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Investing.com - China Feihe Limited (HK:6186) (OTC:CFEIY) was downgraded by Citi from Buy to Neutral with a price target cut to HK$5.50 from HK$7.10.
The downgrade follows Feihe’s preliminary first-half 2025 results announcement, which indicated a 36-47% year-over-year decline in net profit alongside an 8-10% revenue decrease and margin contraction. These figures fell below Citi’s expectations.
Citi attributed the weakness to unexpected competition from major infant milk formula players’ subsidy programs amid soft demand. The firm noted that qualified customers receiving free products from various subsidy programs can exchange products among themselves, leading to sales declines as consumers obtain their preferred brands.
The research firm expects Feihe’s share price to react negatively to the weak earnings in the near term, though dividend yield and share buybacks could provide some support afterward. Citi has opened a 30-day downside catalyst watch on the stock.
Citi analysts indicated that new upside catalysts for Feihe appear limited following recent news about the rollout of the national childcare subsidy, further supporting their decision to downgrade the stock.
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