China Feihe (6186) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 increased by 3.7% year-over-year to RMB10,094.9 million, with profit for the period rising 18.1% to RMB1,911.5 million.

• Gross profit margin improved to 67.9% from 65.3% due to higher sales of premium products and lower raw material costs, with gross profit up 7.8% to RMB6,852.5 million.

• The company maintained a strong cash position with RMB9,667.5 million in cash and equivalents as of 30 June 2024.

• An interim dividend of HK$0.1632 per share was declared, totaling approximately RMB1.35 billion and representing about 70% of profit for the period.

Financial highlights

• Revenue grew to RMB10,094.9 million from RMB9,735.2 million year-over-year.

• Gross profit increased 7.8% to RMB6,852.5 million; gross margin rose to 67.9%.

• Profit for the period was RMB1,911.5 million, up 18.1% year-over-year.

• Basic and diluted EPS were RMB0.21, up 10.5% from RMB0.19.

• Cost of sales decreased by 4.0% due to lower raw material prices.

• Selling and distribution expenses rose 2.2% due to increased online and promotional activities.

• Administrative expenses fell 2.5% mainly from lower R&D costs.

• Finance costs decreased 4.1% year-over-year.

• Effective tax rate increased to 36.9% from 33.5% year-over-year.

• Gearing ratio improved to (0.33) from (0.36) at year-end 2023.

• Net assets: RMB27,043.7 million as of 30 June 2024.

Outlook and guidance

• The company will continue to drive innovation and optimize its product portfolio, focusing on tailored nutritional solutions for all life stages.

• Management expects the infant milk formula market to remain stable, supported by high-end segment growth and favorable government policies.

• Plans to enhance consumer confidence and support the growth of the Chinese dairy industry remain a priority.