Operating Margin - China Feihe Ltd (OTC:CHFLF)

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Price: 0.4952 USD

Market Cap: 4.5B USD

23.1%

Current

29%

Average

5.6%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

23.1%

Operating Profit

4.6B

Revenue

19.8B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
CN		China Feihe Ltd HKEX:6186	38.3B HKD	23%
JP	G	Goyo Foods Industry Co Ltd TSE:2230	53.2T JPY	8%
CH		Nestle SA SIX:NESN	197.4B CHF	17%
US		Mondelez International Inc NASDAQ:MDLZ	70.2B USD	12%
FR		Danone SA PAR:BN	49.5B EUR	13%
ZA	T	Tiger Brands Ltd JSE:TBS	57.6B Zac	11%
CN		Muyuan Foods Co Ltd SZSE:002714	270.9B CNY	17%
US		Hershey Co NYSE:HSY	37.7B USD	17%
ZA	A	Avi Ltd JSE:AVI	34.1B Zac	22%
CH		Chocoladefabriken Lindt & Spruengli AG SIX:LISN	26.9B CHF	15%
CN		Foshan Haitian Flavouring and Food Co Ltd SSE:603288	221.5B CNY	27%

China Feihe Ltd
Glance View

Market Cap

4.5B USD

Industry

Food Products

China Feihe Ltd., a distinguished player in the infant formula industry, traces its roots back to 1962, establishing itself as a pioneer in dairy production in China. Over the decades, the company has morphed from a state-run enterprise into a market leader, capturing the hearts of parents with its deep understanding of nutritional needs and local dietary preferences. Feihe's story is one of strategic evolution—building a robust supply chain, leveraging advanced research, and investing heavily in quality control. Their vertically integrated business model, from dairy farming and production to distribution, ensures a high standard of excellence. With an extensive product portfolio that covers multiple price points and consumer segments, Feihe caters to middle-class desires for health and premium quality, setting itself apart in a market characterized by growing competition and rising consumer expectations. In the bustling and competitive landscape of China's baby formula market, Feihe crafts its narrative by capitalizing on its '100% Made in China' ethos, assuring consumers of quality and safety—a paramount concern given past industry scandals. Operating through a sleek blend of strategic marketing and community trust-building, the company focuses on fostering customer loyalty and brand recognition. By employing state-of-the-art technology and innovation, Feihe develops products that align with the specific health requirements of Chinese infants. This includes formulas enriched with nutrients like DHA and ARA, mimicking the composition of breast milk, and featuring localized ingredients to ensure assimilation and growth. Feihe continues to elevate its brand by expanding its reach to international markets, signifying a forward-looking approach while remaining rooted in its profound local heritage.

View CHFLF Analysis

CHFLF Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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China Feihe Ltd
OTC:CHFLF