Yili is well positioned for further improvements in sales volumes as consumer sentiment gradually recovers over the next two years. Liquid milk sales returned to 8.5% growth in the third quarter of 2023, a reversal from the 1% decline in the first half. Ice cream and infant formula sales increased faster than the industry average. The drivers were the company?s good branding and market position. We project revenue increases of 3.7% for 2023 and 5% for 2024, slower than the double-digit growth a few years back. This primarily reflects weaker consumption as the economy slows. Weaker consumer sentiment should weigh on pricing and limit trading-up to premium products, although volume should still improve along with higher dairy consumption per capita.
