H&H International Holdings faces mounting pressure as its infant formula business has declined for two consecutive years, while its health supplement operations are also losing momentum. Despite encouraging first-quarter results, the question remains whether China CEO Li Fengting can successfully navigate the company toward its ambitious revenue goals.

Between late March and early April, H&H International Holdings (01112.HK) released two starkly contrasting financial reports.

On March 25, the company published its 2024 annual report showing declining revenue and net profit, with the latter plummeting 109.2%.

On April 10, H&H released its first-quarter 2025 results, achieving a "strong start" with overall revenue growth of 10.4%, driven by a remarkable 44.3% surge in infant formula sales.

However, the first-quarter improvement has not alleviated H&H's underlying concerns.

The market remains focused on understanding the logic behind the sudden surge in infant formula business after two years of significant decline. Can this growth trajectory be sustained?

With infant formula sales falling for two consecutive years and the other two major business segments struggling to gain traction, can Li Fengting, H&H's China CEO, still achieve the 12 billion yuan target for the Chinese market in 2025?

**Losing 360 Million in Half a Year, Drifting Further from Target**

In early 2023, newly appointed H&H China President Li Fengting set two objectives: "100 billion yuan revenue for China operations in 2023, and a sprint toward 12 billion yuan by 2025."

Compared to her predecessor An Yuting, this target was already conservative. An Yuting had previously proposed that H&H's China operations reach 20 billion yuan in revenue by 2023.

Even with Li Fengting's 50% downward revision, the target remained elusive. In 2023, H&H's China revenue reached 9.973 billion yuan, falling just short of Li Fengting's expectations.

The second target appears equally challenging. Financial reports show that H&H's total revenue declined 6.3% to 13.052 billion yuan in 2024, with attributable net profit of -53.72 million yuan, down 109.23% year-over-year. China revenue fell 12.9% to 8.685 billion yuan, accounting for 66.6% of total revenue, compared to 71.6% in 2023.

H&H's situation deteriorated in the second half of 2024. While the company posted a net profit of 305.8 million yuan in the first half, it ended the year with a loss of 53.72 million yuan, indicating a second-half net loss of nearly 360 million yuan.

To achieve the 12 billion yuan sprint in 2025, H&H's China operations would need to grow 38.1% this year, far exceeding its average growth rate of less than 10% over the past five years.

For Li Fengting, 2025 will certainly present significant challenges.

H&H attributed its 2024 performance decline to contraction in the ultra-premium infant formula market, leading to reduced revenue in its Baby Nutrition and Care products.

The annual report shows that H&H's Baby Nutrition and Care (BNC) business revenue reached 5.908 billion yuan in 2023, declining 11.7% year-over-year. In 2024, the BNC business continued its "cliff-like" decline, with revenue falling to 4.38 billion yuan, a sharp 25.8% decrease, reducing its share of total group revenue to 33.6%.

H&H's BNC business decline has been an ongoing issue. From 2016-2020, H&H's BNC business maintained steady growth, but began declining in 2021, stagnated in 2022, and resumed falling in 2023 following new national standard implementation, with this trend accelerating in 2024.

The company attributes the severe decline to two factors: systemic challenges facing China's infant formula industry, including declining birth rates and intensified market competition following the new national standards transition; and longer-than-expected time required to clear old-standard products from channels, leading to sales volume decline.

However, the "systemic challenges" are not the primary cause of H&H's BNC business decline, as other formula brands achieved growth under the same conditions. For instance, China Feihe (06186.HK) recorded revenue of 20.749 billion yuan last year, up 6%, with net profit of 3.65 billion yuan, up 11%. AUSNUTRIA (01717.HK) also achieved growth last year.

Therefore, the infant formula business struggles are primarily due to H&H's internal issues.

**Health Supplements Losing Momentum After Formula Struggles**

After formula performance deteriorated, H&H has gradually shifted its business focus toward health supplements in recent years.

H&H operates three main business segments: Adult Nutrition and Care (ANC), Baby Nutrition and Care (BNC), and Pet Nutrition and Care (PNC).

Due to poor performance in the BNC business, represented by infant formula, H&H has placed its hopes in the other two segments, particularly ANC, which encompasses health supplement-related operations.

In H&H's financial reports, this segment is called nutritional supplements, including Swisse vitamins, herbal and mineral supplements, and Biostime infant probiotics and nutritional supplements, with Swisse serving as the main driver.

In recent years, Swisse has pursued both online and offline strategies, actively entering offline pharmacy channels while establishing presence on mainstream e-commerce platforms including Xiaohongshu, Tmall, JD.com, and Douyin. Additionally, Swisse has engaged popular celebrities like Dilraba Dilmurat as spokespersons and sponsored hit variety shows. H&H has also developed 28 Swisse SKUs for marketing on Xiaohongshu.

In 2023, H&H Chairman Luo Fei stated that Swisse's global sales reached 1 billion Australian dollars, triple the level when acquired in 2015.

Driven by Swisse, H&H's ANC business revenue surpassed BNC business for the first time in 2023, accounting for 44.10% and 42.40% of revenue respectively, demonstrating the group's business focus shift. In 2024, ANC, BNC, and PNC businesses accounted for 51.3%, 33.6%, and 15.1% of revenue respectively.

Some analysts and media suggest that H&H's future growth may depend on health supplements.

However, despite significant growth in ANC business revenue and share, it has not successfully taken over H&H's growth baton. In 2024, the growth rates for ANC, BNC, and PNC businesses were 8.8%, -25.8%, and 4.4% respectively. The growth in ANC and PNC businesses could not offset the BNC decline.

Swisse's high-profit nutritional supplements remain highly anticipated, with H&H stating in its financial report: "Revenue from high-profit nutritional supplements remains the core revenue growth driver, with vitamins, herbal and mineral supplements, and pet supplements in this category recording double-digit growth."

However, high-profit nutritional supplement growth rates plummeted from 35.3% in 2023 to 10.4% in 2024. In 2024, flagship brand Swisse achieved 6.9% growth in the Chinese market, accounting for 64.7% of group ANC sales, significantly down from over 30% growth in 2023.

In other words, the nutritional supplement business represented by Swisse is struggling to maintain momentum.

With ANC business growth below 10%, PNC business growing only 4.4%, and BNC business falling 25.8%, all three business lines lack sufficient growth momentum. Without reversing the BNC business decline or finding new growth drivers, H&H may be moving away from rather than "sprinting" toward its 12 billion target.

**Infant Formula Recovery Leaves 12 Billion Sprint in Suspense**

After two consecutive years of significant infant formula business decline, H&H finally received encouraging news in the first quarter of this year.

According to H&H's first-quarter 2025 report, the company achieved revenue of 3.1699 billion yuan, up 10.4% year-over-year. The BNC business generated revenue of 1.14 billion yuan, up 25.3%. Biostime infant formula business achieved revenue of 901.6 million yuan during the reporting period, up 44.3%, with China infant formula business growing 46.9% year-over-year, driven by ultra-premium products.

Will the significant first-quarter growth in infant formula performance become H&H's opportunity to achieve the 12 billion target this year? The key depends on understanding the reasons behind this growth and whether it can be sustained.

H&H attributes first-quarter infant formula growth to four factors: new customer acquisition through e-commerce and mother-baby channels, low base effects, ultra-premium market expansion, and new national standard product transition benefits.

Industry insiders believe these explanations focus more on short-term market fluctuations, with financial reports failing to demonstrate proactive strategic adjustments that are essential for reversing downward trends.

H&H's strategy remains largely unchanged, with no product adjustments involved. According to H&H's 2025 plans, the group will focus on two strategies: "inventory clearance" and "new customer acquisition," completing old national standard product withdrawal in the first half while prioritizing penetration among 2024 newborn families.

At the 2025 BNC Key Customer Spring Festival Conference held in late February, H&H China CEO Li Fengting shared that new customer penetration is key to achieving sustained growth, with BNC business focusing on mothers of 6-12 month infants going forward.

However, this growth path contains multiple concerns: first, price reductions for inventory clearance may damage ultra-premium brand premiums; additionally, newborn numbers have declined for six consecutive years, directly compressing infant formula market expansion space.

Whether H&H's infant formula business can maintain strong growth relates not only to achieving this year's 12 billion China target but potentially to China CEO Li Fengting's tenure.

H&H has previously replaced leadership after missing performance targets. For example, in 2017, Luo Fei proposed achieving 10 billion yuan in sales over three years, but 2019 and 2020 revenues were only 10.925 billion yuan and 11.195 billion yuan respectively, failing to meet targets. In 2019, Luo Fei resigned as CEO, succeeded by An Yuting.

After taking office, An Yuting proposed a vision of China market revenue exceeding 20 billion yuan by 2023, but this target was also unmet. In 2021 and 2022, total company revenues were 11.548 billion yuan and 12.776 billion yuan respectively, showing weak growth and making the 20 billion target essentially impossible. At the end of 2022, An Yuting left for personal reasons.

Industry rumors suggest that H&H has changed CEOs several times, but none have successfully returned the infant formula business to growth.

Whether Li Fengting's leadership capabilities can pass the test will be determined in the remaining eight months of this year.