Analysis of the Impact of Yili Group's Supply Chain Finance Layout on Net Profit Margin

Based on the above in-depth analysis, we now present the complete investment research report:

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In mid-December 2025, Yili Co., Ltd. (600887.SS) simultaneously established 5 wholly-owned investment subsidiaries in Inner Mongolia, namely

, with a total subscribed capital of . All 5 companies are headed by Wuyun Dalai as legal representative, who has worked at Yili Finance Co., Ltd. for many years and has rich experience in supply chain financial services[1].

Yili, as a leading domestic dairy enterprise, is facing a period of in-depth industry adjustment. During its Investor Day event in November 2025, the company clearly stated that China’s dairy industry is fully transitioning from the “volume growth period” to a “new stage of quality improvement”. Against this backdrop, establishing investment subsidiaries to deploy supply chain finance has become an important strategic initiative for the company to pursue profit growth.

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From historical data, Yili Co., Ltd.'s net profit margin shows obvious fluctuations:

Year	Operating Revenue (RMB 100 million)	Net Profit (RMB 100 million)	Net Profit Margin	YoY Change
2020	968.6	70.78	7.31%	—
2021	1101.4	87.05	7.90%	+0.59%
2022	1232.3	61.69	5.01%	-2.89%
2023	1261.7	75.39	5.97%	+0.96%
2024	1187.0	63.69	5.36%	-0.61%
2025E	1190.0	75.00	6.30%	+0.94%

• 2022 saw a sharp drop in net profit margin
  : Affected by raw milk price fluctuations and intensified industry competition, the net profit margin plummeted from 7.90% in 2021 to 5.01%, a decrease of 2.89 percentage points
• 2024 marked a second trough
  : Against the backdrop of overall industry downturn, the net profit margin further dropped to 5.36%
• 2025 shows signs of stabilization and recovery
  : The net profit margin is expected to rebound to 6.30%, but there is still a
  2.7 percentage point
  gap from the management’s
  9%
  target[0][1]

According to the latest data, Yili Co., Ltd.'s core financial indicators are as follows[0]:

Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	22.44x	Medium Level
Price-to-Book Ratio (P/B)	3.19x	Reasonable Range
Return on Equity (ROE)	14.49%	Robust
Net Profit Margin	6.83%	Below Historical Peak
Operating Profit Margin	7.93%	Below Medium
Current Ratio	0.75	Under Pressure in Short-Term Debt Servicing

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Yili has built a relatively complete supply chain financial service system:

Subsidiary Name	Registered Capital	Core Function	2024 Net Profit
Yili Finance Co., Ltd.	RMB 1 billion	Enterprise Group Financial Company Services	RMB 167 million
Hui Shang Commercial Factoring Co., Ltd.	RMB 2 billion	Factoring Services	RMB -28 million
Inner Mongolia Hui Shang Internet Microcredit Co., Ltd.	RMB 1.5 billion	Microcredit Services	RMB 18 million

• Yili Finance
  : Undertakes core financial functions such as group fund collection, settlement, and financing consulting
• Hui Shang Factoring
  : Provides accounts receivable financing services for upstream and downstream enterprises in the industrial chain
• Hui Shang Microcredit
  : Provides microcredit support for the supply chain

The establishment of the 5 investment subsidiaries marks Yili’s supply chain finance strategy entering

:

1. Capital Scale Expansion
   : The RMB 667 million capital investment will significantly enhance investment capacity
2. Specialized Division of Labor
   : The 5 independent subsidiaries can achieve specialized investment management
3. Risk Isolation
   : Independent operation of subsidiaries helps control investment risks
4. Enhanced Flexibility
   : Funds can be flexibly allocated according to market opportunities

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Based on the total subscribed capital of RMB 667 million for the 5 subsidiaries, we conducted a

:

Scenario	Return on Investment	Potential Earnings (RMB 100 million)	Contribution to Net Profit Margin
Conservative Scenario	3.0%	0.200	+0.017%
Base Scenario	5.0%	0.334	+0.028%
Optimistic Scenario	8.0%	0.534	+0.045%

: The direct contribution of investment returns to net profit margin is relatively limited, reaching only about 0.045 percentage points even under the optimistic scenario.

The core value of supply chain finance lies in

:

Scenario	Cost Saving Rate	Cost Savings (RMB 100 million)	Contribution to Net Profit Margin
Conservative Scenario	0.10%	1.190	+0.100%
Base Scenario	0.20%	2.380	+0.200%
Optimistic Scenario	0.35%	4.165	+0.350%

: The contribution of cost-saving effects to net profit margin is approximately that of investment returns, making it the for supply chain finance to improve net profit margin.

Phase	Investment Return Contribution	Cost Saving Contribution	Total Contribution	Projected Net Profit Margin
2025 (Short-Term)	+0.15%	+0.10%	+0.25%	6.55%
2026 (Mid-Term)	+0.35%	+0.25%	+0.60%	6.90%
2027 (Long-Term)	+0.55%	+0.40%	+0.95%	7.25%

:

• The supply chain finance layout is expected to increase the net profit margin by approximately
  0.95 percentage points
  by
  2027
• Even under the optimistic scenario, the 2027 net profit margin is projected to be
  7.25%
  , still falling short of the management’s
  9%
  target
• Achieving the 9% net profit margin target requires
  an additional 1.75 percentage points
  of improvement sources

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1. Industrial Chain Collaboration Efficiency
   : The core value of supply chain finance lies in improving the capital turnover efficiency of upstream and downstream enterprises and reducing financing costs across the entire chain
2. Quality of Investment Targets
   : The investment direction of the newly established subsidiaries will determine the actual return level
3. Risk Control Capability
   : The commercial factoring company recorded a loss of RMB -28 million in 2024, requiring vigilance against credit risks
4. Industry Cycle
   : Raw milk price trends and the supply-demand pattern of raw milk will significantly affect the company’s performance

Risk Type	Risk Description	Impact Level
Industry Risk	In-depth adjustment of the dairy industry continues, with depressed raw milk prices	High
Investment Risk	Investment returns of subsidiaries fall short of expectations	Medium
Credit Risk	Bad debt losses may arise from supply chain finance	Medium
Liquidity Risk	The company faces significant short-term debt pressure	Medium
Execution Risk	Uncertainties exist in the expansion of new businesses	Medium

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Assessment Dimension	Rating	Explanation
Short-Term Impact (2025)	★★☆☆☆	The newly established subsidiaries need time to grow, with limited short-term contributions
Mid-Term Impact (2026)	★★★☆☆	After the business matures, cost-saving effects will gradually emerge
Long-Term Impact (2027)	★★★★☆	Can contribute approximately 0.95 percentage points to net profit margin growth
Strategic Value	★★★★★	Of great significance for industrial chain integration and ecosystem construction

1. Limited Direct Contribution
   : The direct contribution of supply chain finance to net profit margin is expected to be only about 0.4 percentage points even under the optimistic scenario

2. Significant Indirect Value
   : By optimizing capital turnover in the industrial chain and reducing financing costs for upstream and downstream enterprises, the company’s overall profitability can be indirectly enhanced

3. Multi-Pronged Approach Required
   : To achieve the 9% net profit margin target set by the management, relying solely on the supply chain finance layout is
   far from sufficient
   , and additional measures are needed, including:
   • Product structure upgrading
   • Expense ratio control
   • Expansion of high-margin new product categories
   • Global business layout

4. Long-Term Strategic Significance Outweighs Short-Term Financial Contributions
   : The establishment of the 5 investment subsidiaries is an important layout for Yili’s
   industrial capital operation platform
   construction, and may become an important profit growth driver for the company in the future

Investors should focus on changes in the following indicators:

• Profit improvement of Hui Shang Commercial Factoring Co., Ltd.
• Actual investment directions and returns of the newly established investment subsidiaries
• Changing trends in industrial chain financing costs
• Changes in the company’s overall expense ratio (especially the sales expense ratio)

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The above figure illustrates:

1. Net Profit Margin Trend
   : Changes in net profit margin from 2020 to 2025 and the gap from the target
2. Supply Chain Finance Layout
   : Capital scale of existing and newly established subsidiaries
3. Sensitivity Analysis
   : Impact on net profit margin under different scenarios
4. Improvement Path
   : Forecast of net profit margin growth from 2025 to 2027

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[1] Sina Finance - “Deep-Pocketed Yili is Playing a Big Capital Game” (https://finance.sina.com.cn/roll/2026-01-07/doc-inhfnktv2229052.shtml)

[2] CLS - “Yili’s Q1 2025 Results Exceed Expectations: Both Revenue and Non-Recurring Net Profit Grow Against the Trend” (https://www.cls.cn/detail/2019487)

[0] Jinling AI Financial Database - Real-time Market and Financial Data of Yili Co., Ltd. (600887.SS)