On August 28, Inner Mongolia Yili Industrial Group Co.,Ltd. released its semi-annual report, achieving revenue of 61.933 billion yuan in the first half of the year, representing a 3.37% year-on-year increase, and non-GAAP net profit of 7.016 billion yuan, up 31.78% year-on-year. This impressive performance exceeded market expectations.
The current raw milk cycle began at the end of 2021, with continuously declining raw milk prices combined with weak demand affecting companies across the industry supply chain. In 2024, the total operating revenue of 19 A-share dairy companies decreased by 7.44% year-on-year, while net profit declined by 26.88%.
As milk prices stabilize, leading dairy companies are the first to recover growth with further improvements in profitability. For Inner Mongolia Yili Industrial Group, diversified businesses have entered a harvest period, and with the arrival of the raw milk inflection point, the company's future growth prospects are promising.
**Yili's Performance Exceeds Expectations as Diversified Strategy Enters Harvest Phase**
Inner Mongolia Yili Industrial Group achieved revenue of 61.933 billion yuan in the first half, up 3.37% year-on-year, with revenue scale significantly leading other industry peers. Non-GAAP net profit reached 7.016 billion yuan, up 31.78% year-on-year, hitting a historical high.
Looking at the second quarter alone, the company's revenue growth accelerated to 5.77% both year-on-year and quarter-on-quarter, while net profit attributable to shareholders increased by 44.65% year-on-year. First Shanghai Securities research report indicated that the company's profitability inflection point has become clear.
In the first half, Yili's diversified businesses experienced rapid growth, serving as a growth engine and second growth curve alongside the recovery in liquid dairy products.
Currently, Yili has achieved industry leadership in multiple sectors. In the first half, liquid dairy business generated revenue of 36.126 billion yuan, maintaining the top market share; milk powder and dairy products business achieved operating revenue of 16.578 billion yuan, up 14.26% year-on-year, with overall market share ranking first in the industry; frozen products business realized operating revenue of 8.229 billion yuan, up 12.39% year-on-year, maintaining market leadership.
Looking at specific segments reveals Yili's competitive strength: in the first half, the company's goat milk powder revenue growth exceeded 30%, with market share rising to 34.4%, while cheese and milk fat businesses targeting professional restaurant customers saw revenue growth exceeding 20%.
As the industry leader, Yili leverages its brand, channel, and supply chain advantages to demonstrate strong competitive advantages in diversified businesses.
In Yili's operating revenue structure, diversified businesses beyond the core liquid dairy segment now account for over 40% of total revenue. These diversified businesses feature high gross margins, with their revenue expansion driving improvements in company profitability. Specifically, the milk powder and dairy products business achieved a gross margin of 44.1% in the first half, while frozen products reached a gross margin of 39.21%.
Yili's overall gross margin reached 36.21% in the first half, up 1.27 percentage points year-on-year. The non-GAAP net margin reached 11.33%, hitting a historical high.
The improvement in profitability reflects the success of Yili's product structure upgrade. In recent years, the company has focused on building a second growth curve while targeting the premium market, optimizing its product portfolio, and driving overall gross margin improvements.
The liquid dairy segment also delivered notable performance. In the second quarter, liquid dairy revenue recovered rapidly. Against the backdrop of industry overcapacity and weak demand, Yili's ambient temperature segment achieved share stabilization and recovery through growth in premium white milk, functional milk, and high-value products. Low-temperature white milk revenue grew over 20% against the trend, while low-temperature yogurt and dairy beverages achieved volume growth through blockbuster product strategies and customized products for membership stores like Sam's Club.
Alongside the above-expected semi-annual results, management announced continuation of the "no less than 70% of net profit" dividend policy, with expected dividends maintaining stability compared to last year or even showing some improvement.
Since listing, Inner Mongolia Yili Industrial Group has distributed dividends 25 times, with total cash dividends reaching 58.566 billion yuan, demonstrating its commitment to rewarding investors through concrete actions.
**Raw Milk Inflection Point Approaching as Yili Prepares for New Growth Cycle**
From an industry perspective, the dairy sector still has growth potential.
According to Euromonitor data, 2024 per capita dairy consumption by major countries shows: Australia 120kg > UK 109kg/France 101kg > US 88kg > New Zealand 77kg/Italy 75kg > South Korea 39kg/Japan 34kg > China 19kg. Compared to developed economies, China's per capita dairy consumption still has significant room for improvement.
According to Founder Securities research, after 2021, domestic fresh milk supply increased significantly, with supply-side issues largely resolved and industry growth drivers shifting from supply to demand. Under this new cycle, structural growth opportunities remain: by category, low-temperature milk has room for increased market share; by region, vast county and township markets retain growth potential, with ambient temperature milk as the primary entry point.
Under this structural industry trend, Inner Mongolia Yili Industrial Group, with its channel, brand, and supply chain advantages, is well-positioned to be the biggest beneficiary. Yili possesses unique advantages and experience in creating major products and promoting new offerings. In liquid dairy alone, Yili has developed three major products with sales exceeding 20 billion yuan each: Yili Pure Milk, Jindian, and Ambrosial. In the infant formula segment, Yili's brands including Jinlingguan and Kabrita have achieved historic breakthroughs with a "cattle and goat dual strategy," helping Yili's infant formula business capture the leading market share in China.
Another growth expectation for Inner Mongolia Yili Industrial Group comes from rising raw milk prices.
Since September 2024, relevant authorities have successively introduced policies to boost consumption demand. On September 15, 2024, the State Council General Office issued "Opinions on Practicing the Concept of Great Food and Building a Diversified Food Supply System," mentioning "stabilizing beef and mutton production capacity and enhancing dairy industry competitiveness." On September 26, 2024, the Ministry of Agriculture and Rural Affairs and six other departments jointly issued a notice to stabilize beef cattle and dairy cattle production, promoting beef and milk consumption and encouraging qualified regions to boost milk consumption through measures like consumption vouchers. The Central Political Bureau meeting and Central Economic Work Conference in December 2024 proposed "vigorously boosting consumption."
From the supply side, upstream farms began actively reducing capacity starting in Q2 2024. Huatai Securities research believes that capacity reduction will continue in 2025, with supply-demand balance expected to return by 2026.
For Yili, after raw milk prices stabilize, supply-side pressure on liquid dairy will ease, and the company is expected to return to simultaneous volume and price growth. With the recovery of liquid dairy, the company's largest revenue source, Yili will welcome a new round of growth.
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