Feihe in the Pain of Downturn: How to Face the Long Challenge of "Full Lifecycle" Transformation

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Under the dual pressure of changes in population structure and intensified competition within the industry, the leading domestic milk powder producer, China Feihe, is currently in a period of severe performance adjustment.

On March 26, Feihe released its 2025 financial report, revealing annual revenue of 18.113 billion yuan, a year-on-year decrease of 12.7%; 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 significantly declined from 8.52‰ in 2020 to 5.63‰ in 2025.

Feihe cited Frost & Sullivan data, indicating that, impacted by this, the core target customer base (children aged 0 to 3) has shrunk from 41.9 million to about 26.5 million.

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

This may imply that, in order to stabilize market share amid fierce competition, Feihe must maintain high-intensity channel investment and promotional efforts, resulting in a passive rise in the sales expense ratio.

However, Feihe predicts in its financial report that with the implementation of fertility support policies across various regions, the number of newborns is expected to rebound somewhat from 2026 to 2028. For an industry in a downturn, this may signal a bottom-out recovery.

Facing the structural ceiling of its main business, Feihe is attempting to break its original business structure.

A year ago, Chairman Leng Youbin announced a comprehensive upgrade of the company's vision, proposing to become "the most trustworthy leader in national nutrition." In terms of product portfolio, Feihe has shifted from focusing on the 0–3 age group to fully investing in functional nutritional products covering the entire life cycle.

This transformation has initially shown some results in the data. In 2025, revenue from "other dairy products," including adult milk powder and liquid milk, reached 2.06 billion yuan, with its proportion rising from 7.1% to 11.4%, an increase of 4.3 percentage points.

However, transitioning to an all-life-cycle business is a marathon.

The logic of the adult nutrition market differs greatly from that of the mother-and-child market; the former relies more on cultivating long-term health awareness rather than rigid, stage-based consumption.

With the main business under pressure, whether Feihe can quickly establish a moat for its second growth curve while controlling marketing costs still requires further validation by market logic.

To maintain market confidence, between July and December 2025, Feihe repurchased approximately 260 million shares, for a total consideration of about 1.1 billion Hong Kong dollars.

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

Feihe reiterated the stability of its dividends, proposing a final dividend of HK$0.1290 per share and planning to keep the annual dividend ratio at no less than 30% of net profit in the future.

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