Group 1 - Modern Dairy is a pioneer in large-scale farming and is undergoing a digital transformation to enhance operational resilience through cost reduction and efficiency improvement [1] - The company has shifted its strategic focus from capacity expansion to technology-driven high-quality development, optimizing cost structure and resource utilization [1] - The cyclical nature of raw milk prices is influenced by supply expansion or contraction and the time lag in dairy cow reproduction and lactation [1][2] Group 2 - The supply-demand gap in dairy products is expected to narrow, with raw milk prices likely to stabilize and recover in mid to late 2025 [2] - Modern Dairy's core business is raw milk, which is projected to generate revenue of 10.454 billion yuan in 2024, accounting for 78.83% of total revenue [2] - The company has enhanced its vertical integration by launching feed and digital platform businesses to improve synergy within the industry chain [2] Group 3 - The productivity of dairy cows is improving, with an expected yield of 12.8 tons per head per year in 2024 [3] - Modern Dairy has strategically acquired FuYuan Dairy and ZhongYuan Dairy to achieve scale integration and diversify its operations across breeding, feed, deep processing, and digital platforms [3] - The company operates 47 dairy farms in China with over 490,000 dairy cows, focusing on core dairy farming regions, and has established quality forage bases in the U.S. [3] Group 4 - The tightening supply-demand gap in raw milk is expected to create investment opportunities, with profitability improvements anticipated in the second half of 2025 [3] - The company's projected EPS for 2025 and 2026 are 0.01 yuan and 0.10 yuan, respectively, with corresponding PE valuations of approximately 73 and 11 times, indicating significant upside potential [3]

港股研究丨公司深度丨现代牧业（1117.HK） [Table_Title] 现代牧业深度报告：现代智牧，奶业长青 %% %% %% %% research.95579.com 1 丨证券研究报告丨 报告要点 [Table_Summary] 现代牧业是规模化养殖先行者，数智化转型叠加精细化运营驱动降本增效韧性凸显。现代牧业 作为中国规模化原料奶生产及全产业链运营的龙头企业，其发展历程与战略布局深度锚定乳业 核心环节。原奶供需缺口收紧趋势较为清晰，随着行业去产能的推进和原奶价格的触底回升， 公司有望在 2025 年下半年迎来盈利改善。 分析师及联系人 [Table_Author] 董思远 徐爽 SAC：S0490517070016 SAC：S0490520030001 SFC：BQK487 请阅读最后评级说明和重要声明 2/21 %% %% %% %% research.95579.com 2 现代牧业（1117.HK） cjzqdt11111 [Table_Title2] 现代牧业深度报告：现代智牧，奶业长青 [Table_Summary2] 规模先行者，数智化转型筑就穿越周期的经营韧性 现代牧业是规模化养殖先 ...

Core Viewpoint - The conference highlighted the importance of a collaborative full industry chain approach as a key to overcoming challenges in the dairy industry, emphasizing technological innovation and sustainable development as essential for future growth [3][5]. Group 1: Industry Insights - Modern Dairy's President, Sun Yugang, emphasized the significance of full industry chain collaboration for breaking through challenges in the dairy sector, showcasing the company's 20 years of experience in building a comprehensive industry chain system [3]. - The Vice President and Secretary-General of the China Dairy Industry Association, Liu Yaqing, acknowledged Modern Dairy's leadership in large-scale farming and integration of breeding and cultivation, outlining directions for the dairy industry's development, including strengthening milk source foundations and optimizing breeding structures [3]. - Experts presented insights on various aspects of the dairy industry, including carbon efficiency and low-carbon transformation strategies, highlighting the need for a collaborative approach across the entire supply chain to enhance green competitiveness [3][4]. Group 2: Technological Innovations - Modern Dairy's Vice President and Chief Engineer, Zhang Xue, discussed the dual drive of full industry chain layout and technological innovation, providing integrated pathways for cost reduction and sustainable development based on 30 years of practical experience [3]. - The Senior General Manager of Modern Dairy's Grain Source Technology Division, Jia Yutao, illustrated the potential of financial technology in reducing costs and increasing efficiency within the dairy sector [3]. - The Executive President of Inner Mongolia Cloud Raising Cattle Technology Co., Ltd., Wu Rina, emphasized the concept of "data as the new granary," which is crucial for improving ranch efficiency through streamlined information flow [3]. Group 3: Future Directions - The forum included discussions on overcoming challenges and exploring future development, with guests analyzing cost reduction, efficiency enhancement, and resilience in the dairy industry from various perspectives, including national strategy and technological innovation [4]. - The successful hosting of the seminar provided a valuable learning and exchange opportunity for dairy practitioners, reinforcing the idea that technological innovation, collaborative development, and sustainable practices are vital for the industry's long-term progress [5].

Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Viewpoints - The report highlights that the dairy industry is experiencing a significant oversupply of raw milk, leading to a slowdown in the culling of dairy cows. The current contract milk price is 3.04 CNY/kg, while spot milk prices are below 2.5 CNY/kg, indicating financial strain on dairy farms [7] - The report suggests that the culling of dairy cows may accelerate in the near future due to increasing operational pressures on farms, with spot milk prices dropping to around 2.3 CNY/kg [7] Summary by Sections Investment Recommendations and Targets - For the farm sector, it is recommended to focus on Yuran Dairy (09858, Buy), which is the largest farm enterprise and is expected to benefit from the rebound in milk prices and the recovery of dairy cow fair value. The report also suggests paying attention to leading farm Modern Dairy (01117, Not Rated) [2] - In the dairy enterprise sector, the report recommends Tianrun Dairy (600419, Not Rated), Yili Group (600887, Buy), and Mengniu Dairy (02319, Buy). The current low milk prices and intense competition in the dairy product market are expected to improve as milk prices recover, benefiting both Yili and Mengniu [2]

Core Viewpoint - Modern Dairy is actively promoting the use of new energy vehicles, specifically electric loaders, to align with national "dual carbon" strategies and enhance green, low-carbon development in its operations [1][3]. Group 1: Strategic Initiatives - The introduction of electric loaders is part of Modern Dairy's strategic layout in the new energy equipment sector, aimed at reducing carbon emissions and optimizing operational costs [3][11]. - The first batch of 20 electric loaders will be deployed in regions with significant electricity cost advantages, such as Inner Mongolia, to validate their adaptability and reliability [5][11]. Group 2: Environmental Impact - Electric loaders achieve "zero tailpipe emissions" during operation, with each unit estimated to reduce carbon dioxide emissions by over 60 tons annually, significantly improving environmental quality [8][9]. - The introduction of electric loaders contributes to a comprehensive green upgrade for the farms, enhancing sustainability and operational efficiency [7][11]. Group 3: Economic Benefits - The operational cost of electric loaders is notably lower, with initial data indicating a reduction of over 200,000 yuan in annual energy costs compared to traditional diesel models [9][10]. - The noise reduction from electric loaders creates a more comfortable environment for both cattle and employees, promoting a better working atmosphere [10][11]. Group 4: Future Outlook - Following the successful operation of the initial batch, Modern Dairy plans to expand its new energy equipment initiatives and collaborate with other manufacturers to replicate success across more farms [13]. - The commitment to green practices is becoming a defining characteristic of Modern Dairy's high-quality development strategy [13].

Group 1 - The company Modern Dairy has issued a profit warning, expecting a net loss of 800 million to 1 billion yuan for the first half of the year, significantly worse than the net loss of 207 million yuan in the same period last year, marking the lowest mid-year report in eight years [1][3] - Approximately 80% of the company's revenue comes from raw milk sales, with over 70% of that revenue generated from its key customer, Mengniu [3] - The domestic raw milk market remains oversupplied, with raw milk prices dropping significantly; from January to April, the average purchase price of fresh milk in major dairy-producing provinces fell from 3.12 yuan per kilogram to 3.07 yuan, with a month-on-month decline exceeding 10% [3] Group 2 - The increase in net loss is primarily attributed to the company's decision to eliminate low-yield cows, leading to a revaluation loss of dairy cattle estimated between 1.65 billion and 1.85 billion yuan [3] - The company clarified that the revaluation loss of dairy cattle is a non-cash item and will not adversely affect cash flow, working capital, or ongoing operations [3] - Due to high breeding costs and declining raw milk prices, the company reported a significant loss last year, with 2024 revenue projected at 13.25 billion yuan, a year-on-year decline of 1.51%, and a net loss of 1.417 billion yuan, a staggering drop of 908% [3] Group 3 - The company is implementing cost control measures to reduce raw milk sales costs, and the CEO indicated that industry capacity adjustments are accelerating, potentially leading to a turning point in the second half of 2025 [4]

Core Viewpoint - The company is expected to report a net loss of 800-1,000 million yuan in H1 2025, compared to a net loss of 210 million yuan in the same period last year, primarily due to impairment losses and non-cash items, despite stable operational performance [1][2] Group 1: Financial Performance - The company anticipates a cash EBITDA for H1 2025 to be roughly the same as last year’s 1,520 million yuan [1] - The expected impairment losses from the fair value reassessment of dairy cows are projected to be between 1,650-1,850 million yuan, an increase of 500-700 million yuan year-on-year [1] - The average annual yield per dairy cow is expected to exceed 13 tons per head, with the proportion of mature cows increasing to 53% [1] Group 2: Operational Strategy - The company is actively eliminating low-yielding cows, which is part of its strategy to improve herd structure and control operational costs [1] - The sales volume of raw milk is expected to increase by approximately 10% year-on-year [1] - The company has effectively controlled the sales cost of milk, with an anticipated reduction of over 0.22 yuan/kg in sales costs for H1 2025 compared to the previous year [1] Group 3: Industry Outlook - The current dairy price adjustment is primarily driven by supply-demand mismatches, with a clear direction towards capacity reduction in the industry [2] - The number of dairy cows is expected to decline year-on-year, reflecting the responsibility of leading dairy enterprises in the industry [2] - The price of live cattle has rebounded in 2025, which may encourage farms to increase the culling of cows [2]

Group 1 - The company has issued a profit warning, expecting a net loss between 800 million to 1 billion RMB for the six months ending June 30, 2025, compared to a net loss of approximately 207 million RMB for the same period in 2024 [1] - The domestic raw milk market is currently oversupplied, leading to a significant decrease in market prices compared to the same period in 2024, which has negatively impacted the company's raw milk selling prices [1] - Despite the decline in raw milk prices, the company has implemented commodity procurement strategies and cost control measures, resulting in a reduction of sales costs by over 0.22 RMB per kilogram compared to 2024, with an expected increase in raw milk sales volume by approximately 10% [1] Group 2 - The company anticipates a substantial increase in losses compared to 2024 due to the active culling of low-yield cows to improve herd structure, which is expected to enhance key operational metrics [2] - By June 30, 2025, the total number of dairy cows is expected to slightly decrease compared to the end of 2024, but the proportion of productive cows is projected to rise to 53%, with average annual production per cow expected to exceed 13 tons [2] - The anticipated loss from the fair value revaluation of dairy cows, influenced by the increased number of culled cows and declining raw milk prices, is expected to range between 1.65 billion to 1.85 billion RMB, an increase of 500 million to 700 million RMB compared to 2024 [2] - The fair value revaluation loss is a non-cash item and will not have a significant adverse impact on the company's cash flow and ongoing operations [2] - The company is optimistic that with the recovery of dairy consumption demand, the raw milk market will stabilize, leading to a potential rebound in prices and improved profitability for sustainable growth [2]

Core Viewpoint - The article highlights the modern and sustainable practices of the Guoxiangyuan Ranch under Modern Dairy, showcasing its advanced technology and commitment to green development, which ensures high-quality milk production. Group 1: Modern Technology and Management - The ranch features high-standard cow barns equipped with advanced smart feeding TMR systems, self-sensing fans, precise spraying devices, and fully automated temperature-controlled water troughs [3] - A central control hall enables real-time monitoring of the entire process including procurement, feeding, milking, diagnosis, and management, ensuring the health and production performance of each cow [3][5] - This digital management approach enhances the production performance of dairy cows and provides a stable and reliable source of high-quality milk for Mengniu [5] Group 2: Sustainable Development Practices - The ranch promotes a circular farming model, utilizing solar energy resources and establishing a photovoltaic power station to reduce operational costs and dependence on traditional energy sources [5] - It extends its industrial chain by creating a peony viewing garden and integrating dairy science education and a dairy culture museum, offering consumers a space for leisure, learning, and experience [5] - Consumers can enjoy the beauty of the peony fields while gaining insights into dairy culture and the milk production process, highlighting the charm of the modern dairy industry [5] Group 3: Quality Assurance - Modern Dairy's Guoxiangyuan Ranch, through its advanced equipment, strict management, and green development philosophy, continuously provides high-quality milk to Mengniu [7] - Each drop of milk originates from healthy cows, ensuring pure quality and rich nutrition [7] - This exceptional quality not only meets Mengniu's demand for high-quality milk sources but also offers consumers healthy and delicious dairy products [7]

Investment Rating - The investment rating for the company is "Buy" with a target price of 1.14 HKD [6][7]. Core Views - The company is expected to report a net loss of 800-1,000 million RMB for the first half of 2025, compared to a net loss of 210 million RMB in the same period last year. The apparent profit loss is primarily due to impairment and other non-cash items, while actual operations remain stable [1][2]. - The company is actively improving its herd structure and controlling operational costs, with a slight expected decrease in the total number of dairy cows by the end of the first half of 2025, while raw milk sales volume is projected to increase by approximately 10% year-on-year [1][2]. - The company anticipates a reduction in feed costs and other cash costs in the second half of 2025, which may alleviate impairment pressures and allow for profit recovery [1][2]. Summary by Sections Financial Performance - The company expects to report a cash EBITDA for the first half of 2025 that is roughly comparable to the previous year, despite the apparent profit loss due to non-cash impairment losses estimated at 1,650-1,850 million RMB, an increase of 500-700 million RMB year-on-year [2][4]. - Revenue projections for 2025-2027 indicate a slight recovery, with expected net profits of -1,313 million RMB in 2025, 658 million RMB in 2026, and 1,117 million RMB in 2027, reflecting a significant turnaround [4][5]. Market Dynamics - The current dairy price adjustments are driven by supply-demand mismatches, with the company indicating a clear direction towards capacity reduction in response to prolonged low milk prices [3]. - The company is expected to see a decrease in its breeding stock in 2025, reflecting the industry's response to market conditions, with a notable increase in the proportion of productive cows [3]. Valuation Metrics - The target price of 1.14 HKD corresponds to a 13x PE ratio for 2026, down from a previous target of 1.35 HKD, indicating a cautious outlook due to ongoing impairment losses [4][6]. - The company's estimated EPS for 2025 is -0.17 RMB, with projections of recovery to 0.08 RMB in 2026 and 0.14 RMB in 2027, suggesting a potential for profit growth in the coming years [5][12].