Net profit exceeds 120 million, 'Cheese King' Miaoke Landuo sees performance recovery

"Cheese King" Miaokelanduo shows signs of recovery.

According to the performance forecast disclosed on July 11, Miaokelanduo is expected to achieve a net profit of 120 million to 145 million yuan in the first half of this year, a year-on-year increase of 56.29% to 88.86%.

Miaokelanduo's net profit in the first quarter was 82.4 million yuan. Based on the lower limit of the financial forecast, the company's net profit in the second quarter was at least 37.6 million yuan. Compared with the past, its net profit is basically flat with the second quarter of 2024, and there is still a certain gap compared with the second quarter of 2021 and 2022. However, apart from these years, such performance data is still better than most of the past.

In fact, Miaokelanduo has had a bumpy journey in the past few years. As the "Cheese King," Miaokelanduo experienced a period of rapid growth from 2019 to 2022, with revenue increasing from 1.744 billion yuan in 2019 to 4.83 billion yuan in 2022, nearly tripling in three years. During the same period, net profit increased from 19.23 million yuan to 137.6 million yuan. However, with the introduction of the "New National Standard for Processed Cheese" at the end of 2022, which requires "cheese content to be greater than 50%," Miaokelanduo faced a huge impact. From the most intuitive net profit data, Miaokelanduo's net profit in 2023 was 60.07 million yuan, a year-on-year decrease of 56.35%.

Now, after the low point in 2023, Miaokelanduo's performance has clearly rebounded in 2024 and 2025.

From the perspective of stock price trends, Miaokelanduo's stock price has also begun to recover. As of the latest closing, Miaokelanduo's stock price has risen by more than 56% this year, and its market value has returned to above 14 billion yuan.

A Bumpy Journey

Looking back five years, the name Miaokelanduo often brings to mind catchy advertising melodies and golden cheese sticks.

This established dairy company with over 20 years of history successfully broke through the fiercely competitive dairy market by focusing on the "small but comprehensive" children's cheese segment and aggressive advertising.

Miaokelanduo's predecessor was Guangze Dairy, a local company based in Jilin primarily engaged in liquid milk. In 2003, the "Guangze" brand series was launched, with the slogan "Guangze Milk, Fresh to Your Home," achieving nearly 100 million yuan in sales that year. However, with industry giants like Mengniu and Yili, even as the top player in Jilin, Guangze Dairy struggled to stand out.

The turning point came in 2016 when founder Chai Xiu attended the World Food Expo in France and was inspired by the variety of cheese products. While the industry was obsessed with "big and comprehensive" strategies, Chai Xiu focused on the "small and refined" cheese segment, targeting children and concentrating on "cheese sticks," ultimately launching Miaokelanduo's flagship product. In 2018, with rising consumer demand, the cheese industry experienced explosive growth. Capitalizing on this, Guangze Dairy rebranded as Miaokelanduo in 2019.

With its precise market insights and first-mover advantage, Miaokelanduo became one of the most recognized cheese brands in just a few years. The company revealed in institutional research that its market share in the cheese segment has exceeded 39%, solidifying its leading position. Success in the children's cheese segment also drove explosive growth in Miaokelanduo's performance. From 2019 to 2022, revenue grew from 1.744 billion yuan to 4.83 billion yuan, nearly tripling in three years, while net profit increased from 19.23 million yuan to 137.6 million yuan.

However, with the introduction of the "New National Standard for Processed Cheese" at the end of 2022, which requires "cheese content to be greater than 50%," Miaokelanduo faced significant challenges. Before December 30, 2022, China's requirements for natural cheese content in processed cheese were relatively low, with only 15% needed to qualify as "processed cheese." The remaining 85% had few regulations, diluting the selling points of "processed cheese" such as concentration, high calcium, and health benefits. However, this also allowed "processed cheese" products to achieve ultra-high gross margins. Financial reports show that in 2021, Miaokelanduo's cheese products had a gross margin of 48.51%.

With the new standard, "processed cheese" must now contain more than 50% cheese, otherwise it can only be called "cheese products." The higher standard naturally increases production costs, impacting profitability. This is a key reason why Miaokelanduo fell into a low point in 2023. Financial reports show that Miaokelanduo's net profit in 2023 was 60.07 million yuan, a sharp decline of 56.35% year-on-year, while the gross margin of its cheese products dropped to 37.01%, a significant decrease of 11.5 percentage points compared to 48.51% in 2021.

Fortunately, after a brief downturn, Miaokelanduo quickly rebounded. In 2024, the company achieved revenue and net profit of 4.844 billion yuan and 113.6 million yuan, respectively, with revenue growth of -8.99% and net profit growth of 89.15%. Although revenue declined, net profit rebounded significantly. In 2025, the recovery trend continues. According to the performance forecast disclosed on July 11, Miaokelanduo is expected to achieve a net profit of 120 million to 145 million yuan in the first half of the year, a year-on-year increase of 56.29% to 88.86%. If there are no major discrepancies, this net profit level has returned to that of the first half of 2022.

A Long Road Ahead

Regarding the reasons for the net profit rebound in the first half of this year, Miaokelanduo explained in its performance forecast:

The significant increase in net profit is mainly due to the year-on-year growth in revenue from the company's core cheese products, lower raw material procurement costs, and an overall increase in gross margin compared to the same period last year. At the same time, the company actively implemented cost-cutting and efficiency measures, leading to a year-on-year decrease in the sales expense ratio. In short, the rebound in net profit is attributed to two factors: lower raw material costs and cost-cutting measures.

First, regarding lower raw material costs: Cheese is a dairy product made by fermenting and coagulating milk. It takes 10 pounds of milk to make 1 pound of cheese, meaning milk is the primary raw material for cheese.

In the past two years, due to declining demand, the dairy industry entered a "winter," with milk prices continuously falling. In July 2024, Li Shengli, chief scientist of the National Dairy Industry Technology System, publicly stated that the profit margin per kilogram of milk had entered negative territory for the first time since records began, with over 80% of the industry facing losses. Wind data shows that as of January 23, 2025, the average purchase price of raw milk in China's main production areas fell to 3.12 yuan per kilogram, a year-on-year decrease of 14.3%. Although Miaokelanduo is part of the dairy industry, its products use milk as a raw material, so falling milk prices are beneficial.

Second, regarding cost-cutting measures: Since the full half-year report has not been released, we can only analyze based on the first-quarter report. Among sales, management, R&D, and financial expenses, sales expenses have always been the largest and most impactful. Over the long term, Miaokelanduo has indeed been reducing sales expenses. From 2022 to 2025, first-quarter sales expenses were 319.1 million yuan, 248 million yuan, 226 million yuan, and 207.2 million yuan, respectively, showing a clear downward trend. With lower sales expenses, Miaokelanduo's overall gross margin in the first quarter of this year increased from 28.66% to 31.49%.

However, this performance improvement, driven by lower raw material costs and cost-cutting measures, still faces significant uncertainty, especially regarding raw material prices.

Wind data shows that the average purchase price of raw milk in China's main production areas has been declining since September 2021, lasting nearly 40 months, with prices down nearly 30% from their peak. Facing the dairy industry's downturn, in September last year, seven departments, including the Ministry of Agriculture and Rural Affairs, jointly issued a notice to stabilize beef and dairy production, proposing support for both production and consumption. National Bureau of Statistics data shows that China's milk production in 2024 decreased by 2.8% year-on-year, the first decline after six years of growth. With upstream capacity gradually adjusting, the market generally predicts the industry will reach supply-demand balance in 2025.

In reality, although Miaokelanduo's performance is improving, after years of rapid development, China's cheese market demand has "peaked." According to institutional research, from 2017 to 2022, the compound annual growth rate of China's cheese market sales was 20.9%. By 2022, this figure dropped to 9%. In particular, cheese sales growth in 2022 and 2023 was only 2% and 6%, respectively. Additionally, competition in the cheese market is intensifying. For example, Feihe recently launched a children's cheese product called "Zhuoran Chewable Milk Powder Cheese," while Junlebao entered the field earlier by acquiring a cheese company.

Overall, although Miaokelanduo's performance continues to recover, this is mainly achieved through lower raw material costs and cost-cutting measures. In a highly competitive market, the challenges facing Miaokelanduo are far from over.$Milkground(600882.SH)