Financial Performance - For the year ended December 31, 2024, the company reported revenue of RMB 13,254 million, a decrease of 1.5% compared to RMB 13,458 million in 2023[10]. - The company experienced a significant loss of RMB 1,469 million for the year, compared to a profit of RMB 185 million in 2023[10]. - The total cost of sales for the group was RMB 9,802.9 million, representing a year-on-year decrease of 5.1%[144]. - The gross profit for the raw milk business was RMB 3,257.2 million, an increase of 11.8% year-on-year, with a gross profit margin of 31.2%[154]. - The gross profit for integrated dairy farming solutions was RMB 194.3 million, a decrease of 9.6% year-on-year, with a gross profit margin of 6.9%[154]. - The Group's cash EBITDA increased by 19.6% year-on-year to RMB 2,985.8 million in 2024, with a cash EBITDA margin of 22.5%[177]. - The net cash inflow from operating activities decreased significantly to RMB 2,403.6 million, down RMB 3,045.4 million year-on-year from RMB 5,449.0 million in 2023[184]. Production and Sales - The total raw milk sold reached 289.3 thousand tons, representing a 13.6% increase from 254.7 thousand tons in 2023[10]. - Average annualized milk yield per milkable cow reached 12.8 tons, a year-on-year increase of 1.6%, with total raw milk production at 3.005 million tons, demonstrating a year-on-year increase of 16.1%[19]. - Total sales volume of raw milk increased by 13.6% year-over-year to approximately 2.893 million tons, compared to 2.547 million tons in 2023[140]. - Sales revenue from the raw milk business increased by 1.9% year-over-year to RMB 10,454.4 million, up from RMB 10,263.7 million in 2023[136]. - The average selling price (ASP) of raw milk decreased by 10.4% year-over-year to RMB 3.61/kg, down from RMB 4.03/kg in 2023[139]. Debt and Financing - The Group's debt-to-asset ratio increased to 67.2%, up 4.9 percentage points from the end of 2023, while the financing cost rate decreased to 3.40%[19]. - The total interest-bearing borrowings increased by 25.8% year-on-year to RMB 14,463.1 million, up from RMB 11,496.7 million in 2023[191]. - The net gearing ratio increased to 97.1% as of December 31, 2024, up from 74.4% in 2023, reflecting an increase in interest-bearing borrowings[179]. - The annual interest rate for bank borrowings ranged from 2.20% to 4.85% in 2024, compared to 1.50% to 8.16% in 2023[194]. Operational Efficiency and Cost Management - The company implemented cost-reduction and efficiency-enhancing measures, strengthening its core competitiveness amid a challenging market environment[17]. - The average unit cost of raw milk before inter-segment offset was RMB 2.53/kg, down RMB 0.39/kg from RMB 2.92/kg in the previous year[147]. - Selling and distribution costs increased by 17.8% year-on-year to RMB 445.1 million in 2024, up from RMB 377.8 million in 2023, mainly due to higher raw milk sales volume[166]. - Administrative expenses decreased by 10.1% year-on-year to RMB 766.2 million in 2024 from RMB 852.4 million in 2023, reflecting cost reduction efforts[169]. Strategic Initiatives and Innovations - The company aims to be a global dairy farming leader by deploying the entire industry chain and focusing on digital intelligence and ecological practices[17]. - Modern Dairy's strategic direction includes leveraging digital intelligence to innovate across the entire industry chain[43]. - The Group has developed the "Modern No. 1" Genomic Germplasm "Chip," filling a gap in the domestic commercial dairy cows genomic germplasms market[20]. - The company launched its "Green Leadership 2030" vision and initiated the "65 555 11" plan, focusing on six key areas and five core business areas[64]. - The Group's intelligent digital platform, Yunyangniu, focuses on data integration for dairy cow management, improving breeding capabilities and supply chain accuracy[121]. Sustainability and Environmental Initiatives - The Group has established a green recycling industrial chain for sustainable development, including biogas power generation and fertilizer treatment[126]. - The Group aims to reduce unit carbon emissions by 7%, 15%, and 20% by the end of 2025, 2030, and 2035, respectively, using 2021 as the base year[133]. - The Group has been recognized for its green low-carbon initiatives, leading to the establishment of the "FRESH" strategy for sustainable development in the livestock industry[81]. - The company is dedicated to building a green and sustainable development ecosystem across the entire industry chain[41]. Market Conditions and Challenges - Domestic demand for dairy products decreased, leading to a 1.9% year-over-year decline in dairy product output, totaling 29.62 million tons[89]. - China's total raw milk output in 2024 was 40.79 million tons, a 2.8% year-over-year decrease, marking the first decline since 2018[89]. - The average annual prices of feed ingredients like corn and soybean meal decreased by 14.8% and 21.3% respectively, providing some relief to dairy farming costs[90].

Investment Rating - The report initiates coverage with a rating of "Buy" for the company [2][7]. Core Views - The company is expected to see a stabilization and potential recovery in milk prices in 2025, which could lead to improved performance [6][9]. - The company has a strong backing from major shareholders, including Mengniu Dairy, which holds a 56.36% stake, ensuring a stable demand for its raw milk business [6][18]. - The report highlights the cyclical nature of the company's profitability, heavily influenced by raw milk prices and feed costs [6][7]. Financial Data and Profit Forecast - Revenue projections for 2025-2027 are estimated at 13.33 billion, 13.69 billion, and 14.11 billion CNY, with year-on-year growth rates of 0.6%, 2.65%, and 3.06% respectively [5][7]. - The net profit for the same period is forecasted to be 252 million, 432 million, and 727 million CNY, indicating a turnaround from losses in 2024 [5][7]. - The earnings per share (EPS) is expected to improve from -0.179 CNY in 2024 to 0.032 CNY in 2025, and further to 0.092 CNY by 2027 [5][7]. Business Overview - The company primarily focuses on raw milk sales, with a significant portion of its revenue derived from long-term contracts with major clients like Mengniu and New Hope Dairy [6][26]. - The company has expanded its operations to 47 farms across 13 provinces, with a total of 491,200 dairy cows, of which 51.08% are mature cows [6][21]. - New business segments, including feed and breeding solutions, are being developed, contributing to revenue diversification [6][22]. Valuation and Market Comparison - The report employs a comparable company price-to-book (PB) valuation method, suggesting a target price of 1.26 HKD per share for the next year, representing a 12.4% upside from the current price [7][9]. - The average PB ratios for comparable companies are projected to be 0.95, 0.80, and 0.69 for 2025-2027 [7][9]. Key Assumptions - The report assumes a 2% and 0.5% year-on-year growth in raw milk sales volume for 2025 and 2026, respectively, with an average selling price (ASP) increase of -2% in 2025 and 1.5% in 2026 [8][9]. - The cost of raw milk is projected to be 2.51 CNY/kg in 2025, with feed costs contributing significantly to overall expenses [8][9].

Group 1 - The modern dairy farm in Baoji, Shaanxi Province, is a high-standard, specialized, and large-scale dairy cattle breeding base, recognized as a key leading enterprise in agricultural industrialization in the region [3] - The farm utilizes an intelligent breeding system that includes fully automated TMR feeding, manure cleaning, milking, and resource utilization of manure, leading to high breeding standards and quality control of raw milk [3] - The surrounding area is flourishing with kiwi and seedlings, benefiting from the promotion of biogas fertilizer application, which enhances soil fertility and crop growth [5] Group 2 - To facilitate the use of biogas fertilizer for local farmers, the modern dairy farm has constructed a liquid fertilizer return pipeline covering over 2,800 acres, providing tangible benefits and increased efficiency for nearby farmers [6] - The farm not only brings technology but also stimulates the economic vitality of surrounding villages, enabling local residents to find employment close to home and expand silage planting areas for additional income [8]

证券研究报告|港股公司点评报告 [Table_Date] 2025 年 03 月 31 日 [Table_Title] 业绩符合预期，期待原奶周期反转 [Table_Title2] 现代牧业(1117.HK) | [Table_DataInfo] 评级： | 买入 | 股票代码： | 1117 | | --- | --- | --- | --- | | 上次评级： | 买入 | 52 周最高价/最低价(港元)： | 0.91/0.63 | | 目标价格(港元)： | | 总市值(亿港元) | 90.24 | | 最新收盘价(港元)： | 1.14 | 自由流通市值(亿港元) | 90.24 | | | | 自由流通股数(百万) | 7,915.66 | [Table_Summary] 事件概述 公司 24FY 实现营业收入 132.5 亿元，同比-1.5%，实现股东应占亏损 14.7 亿元，去年同期为实现盈利 1.9 亿元。据此推算，公司 24H2 实现营业收入 68.4 亿元，同比基本持平，实现股东应占亏损 12.6 亿元，去年同 期为亏损 0.3 亿元。公司业绩表现符合之前盈利预警预期。 分析判断: ► ...

买入(首次) 事件 2025 年 03 月 29 日 业绩短期承压，期待原奶价格回升 | 当前股价 | （港元） | 1.13 | | --- | --- | --- | | 总市值 | （亿港元） | 89.4 | | 总股本 | （百万股） | 7,915.7 | | 流通股本 | （百万股） | 7,915.7 | | 52周价格区间 | （港元） | 0.6-1.31 | | 日均成交额 | （百万港元） | 8.6 | 市场表现 分析师：孙山山 S1050521110005 sunss@cfsc.com.cn 联系人：肖燕南 S1050123060024 xiaoyn@cfsc.com.cn 基本数据 资料来源：Wind，华鑫证券研究 -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 现代牧业 恒生指数 相关研究 —现代牧业（1117.HK）公司事件点评报告 2025 年 3 月 25 日，现代牧业发布 2024 年年报。 投资要点 ▌ 利润短期承压，现金流表现较好 收入符合预期，非现金项目拖累利润。2024 年公司实现营收 132.54 亿元，同减 1.5%； ...

Investment Rating - The report assigns a "Buy" investment rating for the company, marking its first coverage [10]. Core Views - The company is experiencing short-term profit pressure but has strong cash flow performance. Revenue for 2024 was 13.254 billion, a decrease of 1.5%, while the net profit attributable to shareholders was -1.469 billion, compared to a profit of 0.185 billion in the previous year. The decline in profit was primarily due to losses from changes in the fair value of dairy cows and goodwill impairment [6]. - The profitability of raw milk continues to improve, with revenue from raw milk reaching 10.454 billion, an increase of 1.9%, and a gross margin of 31.2%, up by 2.8 percentage points. The company anticipates a gradual recovery in milk prices as the industry undergoes consolidation [7]. - The company is expanding its feed business and making breakthroughs in breeding, with comprehensive solutions for dairy farming generating 2.8 billion in revenue, despite a 12.4% decrease. The sales volume of feed has exceeded 1 million tons [8]. Summary by Sections Financial Performance - In 2024, the company achieved revenue of 132.54 billion, down 1.5%, and a net profit of -14.69 billion, compared to 1.85 billion in the previous year. The gross margin improved to 26.0%, an increase of 2.8 percentage points. Cash EBITDA was 29.86 billion, with a cash EBITDA margin of 22.5%, reflecting a year-on-year increase of 19.6% and 4.0 percentage points respectively [6]. - The operating cash flow for 2024 was 28.08 billion, up 17.3%, while capital expenditure decreased by 8.1% to 34.52 billion [6]. Raw Milk Business - Raw milk revenue was 104.54 billion, accounting for 78.9% of total revenue, with a gross margin of 31.2%. The production volume reached 3.01 million tons, an increase of 16.1%. The average selling price of raw milk was 3.61 yuan/kg, down 10.4% from the previous year, but still above the market price of 3.32 yuan/kg [7]. Future Outlook - The company expects revenue growth for 2025-2027 to be 139.50 billion, 147.80 billion, and 156.91 billion respectively, with EPS projected at 0.04, 0.10, and 0.15 yuan. The current stock price corresponds to PE ratios of 25, 11, and 7 times for the respective years [10].

Group 1 - The company maintains its profit forecast for 2025/2026, with current trading at 26.9/11.0 times P/E and 0.9/0.8 times P/B for 2025/2026, raising the target price by 10.0% to HKD 1.43, while maintaining an "outperform" rating [1] - In 2024, the company reported revenue of CNY 13.3 billion, with a 2H24 revenue of CNY 6.8 billion, reflecting a year-on-year increase of 0.2%. The cash EBITDA for 2024 is CNY 3 billion, representing a growth of approximately 20% [1] - The company’s milk yield continues to improve, with a slight year-on-year increase of 1.6% to 12.8 tons per cow in 2024, and the herd size is expected to reach 491,000 by the end of 2024 [1] Group 2 - The company benefits from a decrease in feed costs by 16.7% and an improvement in milk yield, leading to a slight expansion of gross margin by 2.8 percentage points in 2024 [2] - Despite the decline in raw milk prices, the company’s cash EBITDA increased by 20% due to improved gross margins [2] - The industry is experiencing a reduction in herd size, with 85-90% of the industry facing losses, and a continued decrease in herd size is expected into 2025 [3] Group 3 - The company is positioned well in the industry downturn, with a projected domestic raw milk supply gap of approximately high single digits to 10% in 2024, and potential stabilization of raw milk prices anticipated in 2025 [3] - The industry is currently at the bottom of the cycle, and it is considered a favorable time for left-side investments [3]

Summary of Modern Dairy's Conference Call Company Overview - **Company**: Modern Dairy - **Year**: 2024 - **Revenue**: RMB 13.254 billion, with a cash flow adjustment of RMB 2.986 billion, representing a year-on-year growth of 19.61% [3][4][7] - **Loss**: Reported a loss of RMB 1.469 billion due to non-cash items including a fair value loss of RMB 861 million and goodwill impairment of RMB 599 million [4][10] Key Financial Metrics - **Adjusted Operating Profit Margin**: Increased by 4 percentage points to 22.5% [3][4] - **Dairy Cow Inventory**: Exceeded 490,000 heads, a 9% increase year-on-year, including 30,000 organic dairy cows from acquisitions [4][5] - **Raw Milk Production**: Reached 3.01 million tons, a 16.1% increase year-on-year, with annualized yield per cow at 12.8 tons, up 1.6% [4][5] - **Feed Costs**: Decreased by 16.7% to RMB 1.95 per kg, with sales cost per kg of milk down 13.4% to RMB 2.53 [4][5] - **Cash Flow Improvement**: Operating cash flow, excluding working capital changes, grew 17% to RMB 2.8 billion [4][7] Strategic Developments - **Specialty Milk Production**: Accelerated focus on specialty milk, with organic milk production reaching 470,000 tons and a target of 10% specialty milk by 2027 [4][6] - **A2 Milk Certification**: Achieved for Zhangyuan Phase I and Shanghe Pasture, with plans to increase certified student pastures to 13 [4][6] Industry Insights - **Inventory Reduction**: Accelerated de-stocking in the industry, with small farms disappearing; a potential turning point in dairy supply-demand dynamics expected by Q3 2025 [4][8] - **Import Reduction**: Decrease in imported milk powder, with demand-side stimulus policies likely to address supply-demand discrepancies [4][8] - **Future Impairment Outlook**: Significant improvement in impairment expected in 2025, with no large-scale one-time impairment projects anticipated [4][10] Challenges and Risks - **Market Dynamics**: The industry faces challenges including sales issues, market expansion, and financial pressures, particularly for small-scale farms [20][25] - **Supply Chain Issues**: The trend of small farms exiting the market due to financial difficulties and inability to secure loans [20][25] - **Feed Cost Uncertainty**: Potential challenges from tariff countermeasures affecting feed costs in Q4 [9] Price Trends and Projections - **Raw Milk Price**: Expected to stabilize around RMB 3.45 per kg, with potential to approach RMB 4 per kg [16][22] - **Consumer Demand**: Current demand remains sluggish, with a potential turning point in the second half of 2025 [32][35] Conclusion - Modern Dairy is navigating a complex landscape with significant operational improvements and strategic initiatives in specialty milk production. However, the company faces industry-wide challenges, particularly from small-scale farms and fluctuating market dynamics. The outlook for 2025 suggests a cautious optimism with expected improvements in financial performance and market conditions.

Core Viewpoint - The dairy industry is expected to see a turning point in the second half of 2024, with signs of recovery in milk powder and beef prices after a prolonged downturn [1][2][3] Industry Summary - The dairy sector has experienced a three-year downtrend, but recent indicators suggest a potential rebound. The domestic milk price is projected to decline in 2024 but may stabilize and improve in 2025 due to accelerated capacity adjustments and rising international milk prices [2][3] - Domestic raw milk production and cattle inventory are both expected to decrease in 2024, with a reported 4.5% drop in cattle inventory, reversing five years of growth. The total raw milk output is anticipated to be 40.79 million tons, a year-on-year decrease of 2.8% [3][4] - The average purchase price of fresh milk in China was 3.11 yuan/kg in February 2024, down 0.3% month-on-month and 14.1% year-on-year, while international prices are significantly higher, with New Zealand at approximately 3.12 yuan/kg, and the US and Europe at 3.83 yuan/kg and 4.01 yuan/kg respectively [3] Company Summary - Modern Dairy reported a revenue of 13.25 billion yuan in 2024, a slight decrease of 1.5% year-on-year, but cash EBITDA increased by 19.6% to 2.99 billion yuan. The company aims to improve operational efficiency and reduce costs to navigate the challenging market [7][9] - The cost of milk sales decreased to 2.53 yuan/kg, down 13.4% year-on-year, and feed costs fell to 1.95 yuan/kg, down 16.7%, contributing to a gross profit margin increase of 2.8 percentage points [7] - Despite a net loss of 1.42 billion yuan in 2024, attributed to declining milk and beef prices and biological fair value adjustments, the company remains optimistic about future profitability as prices stabilize [6][8] - Modern Dairy is diversifying its revenue streams, with a reported income of 2.8 billion yuan from comprehensive breeding solutions and significant advancements in breeding projects aimed at reducing reliance on imported frozen semen [9]

Financial Performance - The company recorded cash EBITDA of RMB 2,986 million, an increase of approximately RMB 490 million or 19.6% compared to 2023[3]. - Total revenue for the year was RMB 13.254 billion, a decrease of 1.5% compared to RMB 13.458 billion in 2023[5]. - The company reported a loss of RMB 1,469 million for the year, compared to a profit of RMB 185 million in 2023[5]. - Gross profit for 2024 is expected to be RMB 3,128,013, down from RMB 3,451,465 in 2023, indicating a decline of about 9.36%[9]. - The company reported a net loss before tax of RMB 1,474,212 for 2024, compared to a profit of RMB 228,996 in 2023, representing a significant shift in performance[9]. - The group reported a pre-tax loss of RMB 1,474,212 for the year ending December 31, 2024, compared to a pre-tax profit of RMB 228,996 in 2023[29]. - The total dividend declared for the year was RMB 34,888,000, a decrease of 68.8% from RMB 111,997,000 in 2023, with a proposed dividend of RMB 0.0122 per share for the upcoming year[45]. - The company reported a net loss attributable to shareholders of RMB (1,416,753) thousand for 2024, compared to a profit of RMB 175,159 thousand in 2023, indicating a significant decline in performance[46]. Revenue and Sales - Raw milk sales revenue amounted to RMB 10.45 billion, reflecting a year-on-year growth of 1.9%[4]. - The company’s herd size increased by 9.0% to 491,169 heads, while total fresh milk sales volume rose by 13.6% to 289.3 thousand tons[5]. - Revenue from breeding products and platform services increased to RMB 68,864,000 in 2024 from RMB 51,496,000 in 2023, a growth of 33.9%[23]. - The raw milk business generated external sales of RMB 10,454,371, an increase of 1.9% from RMB 10,263,657 in the previous year[29]. - The integrated breeding solutions segment recorded revenue of RMB 2,800.0 million, a decline of 12.4% from RMB 3,194.6 million in 2023, primarily due to weak market demand[67]. Assets and Liabilities - The company’s total equity decreased to RMB 11,122,796 in 2024 from RMB 11,842,764 in 2023, a decline of approximately 6.08%[12]. - Total assets less current liabilities increased to RMB 25,310,830 in 2024 from RMB 22,931,460 in 2023, marking an increase of approximately 10.05%[12]. - Non-current assets rose to RMB 25,861,893 in 2024, up from RMB 24,526,141 in 2023, reflecting a growth of about 5.43%[11]. - The group’s biological assets had a carrying amount of RMB 12,435,776,000 as of December 31, 2024, compared to RMB 11,927,977,000 in 2023, indicating an increase of 4.3%[21]. - The group’s net debt is approximately RMB 10,795.4 million as of December 31, 2024, compared to approximately RMB 8,813.2 million as of December 31, 2023, indicating an increase of about 22%[89]. Operational Metrics - The average annual milk yield per cow reached 12.8 tons, a year-on-year increase of 1.6%, while total raw milk production reached 3.005 million tons, up 16.1%[4]. - The average price of raw milk has been declining for three consecutive years, impacting production motivation and leading to a decrease in raw milk output by 2.8% in 2024, the first decline since 2018[51]. - The average prices of corn and soybean meal, key feed components, decreased by 14.8% and 21.3% respectively, which somewhat alleviated cost pressures for dairy farming[51]. - The proportion of mature cows in the total herd increased to 51.1% in 2024, up 2.6 percentage points from 2023, aligning with the group's herd management strategy[56]. Financial Management - The company’s debt-to-asset ratio increased by 4.9 percentage points to 67.2% by the end of 2024, while the proportion of interest-bearing loans with a maturity of over one year rose to 79.5%[4]. - The financing costs for 2024 are expected to be RMB (528,674), slightly higher than RMB (521,247) in 2023, indicating a rise of about 1.83%[9]. - The company incurred a goodwill impairment loss of RMB 599,240 in 2024, which was not present in 2023[9]. - The company recognized impairment losses of RMB 18,686,000 for trade receivables and other receivables in 2024, up from RMB 17,278,000 in 2023[39]. Strategic Initiatives - The company aims to enhance its core competitiveness and build a sustainable business model in the dairy farming industry, focusing on steady growth in core business[96]. - The development strategy will emphasize cost control, lean management, and innovation, while actively embracing digitalization and sustainability[97]. - The company is exploring a comprehensive cattle service industry chain, offering a one-stop solution from breeding to management output, technical training, and consulting services[99]. - The company is actively investing in breeding business to enhance self-sufficiency in core breeding sources and improve dairy cow genetic quality[62]. Market Environment - The government has introduced supportive policies to stabilize the dairy industry, including subsidies for fresh milk and beef cattle production, aimed at reducing costs for farmers and enterprises[52]. - In 2024, China's dairy product imports decreased by 9.5% year-on-year to 2.768 million tons, marking three consecutive years of significant decline[53]. - The self-sufficiency rate of raw milk in China increased to 72% in 2024, up 1 percentage point from 2023, reflecting a continuous recovery trend[53].