Investment Rating - The investment rating for the company is "Buy" [9] Core Views - The report anticipates a resonance between the meat and dairy cycles, which is expected to reveal profit elasticity for the company [1] - The company has experienced a decline in revenue and increased net losses in the first half of 2025, but there are signs of potential recovery in the dairy and beef markets [1][4] Revenue and Performance Summary - In the first half of 2025, the company's revenue was 6.07 billion RMB, a year-on-year decrease of 5.4%, with a net loss of 980 million RMB compared to a net loss of 210 million RMB in the same period last year [1] - Raw milk revenue decreased by 0.8% year-on-year to 5.07 billion RMB, with sales volume increasing by 10.3% but average price per kilogram dropping by 10.1% to 3.29 RMB/kg [2] - The company has improved its core herd ratio and increased the annual average yield per lactating cow to 13.2 tons per head, a year-on-year increase of 1.5% [2] Profitability and Margin Analysis - The gross margin for the first half of 2025 increased by 0.3 percentage points to 26.4%, while the cash EBITDA was 1.48 billion RMB, a year-on-year decrease of 2.5% [3] - The company expects a reduction in biological asset impairment losses in the second half of 2025, which could improve profitability [3] Future Outlook and Valuation - The report maintains earnings forecasts, projecting EPS of -0.17, 0.08, and 0.14 RMB for 2025 to 2027, respectively [4] - The target price is set at 1.58 HKD, based on a 18x PE ratio for 2026, indicating potential upside from the current market price [4][5]

Core Viewpoint - Modern Dairy (01117) reported a revenue of 6.073 billion yuan for the six months ending June 30, 2025, with a loss of 984 million yuan, resulting in a loss per share of 0.1167 yuan [1] Group 1: Financial Performance - The company achieved a net cash inflow from operating activities of 490 million yuan, an increase of 23.3% compared to the same period in 2024, enhancing its core competitiveness and resilience against industry cycles [1] - The total loss for the period was 984 million yuan, indicating challenges in profitability despite revenue growth [1] Group 2: Business Strategy and Operations - The company aims to become a global leader in the dairy industry through a vision of "layout of the industrial chain, digital innovation," focusing on raw milk production as its core business [1] - The business model encompasses a full value chain in the dairy industry, including seed research and development, pasture planting, feed, dairy cattle breeding, and a digital platform for the industry chain [1] Group 3: Livestock and Production Metrics - As of June 30, 2025, the company raised 472,500 dairy cows, a year-on-year increase of 6.2%, with the proportion of mature dairy cows at 54.1%, up 3.5 percentage points [1] - The average annualized yield per mature dairy cow reached 13.2 tons, a year-on-year increase of 1.5%, maintaining a leading position in the industry [1] - The total raw milk production for the period was 1.661 million tons, reflecting a year-on-year growth of 14.6% [1]

Core Viewpoint - Modern Dairy (01117.HK) reported a decline in sales revenue and incurred a significant loss for the six months ending June 30, 2025, reflecting challenges in the dairy industry [1] Financial Performance - The company recorded sales revenue of RMB 6.07 billion, a year-on-year decrease of 5.4% [1] - The loss for the period amounted to RMB 980 million, with a basic loss per share of RMB 11.67 [1] - The board decided not to declare an interim dividend for the six months ending June 30, 2025, consistent with the previous period [1] Business Strategy - The company aims to become a global leader in the dairy industry with a vision focused on "layout of the industrial chain, digital innovation" [1] - Core business revolves around raw milk production, supported by digital transformation and ecological development [1] - The business model encompasses a comprehensive value chain in the dairy industry, including seed research and development, pasture planting, feed production, dairy cattle breeding, and a digital platform for the industry chain [1] - The company maintains a steady growth trend through a collaborative development model across the entire industry chain [1]

Core Viewpoint - Modern Dairy (01117) reported a revenue of 6.073 billion yuan for the six months ending June 30, 2025, with a loss of 984 million yuan, translating to a loss of 11.67 cents per share [1] Group 1: Financial Performance - The company achieved a net cash inflow from operating activities of 490 million yuan, an increase of 23.3% compared to the same period in 2024, enhancing its core competitiveness and resilience against industry cycles [1] - The total revenue for the period was 6.073 billion yuan, while the net loss was 984 million yuan [1] Group 2: Business Strategy and Operations - The company aims to become a global leader in the dairy industry through a vision of "layout of the industrial chain, digital innovation," focusing on raw milk production as its core business [1] - The business model encompasses a full value chain in the dairy industry, including seed research and development, pasture planting, feed, dairy cattle breeding, and a digital platform for the industry chain [1] Group 3: Livestock and Production Metrics - As of June 30, 2025, the company raised 472,500 dairy cows, a year-on-year increase of 6.2%, with the proportion of mature dairy cows at 54.1%, up 3.5 percentage points [1] - The average annualized yield per mature dairy cow reached 13.2 tons, a year-on-year increase of 1.5%, with total raw milk production hitting 1.661 million tons, a growth of 14.6% [1]

Investment Rating - Industry rating: Outperform the market (maintained rating) [9] Core Insights - The pet industry is experiencing significant growth, with the Asia Pet Expo showcasing over 2,600 exhibitors and 20,000 brands, indicating a thriving market driven by globalization and innovation [2][13] - China's pet food exports have shown continuous growth, with 201,000 tons exported from January to July 2025, reflecting a year-on-year increase of 6.64% [14] - The pig farming sector is facing challenges, with the average pig price at 13.82 yuan/kg, a decrease of 3.63% from the previous week, and the average weight of pigs reaching a historical high [15][16] - The dairy sector is poised for a recovery, with the original milk price expected to rebound as production capacity decreases after a prolonged period of losses [17][18] - The poultry sector is focusing on breeding gaps, with a significant decline in the import of breeding chickens due to avian influenza concerns, which may impact future supply [19][20] - The planting sector emphasizes food security and the importance of biotechnology, with a focus on high-yield and resilient crop varieties [25] - The feed sector is recommended for investment, particularly in companies like Haida Group, which is expected to benefit from market recovery and increased market share [26] Summary by Sections Pet Sector - The Asia Pet Expo has reached a record scale of 310,000 square meters, highlighting the industry's vitality and innovation potential [2][13] - Pet food exports from China have increased, with a total of 201,000 tons exported in the first seven months of 2025, showing a year-on-year growth of 6.64% [14] - Recommended companies include pet food brands like Guibao Pet, Zhongchong Co., and Petty Co. [14] Pig Sector - The average pig price is currently at 13.82 yuan/kg, with a year-to-date low in profitability for pig farming [15][16] - The average weight of pigs is at a historical high, indicating supply pressures [15] - Recommended companies include leading pig farming firms such as Wens Foodstuffs Group and Muyuan Foods [16] Dairy Sector - Yuran Dairy reported stable performance with a revenue of 10.3 billion yuan, showing a year-on-year growth of 2.3% [17] - The dairy industry is expected to see a recovery as production capacity decreases [18] - Recommended companies include Yuran Dairy and China Shengmu Organic Milk [18] Poultry Sector - The poultry sector is facing challenges with breeding imports, particularly for white chickens, due to avian influenza [19][20] - Recommended companies include Shennong Development and Yisheng Livestock [20] Planting Sector - The focus is on food security and biotechnology, with an emphasis on high-yield and resilient crop varieties [25] - Recommended companies include Longping High-Tech and Dabeinong Technology Group [25] Feed Sector - Haida Group is highlighted as a key investment opportunity due to its increasing market share and performance [26] - The animal health sector is also recommended, particularly companies like Kexin Biological [27]

Core Viewpoint - The third Green Pasture Open Day event emphasizes the theme of "coexistence of all things and sustainable beauty," focusing on the construction of biodiversity-friendly pastures and the green transformation of China's livestock industry [1][3]. Group 1: Event Overview - The event took place on August 23 in Harbin, Heilongjiang, and involved deep practice and exchange around the theme of biodiversity-friendly pasture construction [1]. - Experts highlighted the importance of multi-party collaboration in driving high-quality development within the livestock sector [1]. Group 2: Research Findings - Liu Manhong, an associate professor from Northeast Forestry University, presented a biodiversity baseline survey report for the Shuangcheng Pasture, detailing a systematic investigation of plant, insect, and bird species [1][3]. - The report quantifies the harmonious coexistence of large-scale pastures with natural ecosystems, marking a significant step in understanding biodiversity levels [1]. Group 3: Ecological Advantages - The Shuangcheng Pasture benefits from its proximity to the Songhua River, which provides critical habitats for fish, amphibians, and waterfowl, enhancing regional ecological functions and biodiversity levels [3]. - The event showcased the collaborative efforts of academic institutions, enterprises, and social organizations in promoting ecological sustainability [3]. Group 4: Future Directions - The Shuangcheng Pasture has been designated as a pilot unit for biodiversity-friendly pasture projects, aiming to transition the livestock industry from traditional farming to an "ecology + farming" integrated model [5]. - Experts recommend that future livestock development should focus on the integrity and connectivity of ecosystems, emphasizing the need for scientific ecological design based on local environmental and biological characteristics [5].

Group 1 - The top three companies with the highest short positions as of August 15 are WuXi AppTec (02359), CATL (03750), and COSCO Shipping Holdings (01919), with short ratios of 14.92%, 14.41%, and 13.40% respectively [1][2] - The companies with the largest absolute increase in short positions are Heng Rui Medicine (01276), Yao Cai Securities (01428), and Modern Animal Husbandry (01117), with increases of 2.49%, 1.34%, and 1.31% respectively [1][2] - The companies with the largest absolute decrease in short positions are Ganfeng Lithium (01772), WuXi AppTec (02359), and Fourth Paradigm (06682), with decreases of -2.98%, -2.67%, and -2.28% respectively [1][2] Group 2 - The top ten companies with the highest short ratios include Ping An Insurance (02318) at 12.46%, Green Leaf Pharmaceutical (02186) at 12.36%, and Vanke Enterprises (02202) at 12.13% [2] - The companies with the most significant increases in short ratios include Heng Rui Medicine (01276) from 0.51% to 2.99%, Yao Cai Securities (01428) from 3.47% to 4.81%, and Modern Animal Husbandry (01117) from 4.74% to 6.05% [2] - The companies with the most significant decreases in short ratios include Ganfeng Lithium (01772) from 13.32% to 10.34%, WuXi AppTec (02359) from 17.59% to 14.92%, and Fourth Paradigm (06682) from 2.74% to 0.46% [2][3]

Core Viewpoint - The report from Guotai Junan indicates that the beef and dairy industries are entering a phase of supply-demand balance due to reduced supply pressures and improved demand conditions in the second half of 2025 [1][2]. Beef Industry Insights - The beef price has begun to reverse from low levels, with a projected increase in 2025 driven by supply reduction and decreased import pressures. Since the beginning of 2025, beef and live cattle prices have risen approximately 10% and 20% respectively from previous lows [1][4]. - The supply of beef cattle is expected to decrease due to ongoing losses in ranching, with a reported 2.1% year-on-year decline in national cattle inventory as of Q2 2025, totaling 99.92 million heads [4]. - The reduction in imported beef, which saw a 9.5% year-on-year decline in the first half of 2025, is anticipated to further support domestic beef prices [4]. Dairy Industry Insights - The price of raw milk has continued to decline, but a supply-demand balance is expected in the second half of 2025, aided by reduced dairy cow restocking and a recovery in demand [2]. - The implementation of a fertility subsidy policy in July 2025 is expected to boost dairy product consumption, alongside the introduction of new national standards for UHT milk, which will limit the use of reconstituted milk [2]. - The dairy industry is projected to see a strong upward trend in prices in 2026 due to the fading effects of previous expansion and a reduction in lactating cow restocking [2]. Profitability and Market Dynamics - The cyclical nature of the meat and dairy industries is expected to enhance the profitability of leading agricultural companies. A hypothetical 10% to 20% increase in milk prices could improve the gross margin of leading dairy companies by 6 to 10 percentage points [5]. - The valuation of breeding cattle and income from culling are expected to increase with a 20% to 40% rise in cattle prices, potentially adding 200 to 400 million yuan to the total income of leading ranching companies [5]. - Companies involved in both beef and dairy sectors, such as Aoyuan Group and China Shengmu, are likely to benefit directly from the recovery in live cattle prices and the reversal of milk prices [5].

Group 1 - The core viewpoint is that raw milk prices continue to decline, and there is potential for supply-demand balance in H2 2025 due to accelerated herd reduction and improved demand during peak seasons [2][3] - The report suggests that the dairy industry is likely to see a price increase in 2026, driven by reduced dairy cow replenishment and a recovery in demand, supported by new policies aimed at boosting dairy consumption [2][3] - The beef market is expected to enter an upward cycle in 2025, as low beef prices have started to reverse, benefiting from reduced supply and diminished import pressures [3][4] Group 2 - The report highlights strong profit elasticity for livestock companies due to the resonance of meat and milk cycles, with potential improvements in gross margins driven by rising milk prices and cost reductions [4] - The valuation of breeding cows and income from culling are expected to increase with rising beef prices, which could enhance total revenue for leading livestock companies [4] - Companies like YouRan Dairy and Modern Farming are recommended for investment, while China Shengmu and Aoyuan Group are noted as companies to watch due to their involvement in the livestock sector [1][4]

Group 1 - The core viewpoint is that raw milk prices continue to decline, and by the second half of 2025, supply and demand are expected to balance, benefiting the dairy industry [1] - In the procurement season of August-September, the financial pressure on farms is significant, leading to an accelerated reduction in livestock numbers [1] - The implementation of the fertility subsidy policy in July 2025 is expected to boost dairy product consumption demand [1] Group 2 - Beef prices are reversing from low levels, entering an upward cycle in 2025 due to reduced supply and diminished import impacts [2] - The beef market has experienced three cycles, with the current cycle characterized by a decline in beef prices since 2023, primarily due to low-priced imported beef and increased domestic production [2] - The national cattle inventory decreased by 2.1% year-on-year to 99.92 million heads in Q2 2025, indicating a tightening supply [2] Group 3 - The resonance of the meat and dairy cycles provides strong profit elasticity for livestock companies, with potential gross margin improvements of 6% to 10% for leading dairy firms if milk prices increase by 10% to 20% [3] - The valuation of breeding cows and income from culling are expected to improve with a 20% to 40% increase in beef prices, potentially adding 200 million to 400 million yuan to total income for leading livestock companies [3] - Companies involved in beef operations, such as Australia Asia Group and China Shengmu, are likely to benefit directly from the rebound in live cattle prices [3]