YILI(600887)2024-12-04 08:07Summary of Conference Call Company and Industry Overview - The conference call primarily discusses the dairy industry, focusing on a specific company involved in dairy products, including milk powder and other dairy items [1][2][3][4]. Key Points and Arguments 1. Channel Inventory and Product Freshness: - As of July, the company completed channel adjustments, leading to a healthy inventory level and improved product freshness. By the third quarter, dealer profitability also showed improvement, with mid-range product prices returning to normal levels [1][3]. 2. Consumer Behavior and Sales Trends: - In October, consumer behavior was influenced by travel during the National Day holiday, with sales remaining stable. The company is expanding consumption scenarios but still sees a high proportion of self-drinking and gifting scenarios [1][2]. 3. Government Policies Impacting Dairy Demand: - In September, the government introduced policies to boost consumer confidence and dairy demand, which are expected to positively impact sales in the upcoming quarters [2]. 4. Healthy Inventory Levels: - The average channel inventory is now at a healthy level of 20 to 30 days, indicating a return to pre-loss conditions. Dealers are stocking based on sales performance, avoiding excess inventory [3][4]. 5. Market Trends in Gifting and Self-Consumption: - The company notes a shift towards self-consumption, with gifting scenarios becoming more diverse. The proportion of self-drinking is expected to increase in the long term [5][6]. 6. Raw Milk Supply and Pricing Outlook: - The company anticipates a stabilization in raw milk prices, with expectations of a balanced supply-demand relationship by the second half of next year. Current raw milk prices are hovering around 3.1 RMB per liter [9][22]. 7. Sales and Marketing Strategies: - The company is adapting its sales strategies to focus on new channels, including e-commerce and discount stores, to meet changing consumer preferences. There is an emphasis on customized products for specific channels [14][20]. 8. Advertising and Promotion Adjustments: - Future advertising strategies will focus on precision and diversity, utilizing digital platforms like Xiaohongshu and Douyin to enhance sales effectiveness [28]. 9. Challenges in the Ice Cream Sector: - The ice cream segment faces challenges due to weather conditions and inventory pressures. The company is using this time to improve channel health [25][26]. 10. Future Growth in Organic and Premium Products: - There is a potential for growth in organic dairy products, although the current market share is still low compared to international standards. The company aims to capture this growth as consumer confidence improves [30][31]. Other Important but Overlooked Content - The company is maintaining a cautious approach to inventory management, avoiding pressure on dealers to stock excess products. This strategy is aimed at sustaining a healthy supply chain [4][10]. - The company has a controlled milk source accounting for approximately 40% of its supply, with no significant changes expected in this ratio [36]. - The overall sentiment indicates a cautious optimism about future sales growth, particularly in the context of improving consumer confidence and government support for the dairy sector [22][31].