Yipin Dairy, Riding the Trend: A Good Story to Tell, but Difficult to Sustain Growth

The maternal and infant industry IPO camp welcomes an important participant.

Recently, Yipin Nutrition Technology (Qingdao) Group Co., Ltd. (referred to as "Yipin Dairy") officially submitted its main board listing application to the Hong Kong Stock Exchange.

Yipin Dairy's product system focuses on the nutritional needs of infants with allergic constitutions.

According to Chairman Mou Shanbo, healthy babies can choose its cow milk powder or goat milk powder, while mildly allergic babies can be supported by Yipin goat milk powder. For those with severe allergies, corresponding special medical food solutions are available.

Infant formula goat milk powder and special medical food are the two core business segments, which are Yipin Dairy's leading advantages, contributing 56% and 16% of total revenue respectively in the first half of 2025.

With a retail sales estimate of 3.5 billion yuan in 2024, Yipin Dairy ranks second in China's goat milk powder market with a 14% market share, second only to Ausnutria Dairy, a subsidiary of YILI.

In the infant special medical food market, Yipin Dairy also ranks second among local brands with a 4.5% market share.

However, the company still faces pressure from the overall slowdown in the milk powder industry.

In 2024, Yipin Dairy achieved revenue of 1.76 billion yuan, with revenue growth slowing from 15% in the same period last year to 9.2%; after excluding the impact of changes in the fair value of biological assets not realized, profit fell from 181 million yuan to 173 million yuan.

In the first half of 2025, revenue declined by 10% year-on-year to 810 million yuan, with infant formula goat milk powder revenue dropping nearly 20% year-on-year; net profit fell by more than 40%.

The growth of the pillar business, goat milk powder, has encountered bottlenecks, while new businesses such as special medical food are still in the early stages of development.

The continued increase in investment in the industrial chain has led to a significant decline in return on equity, dropping from 30% in 2022 to 11% in the first half of 2025.

How to achieve stable and sustainable growth has become a core issue that needs to be addressed urgently.

Goat Milk Powder "Capping"?

Yipin Dairy's listing plan can be traced back to 2022.

On the occasion of the company's 66th anniversary in June of that year, Yipin Dairy held a high-profile IPO strategy seminar, where Chairman Mou Shanbo set a goal of "achieving revenue of 3 billion yuan within two years and striving for 3-5 billion yuan within 3-5 years."

This optimistic expectation was closely related to the high prosperity of the segmented market at that time.

Against the backdrop of domestic cow milk powder brands still mired in trust issues, goat milk powder quickly rose as an alternative track, attracting several giants to enter the market.

In 2021, Feihe acquired Shaanxi Xiaoyang Miaoke, while YILI secured imported milk sources through the acquisition of Ausnutria, and Junlebao also entered the market in 2022 with its own brand.

Yipin Dairy also achieved significant growth during this period through goat milk powder.

At that time, goat milk powder became Yipin Dairy's fastest-growing business, accounting for over 60% of revenue, with sales exceeding 1 billion yuan—less than six years after it fully transitioned from cow milk powder to goat milk powder.

Although the growth rate of goat milk powder is higher than that of the overall infant milk powder market, the scale remains relatively limited. Against the backdrop of a continuous decline in the birth population, Yipin Dairy's expected high growth has not materialized as anticipated. The domestic infant formula goat milk powder market has been struggling to grow since it surpassed 10 billion yuan, experiencing declines for two consecutive years in 2022 and 2023, with no signs of recovery in 2024. The overall market size is expected to remain in the range of 9.5 to 10 billion yuan.

During this period, Yipin Dairy's goat milk powder revenue has only maintained single-digit growth, while Ausnutria even experienced a performance setback in 2023.

Song Liang, head of the expert group of the China Agricultural Reclamation Dairy Industry Alliance, believes that the infant formula market has entered a stage of stock competition, with the growth of goat milk powder mainly coming from its substitution of the cow milk powder market. As cow milk powder companies have launched easily absorbable small molecule protein milk powders, the original market share of goat milk powder has been significantly eroded.

Song Liang emphasized, "Goat milk powder is still a category that relies on consumer education. Brands should focus their funds and terminal resources on offline promotion."

Yipin Dairy is indeed expanding its distributor scale under sales pressure.

As of June 30, 2025, the number of distributors has reached 2,119, nearly doubling compared to 2022.

However, the main reason for the increase in sales expense ratio from 17.1% to 28.9% is the rapid growth of commissions and service fees paid to e-commerce platforms.

In the first half of 2025, this expense accounted for nearly 40% of sales expenses.

This phenomenon mainly stems from the company's reliance on the cross-border mini-program "Weiyi Zhenxuan" sales channel.

In 2024, the company's procurement amount to the operator of "Weiyi Zhenxuan" reached 130 million yuan, while the online direct sales revenue achieved through this platform was only 177 million yuan.

Entering the first half of 2025, the direct sales revenue from this platform was 73.32 million yuan, a year-on-year decrease of 26%, but during the same period, the procurement amount reached 74.86 million yuan, even exceeding the revenue generated by this channel.

Competing for the Special Medical Food Opportunity

Against the backdrop of sluggish growth in goat milk infant formula, Yipin Dairy has found a new opportunity in "special medical food."

With the market gradually standardizing and the acceleration of domestic registration approvals, the penetration rate of special medical food has continued to rise in recent years, showing a clearer development prospect than traditional infant milk powder.

Yipin Dairy established Yipin Special Medical Food in June 2021, being one of the early players among domestic brands.

In 2024, the revenue from the special medical food segment reached 219 million yuan, with a compound annual growth rate exceeding 200%. As of the first half of 2025, this segment accounted for 16.1% of the total, second only to formula goat milk powder.

With high repurchase rates and high average transaction values, the gross margin of Yipin Dairy's special medical food segment remains stable at over 70%, far exceeding the overall gross margin level of 50%.

However, "first mover" does not equate to "winner."

At the top of the industry, the giant Nestlé dominates with a sales revenue of 7 billion yuan, holding 53% market share, making its dominant position difficult to shake.

More and more dairy companies are beginning to view special medical milk powder as the "high ground of functional dairy products," actively leveraging this category to build professional brand images and technical barriers.

Among domestic brands, Shengtong Special Medical Food, which is also in the process of listing on the Hong Kong Stock Exchange, has an annual sales revenue of 1.3 billion yuan, more than double that of Yipin; it successfully obtained approval for two special medical foods targeting rare diseases in infants at the beginning of the year, achieving a zero breakthrough for domestic brands in this field One of the core advantages of domestic brands compared to foreign capital lies in their more efficient channel expansion capabilities in lower-tier cities.

Tang Zhengye, a partner in the life sciences and healthcare industry at Lita Consulting, once stated to Xinfeng: "When competing for market share with the same products, the penetration speed of foreign products may not be higher than that of domestic brands that achieve network layout through hundreds of agents."

Data shows that over 80% of stores selling goat milk powder for mothers and infants are located in third-tier cities and below, which aligns closely with Yipin Dairy's channel strategy primarily based on distribution.

However, before leveraging channel advantages, companies must first overcome product registration barriers.

As of now, Yipin Dairy has obtained a total of 4 special medical purpose formula food registration approvals, with another 15 products in the preparatory registration stage.

The registration process for special medical foods is not only time-consuming but also requires relatively high financial investment. Some companies choose to introduce products through cross-border e-commerce to enter the market more quickly.

However, according to current policies, milk powder imported through cross-border e-commerce cannot be resold through traditional domestic distribution channels, which somewhat restricts Yipin Dairy's ability to leverage its channel advantages in the sinking market.

Whether it can transition from infant special formula to the larger, higher-barrier adult functional nutrition market is becoming a key factor for domestic brands to break through homogeneous competition in the special medical field.

Yipin Dairy has clearly stated its intention to expand into adult special medical foods and overseas markets.

However, in 2023 and 2024, its R&D expenses did not exceed 8.5 million yuan, with R&D expense ratios of only 0.52% and 0.45%, significantly lower than the 1.6% investment level of Shengtong Special Medical during the same period.

Easy to Expand, Hard to Digest

Against the backdrop of weak main business and rising costs, Yipin Dairy is also digesting excess upstream production capacity.

Yipin Dairy is one of the few companies in the industry with dual supply capabilities of self-built controllable goat milk source pastures and its own de-salted goat whey factory.

The industrial chain covers multiple bases both domestically and internationally, including dairy farms in Beian, Heilongjiang, and two goat farms in Laixi and Jimo, Qingdao, with four factories in China and five overseas factories in South Korea and Spain.

During the rapid growth phase of the goat milk market, the company also comprehensively expanded its industrial chain.

The most notable is the Laixi factory in Qingdao, which began production in 2022, designed with an annual capacity of over 16,000 tons, mainly responsible for processing fresh goat milk from the Laixi and Jimo pastures for the production of infant formula goat milk powder and special medical foods.

The concentrated production of new capacity has led to significant fluctuations in capacity utilization rates.

The three factories in Heilongjiang have seen varying degrees of decline in capacity utilization rates in recent years as capacity gradually shifts to the Qingdao factory.

In 2024, the average capacity utilization rate of Yipin Dairy's four domestic factories was 51.7%, further dropping to 44.5% in the first half of 2025.

The strategic reserves made by the Laixi factory for capacity expansion and anticipated market growth have further increased Yipin Dairy's inventory of raw materials.

In the first half of 2025, Yipin Dairy's inventory turnover days exceeded 360 days.

Although the company emphasizes that the turnover cycle for products and finished goods is relatively short, only one to two months, the inventory scale had reached 800 million yuan by the end of the first half of 2025, accounting for 58% of current assets Against the backdrop of weak market demand, the impairment of biological assets represented by dairy cows has brought another layer of pressure.

In 2022, the company had no dairy cows in production, only raising 2,031 calves; by the first half of 2025, the total number of dairy cows and calves had exceeded 2,100, achieving a doubling in scale.

The existing dairy cows are all of the JiuShan breed, capable of producing organic A2 milk, supporting the low-allergen characteristics of formula milk powder.

However, the sales revenue from infant formula milk powder has decreased from CNY 220 million in 2022 to CNY 140 million in 2024.

During the same period, the net impairment loss of biological assets expanded from CNY 33.5 million to CNY 62.5 million, continuously dragging down profitability.

Despite this, the company has not shown any intention to eliminate dairy cow production capacity; instead, it plans to use the funds raised from the Hong Kong stock market to further expand sheep farms and increase the self-sufficiency rate of milk sources over the next three years.

The ranch located in Laixi, Shandong, entered the trial operation phase in June this year and can raise about 1,600 lactating ewes when fully operational; another sheep farm, invested in cooperation with the government of Fuyu County, Heilongjiang Province, is expected to enter trial operation in the first half of 2026.

From sheep milk powder to special medical foods, Yipin Dairy has always been chasing trends, yet cannot escape growth anxiety.

How to balance investment and return, scale and efficiency remains a pressing issue for Yipin Dairy.