Caught between the dual pressures of shifting demographics and intense competition in a stagnant market, domestic milk powder leader CHINA FEIHE is undergoing a severe period of performance adjustment.

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

According to data from the National Bureau of Statistics, China's birth rate has dropped significantly from 8.52‰ in 2020 to 5.63‰ in 2025.

Feihe cited Frost & Sullivan data indicating that, as a result, the number of core target customers (children aged 0 to 3) has shrunk from 41.9 million to approximately 26.5 million.

The shrinking customer base has intensified industry competition. Against the backdrop of a double-digit decline in revenue, Feihe's selling and distribution expenses remained high at 7.162 billion yuan, nearly flat compared to 7.165 billion yuan in 2024.

This likely suggests that in order to stabilize market share amidst cutthroat competition, Feihe must maintain high levels of channel investment and promotional efforts, leading to a passive increase in its selling expense ratio.

However, Feihe predicted in its financial report that with the implementation of birth support policies in various regions, the number of newborns is expected to rebound between 2026 and 2028. For an industry currently at a low point, this may signal a potential bottoming out and recovery.

Facing a structural ceiling in its core business, Feihe is attempting to reshape its original business structure.

A year ago, Chairman Leng Youbin announced a comprehensive upgrade of the corporate vision, proposing to become the "most trusted leader in national nutrition." In terms of product portfolio, the focus is shifting from targeting the 0-3 age group to a comprehensive layout of functional nutrition products covering the full life cycle.

This transformation has shown initial 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 share of total revenue increasing from 7.1% to 11.4%, a rise of 4.3 percentage points.

However, transitioning to a full life cycle model is a marathon.

The logic of the adult nutrition market is vastly different from that of the mother-and-baby market; the former relies more on cultivating long-term health consciousness rather than rigid, stage-based consumption.

With the core business under pressure, whether Feihe can quickly build a moat for its second growth curve while controlling marketing costs remains to be further validated by market logic.

To maintain market confidence, Feihe repurchased a cumulative total of approximately 260 million shares between July and December 2025, for a total consideration of approximately HK$1.1 billion.

The Board of Directors believes that current trading prices do 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 plans for the annual dividend payout ratio to be no less than 30% of net profit in the future.