Scan the QR code in the image to register -01- Data 'takes off' across the board, 'the first stock of domestic milk powder' is stable Last night, China Feihe announced its 2020 results. During the reporting period, it achieved operating revenue of 18.592 billion yuan, a year-on-year increase of 35.5%. Net profit reached 7.4369 billion yuan, a year-on-year increase of 89%. Among them, infant formula milk powder products achieved revenue of 17.673 billion yuan, a year-on-year increase of 41%. In addition to the surge in both revenue and net profit, according to Nielsen data, in the fourth quarter of 2020, Feihe's overall market share further increased to 17.2%. It continued to maintain the top ranking and its leading advantage further expanded, especially in key and provincial capital cities, where Feihe's product sales share reached 14.4%, a year-on-year increase of 38.46%. Moreover, the announcement showed that Feihe's significant revenue growth was mainly due to the increase in revenue from the infant formula milk powder product series, driven by the growth of the Xingfeifan and Zhenzhi Organic series products, as well as the enhancement of brand power. In 2020, Feihe's infant formula milk powder business revenue was 17.674 billion yuan, accounting for 95% of total revenue (in 2019, the infant formula business accounted for 91.4% of total revenue); other dairy products revenue was 607 million yuan, accounting for 3.3% of total revenue; nutritional supplements revenue was 312 million yuan, accounting for 1.7% of total revenue. It is worth mentioning that in 2020, the company's gross margin was 72.5%, a year-on-year increase of 2.5 percentage points. In terms of expense ratios, the sales and distributor expense ratio was 28.3%, a year-on-year increase of 0.3 percentage points, basically a small increase, indicating that the brand has begun to occupy consumers' minds. While increasing sales, the expense ratio did not increase significantly, which is the best proof. The administrative expense ratio was 6.2%, a year-on-year decrease of 0.5 percentage points, and economies of scale began to show. Undoubtedly, as the leader in China's infant formula milk powder market, China Feihe delivered a satisfactory answer in 2020, demonstrating the high-speed growth and sustainable development posture of an industry leader. -02-

High-quality differentiated development, how much upward space does Feihe have?

Affected by the epidemic and the international political and economic situation, 2020 was a year full of uncertainty. However, under such a macroeconomic environment, Feihe achieved sustained and stable growth, which is inseparable from its multi-faceted innovation in products, brands, and strategies, and its adherence to high-quality differentiated development. At the beginning of 2021, Feihe released its 2020 achievements in Chinese breast milk research. Reports show that several achievements were global firsts. According to Feihe, from 2016 to 2020, Feihe's R&D personnel expanded threefold, and basically added a new high-level external R&D platform every year. In 2020, the main milk powder business revenue was 17.67 billion yuan, a year-on-year increase of 41.0%, accounting for 95.0% of total revenue. According to CITIC research reports, among them, ultra-high-end milk powder, such as Xingfeifan, grew about 39% year-on-year, while Zhenzhi Organic performed well, growing about 67% year-on-year. Wu Jing's endorsement further enhanced brand awareness. The full-year revenue was about 10.9 billion yuan, a year-on-year increase of about 41% (H1/H2 increased about 73%/21% respectively). As a major product, Xingfeifan has been progressing steadily on the high-end milk powder track. After announcing the 2020 results, Feihe proposed a performance guidance of 350 billion yuan in sales target for 2023, which is equivalent to a compound annual growth rate of 23.5% over the next three years, and a compound annual growth rate of 15% for sales from 2024 to 2028. Although the overall Chinese infant formula milk powder market is shrinking from 2020 to 2025, with the improvement in consumer confidence in Chinese milk powder, the growth of the high-end milk powder market, and the substitution of foreign milk powder, the possibility of Feihe achieving its performance guidance is extremely high. Multiple investment institutions predict that as a leader in China's milk powder industry, Feihe has accumulated diversified advantages in brand, R&D, channels, etc., and has formed brand effects and Matthew effects. In the future, its high-end milk powder strategy will also conform to the high-end development of China's milk powder industry, supporting its further growth.