristics of "slowing revenue growth, and increasing pressure on net profit margin" due to intensified competition. Valuation could be lower than Yili but higher than <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe</a>.</li>
</ul>


Many companies enter the goat/sheep milk powder market due to higher gross margin than cow milk powder, but after years of development, this market has been in a shrinking trend.
With a closed-loop capability in full internal control, production and supply of core ingredients of demineralized goat and sheep whey, Yeeper has supply chain advantage, thus with higher pricing power.
Yeeper’ has shown the characteristics of "slowing revenue growth, and increasing pressure on net profit margin" due to intensified competition. Valuation could be lower than Yili but higher than China Feihe.


Pre-IPO Yeeper Nutrition Technology (Qingdao) Group - Concerns About the Business and the Outlook

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.</li>
<li>We see attractive stories for <a href="https://www.smartkarma.com/entities/shanxi-xinghuacun-fen-wine-factory-co" target="_blank" data-smartkarma-citation="entities:9288:1" rel="noopener">Shanxi Xinghuacun Fen Wine (600809 CH)</a>, <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring (603288 CH)</a>, <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial (600887 CH)</a> and <a href="https://www.smartkarma.com/entities/fu-jian-anjoy-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Fu Jian Anjoy Foods (603345 CH)</a>.  </li>
<li>While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  </li>
</ul>


Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.
We see attractive stories for Shanxi Xinghuacun Fen Wine (600809 CH), Foshan Haitian Flavouring (603288 CH), Inner Mongolia Yili Industrial (600887 CH) and Fu Jian Anjoy Foods (603345 CH).  
While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  


China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Greatview Aseptic Packaging / Event-Driven

<ul>
<li>Back on the 27 January 2023, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson (JM SP)</a> entered an agreement with <a href="https://www.smartkarma.com/entities/shandong-xinjufeng-technology-packaging-co-ltd" target="_blank" data-smartkarma-citation="entities:36744:1" rel="noopener">Shandong Xinjufeng (301296 CH)</a> (XJF) to sell its 28.22% stake in <a href="https://www.smartkarma.com/entities/greatview-aseptic-packaging" target="_blank" data-smartkarma-citation="entities:10802:1" rel="noopener">GAPack (468 HK)</a>. </li>
<li>That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (&amp; friendly) directors, all-but taking control of the board. </li>
<li>CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?</li>
</ul>


Back on the 27 January 2023, Jardine Matheson (JM SP) entered an agreement with Shandong Xinjufeng (301296 CH) (XJF) to sell its 28.22% stake in GAPack (468 HK). 
That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (&amp; friendly) directors, all-but taking control of the board. 
CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?


GAPack (468 HK): Unpacking XJF's Move To Send The Board Packing

<ul>
<li>Disappointing FY22 result from raw milk company <a href="https://www.smartkarma.com/entities/austasia-group-ltd" target="_blank" data-smartkarma-citation="entities:36655:1" rel="noopener">AustAsia Group (2425 HK)</a> should be well expected, but the issue is its guidance that FY23 industry outlook will stay challenging. </li>
<li>Raw milk price is still coming down and 1H23 dairy product demand recovery is slow. Capacity influx will disrupt demand-supply balance, but feed costs pressure seems to have moderated. </li>
<li>Consensus profit projections for the sector are overly optimistic and there is earnings downgrade risk after FY22 result announcement. We will shy away in the near term.</li>
</ul>


Disappointing FY22 result from raw milk company AustAsia Group (2425 HK) should be well expected, but the issue is its guidance that FY23 industry outlook will stay challenging. 
Raw milk price is still coming down and 1H23 dairy product demand recovery is slow. Capacity influx will disrupt demand-supply balance, but feed costs pressure seems to have moderated. 
Consensus profit projections for the sector are overly optimistic and there is earnings downgrade risk after FY22 result announcement. We will shy away in the near term.


China Raw Milk Industry: Takeaways from AustAsia (2425 HK) Call

China

Inner Mongolia Yili Industrial Group Co., Ltd. produces milk, powdered milk, ice cream, and other dairy products.  The Company also produces frozen food and noodles.

Inner Mongolia Yili Industrial Group (A) (600887 CH)

Price Gauge
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Inner Mongolia Yili Industrial Group (A) (600887 CH)

Primer: Inner Mongolia Yili Industrial Group (A) (600887 CH) - Sep 2025

Market Leader Facing Headwinds: Inner Mongolia Yili is the largest dairy producer in China, commanding a significant market share. However,...

αSK

Pre-IPO Yeeper Nutrition Technology (Qingdao) Group - Concerns About the Business and the Outlook

The goat/sheep milk powder market faces shrinking trend. Yeeper's closed-loop supply chain gives pricing advantage but with big competition...

Xinyao (Criss) Wang

GAPack (468 HK): Unpacking XJF's Move To Send The Board Packing

Nothing like bringing one of your customers - China Mengniu - on board (so to speak), both as a substantial shareholder (5.01%) and board member...

David Blennerhassett

China Raw Milk Industry: Takeaways from AustAsia (2425 HK) Call

Outlook for the raw milk industry stays challenging in FY23. Raw milk price is still coming down, 1H23 dairy product demand recovery is slow and...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Primer: Inner Mongolia Yili Industrial Group (A) (600887 CH) - Sep 2025

Market Leader Facing Headwinds: Inner Mongolia Yili is the largest dairy producer in China, commanding a significant market share. However,...

αSK

Pre-IPO Yeeper Nutrition Technology (Qingdao) Group - Concerns About the Business and the Outlook

The goat/sheep milk powder market faces shrinking trend. Yeeper's closed-loop supply chain gives pricing advantage but with big competition...

Xinyao (Criss) Wang

China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

With the recent IPOs of Foshan Haitian Flavouring and Fujian Anjoy Foods (planned), we think the interest in China's consumer staples sector will...

Osbert Tang, CFA

GAPack (468 HK): Unpacking XJF's Move To Send The Board Packing

Nothing like bringing one of your customers - China Mengniu - on board (so to speak), both as a substantial shareholder (5.01%) and board member...

David Blennerhassett

China Raw Milk Industry: Takeaways from AustAsia (2425 HK) Call

Outlook for the raw milk industry stays challenging in FY23. Raw milk price is still coming down, 1H23 dairy product demand recovery is slow and...

Osbert Tang, CFA