Feihe in the Downward Pain: How to Face the Long Test of "Full Lifecycle" Transformation

Under the dual impact of demographic changes and industry stock competition, the domestic milk powder leader China Feihe is currently facing a severe performance adjustment period.

On March 26, Feihe disclosed its 2025 financial report, revealing that the company achieved an annual revenue of 18.113 billion yuan, a year-on-year decline of 12.7%; the net profit for the year was 2.09 billion yuan, representing a year-on-year drop of 42.7%.

According to data from the National Bureau of Statistics, China’s birth rate has drastically decreased from 8.52‰ in 2020 to 5.63‰ in 2025.

Feihe cited data from Frost & Sullivan indicating that, as a result, the core target group (children aged 0 to 3 years) has shrunk from 4.19 million to approximately 2.65 million.

The shrinking customer base has intensified industry competition, and against the backdrop of double-digit revenue decline, Feihe’s sales and distribution expenses still reached 7.162 billion yuan, nearly unchanged from 7.165 billion yuan in 2024.

This may imply that in order to maintain market share amid fierce competition, Feihe must sustain high levels of channel investment and promotional efforts, leading to a passive increase in the sales expense ratio.

However, Feihe anticipates in its financial report that with the implementation of fertility support policies across various regions, the number of newborns is expected to rebound from 2026 to 2028. This may be a glimmer of hope for the industry currently in a downturn.

In the face of a structural ceiling in its main business, Feihe is attempting to break its original business structure.

One year ago, Chairman Leng Youbin announced a comprehensive upgrade of the company’s vision, stating the goal to become “the most trusted leader in national nutrition.” In terms of product layout, the focus has shifted from primarily catering to children aged 0-3 to fully covering functional nutrition products across the entire life cycle.

This transformation has begun to show results in the data. By 2025, revenue from “other dairy products,” including adult milk powder and liquid milk, reached 2.06 billion yuan, with its share increasing from 7.1% to 11.4%, an increase of 4.3 percentage points.

However, transitioning to a full life-cycle approach is a long-term endeavor.

The logic of the adult nutrition market differs significantly from that of the maternal and infant market, with the former relying more on the cultivation of long-term health awareness rather than rigid, stage-based consumption.

Against the backdrop of pressure on its main business, it remains to be seen whether Feihe can quickly establish a moat for a second growth curve while controlling marketing costs, which requires further validation by market logic.

To maintain market confidence, from July to December 2025, Feihe repurchased approximately 260 million shares, with a total price of around 1.1 billion Hong Kong dollars.

The board believes that the current trading price does not reflect the company’s intrinsic value and growth prospects.

Feihe reiterated the stability of its dividends, proposing a final dividend of 0.1290 Hong Kong dollars per share and planning to maintain a dividend payout ratio of no less than 30% of net profit in the future.

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