中国圣牧 20250718 摘要 中国有机奶市场需求增长，圣牧作为中国最大的有机牧场，受益于消费 者对高端、健康产品的需求，市场前景乐观，人均消费水平提升将进一 步推动有机奶市场发展。 原奶价格自 2021 年以来持续下滑，但降幅收窄，预计产能出清接近尾 声，奶价有望企稳，利好圣牧成母牛估值及利润增长。牛肉价格自 2023 年起回升，得益于反倾销政策和供给短缺，将显著改善圣牧的利 润表现。 预计圣牧 2025 年仍可能亏损，但 2026 年保守估计可实现约 4 亿元利 润，对应 PE 约为 5 倍，估值显著低于同行，股价弹性空间大。公司通 过分散式管理多个中小型牧场实现规模经济，有效控制成本。 国内上游养殖资源稀缺，规模化是必然趋势。圣牧与蒙牛绑定股权结构， 确保奶源供应稳定，聚焦有机乳业，毛利率维持在 30%左右，财务报表 质量和现金比率表现优异。 圣牧原料奶销售单价常年维持在 4 元左右，特色奶（有机、A2、娟姗） 占比高，使其在价格下行周期表现出更好的防守性和经营韧性。地理资 源优势和与蒙牛的合作关系是其独特竞争优势。 Q&A 中国圣牧作为国内有机奶的龙头企业，其主要业务和市场前景如何？ 中国乳制品加工 ...

国内有机原奶龙头，专注上游牧场经营。中国圣牧是首家获得中国和欧盟有机标准双认证的原奶品牌， 享有多项行业桂冠。公司业务涵盖整个乳品行业价值链，包括牧草种植、奶牛养殖到生产原料奶以及加 工生产高端液态奶产品，目前也是我国规模最大的有机原料奶生产商。同时公司通过股权深度绑定下游 乳企，一方面可以平抑原奶价格周期给生产经营活动带来的不确定性，一方面亦可获得下游乳企的支 持，目前蒙牛集团持有公司29.99%股份，是公司最大股东。 随人均消费水平的提升，高端有机牛奶市场预计将持续扩容。有机牛奶在饲料来源、奶牛饲养方式到牛 奶处理方面，都有着更严格的标准，成本和价格相对较高，但其顺应了消费者对绿色、健康食品的追 求，成为液态奶消费升级的热门方向。中国圣牧地处内蒙古乌兰布和沙漠，这里是行业内公认的黄金奶 源地。基于这一得天独厚的地理优势，圣牧实现了从草场到餐桌的全程有机生产，这种模式较为罕见， 能够有效保障牛奶的品质和安全，而最高级别的食品安全等级则是其核心竞争力。预计随着未来沙漠资 源开发难度的增加，地理资源带来的行业壁垒将更加坚固。 机构：华源证券 研究员：张东雪/林若尧 奶价、牛价底部反转，有望带来较强的基本面弹性。 ...

Group 1: Fixed Income Market Insights - The domestic economic recovery shows continued differentiation, with resilient consumer market recovery and ongoing growth in logistics volume [2][7] - As of July 11, the average duration of long-term government bonds has risen to approximately 5.4 years, while the average duration of credit bonds remains stable at about 2.2 years [8][9] - The report suggests a narrow fluctuation in interest rate bonds for Q3 2025, with a bullish outlook on long-term municipal and capital bonds [9][14] Group 2: Financial Data Overview - In June 2025, new loans amounted to 2.24 trillion yuan, and social financing reached 4.2 trillion yuan, with M2 growing by 8.3% year-on-year [11][13] - The report indicates a significant increase in social financing growth, with a year-on-year increase of 8.9% [12][13] - The report anticipates a slight increase in new loans for 2025, driven by government bond financing and credit [11][13] Group 3: Company-Specific Insights - China Shengmu (01432.HK) - China Shengmu is the first organic raw milk brand to obtain dual certification from China and the EU, and it is the largest organic raw milk producer in China [22][23] - The company is expected to benefit from the expansion of the high-end organic milk market as consumer demand for healthy food increases [23][24] - The report forecasts a significant recovery in profits due to the anticipated stabilization of milk and beef prices, which have previously negatively impacted the company's financial performance [23][24] Group 4: Company-Specific Insights - Crystal Technology (603005.SH) - Crystal Technology is a leading supplier of WLCSP advanced packaging, focusing on CMOS image sensor chips and expanding into new fields such as optical devices and GaN devices [25][26] - The company is expected to see revenue growth driven by the increasing demand for automotive CIS, with a projected revenue of 1.13 billion yuan in 2024, representing a year-on-year growth of 23.72% [25][26] - The report highlights the company's strong competitive advantage with a gross margin of 43.28%, which is significantly higher than its peers [26][28]

Investment Rating - The investment rating for the company is "Buy" (首次) [3] Core Views - The company is a leading organic raw milk producer in China, with a fundamental reversal expected [3] - The company has obtained dual certification for organic standards from China and the EU, making it a prominent player in the organic milk market [6] - The company operates across the entire dairy value chain, from pasture planting to raw milk production and high-end liquid milk processing [6] - The high-end organic milk market is anticipated to continue expanding due to rising consumer demand for healthy food options [6] - The company benefits from a unique geographical advantage in Inner Mongolia, recognized as a prime milk source region [6] - A rebound in milk and beef prices is expected to enhance the company's fundamental performance [6] Financial Forecasts and Valuation - Revenue projections for the company are as follows: - 2023: 3,383.63 million RMB - 2024: 3,126.18 million RMB - 2025E: 2,989.43 million RMB - 2026E: 3,207.90 million RMB - 2027E: 3,447.21 million RMB - The expected growth rates show a decline in 2024 and 2025, followed by a recovery in 2026 and 2027 [4] - The projected net profit for 2025 is -47.31 million RMB, with a significant recovery expected in 2026 and 2027 [4] - The company’s price-to-earnings ratio (P/E) for 2026 is estimated at 5.51, significantly lower than the average P/E of comparable companies at 9.6 [6]

Summary of China Shengmu's Conference Call Industry Overview - The raw milk market price in the first half of 2025 is higher than the same period last year, alleviating some financial pressure on companies and delaying the industry's exit speed [2][3] - The industry exit is characterized by a staggered approach, with different types of farms exiting at different stages, leading to a slowdown in overall exit speed [2][3] - The market anticipates a turning point in milk prices in Q3 2025, prompting many farms to continue operations instead of exiting immediately [2][3] Company Insights - China Shengmu's high-quality raw milk products (including organic milk, DHA, A2) account for over 80% of its offerings, primarily supplying Mengniu, with 85% of sales directed to them [2][8] - A three-year strategic agreement and annual milk sales agreement with Mengniu are in place, with milk prices following market trends without locking in prices [2][10][11] - The price of specialty milk has decreased slightly but remains above 4 RMB, with last year's average milk price around 4.4 RMB, showing a decline of less than a single-digit percentage [2][12] - The company expects its annual revenue to remain flat or see slight growth compared to last year, with profits dependent on milk and beef prices in the second half of the year [2][14] Financial Performance - The cash flow situation for the first half of 2025 is stable or slightly down due to lower milk prices, but free cash flow has improved due to reduced investment spending [2][20] - The company is currently in a cash loss state when considering the costs of raising calves, with an average milk price of 4.4 RMB and cash operating costs around 3 RMB [2][7] - The overall milk sales cost is high, particularly due to a large proportion of replacement calves, which increases cash pressure [2][25] Market Dynamics - The supply and demand dynamics are expected to change, with potential market clearing in Q3 2025 now anticipated to be pushed to Q3 2026 [2][26][27] - Factors that could accelerate market clearing include cash flow issues leading to liquidity problems for large farms and significant increases in beef prices [2][28] - The demand for high-end dairy products, especially organic products, continues to grow, with Mengniu's order demand remaining stable [2][15][17] Future Outlook - China Shengmu has no plans for expansion and aims to maintain its current scale while improving efficiency and reducing costs [2][4][18] - The company plans to gradually increase its dividend payout ratio to 30%, depending on profit and cash flow improvements [2][19] - The proportion of breeding cows is expected to increase gradually, contributing positively to production levels [2][30] Additional Considerations - The company does not track overall industry data closely, focusing instead on maintaining quality and meeting supply agreements with core customers [2][5] - The cash cost of feed is approximately 2.65 RMB, slightly above the industry average due to the use of organic feed [2][8]

Summary of China Shengmu's Conference Call Company Overview - **Company**: China Shengmu - **Industry**: Organic Dairy Farming - **Market Position**: One of the largest suppliers of desert organic raw milk in China, holding approximately 35%-40% market share alongside Yili's YouRan Dairy [2][4]. Strategic Transformation - **Focus Shift**: Transitioned from a full-chain dairy product company to specializing in upstream cattle farming, selling downstream operations to Mengniu in 2019 [4]. - **Current Strategy**: Concentration on desert organic raw milk production, maintaining a stable customer base with 85% of raw milk sales to Mengniu [2][6]. Financial Performance - **Profitability Amid Price Decline**: Despite a downward trend in milk prices since 2021, China Shengmu has maintained a price premium of approximately 30% for organic raw milk compared to regular raw milk, helping sustain profit margins [5]. - **Cost Control**: Average selling price of raw milk in 2024 is projected at 4.4 RMB per kg, exceeding the industry average by about 1 RMB, with total costs controlled at around 3.31 RMB per kg [10]. - **Debt and Expense Ratios**: The company has a debt ratio of about 50% and a low expense ratio of less than 0.4 RMB per kg, indicating a solid financial position [8]. Cattle Management - **Herd Composition**: As of 2024, the company has approximately 157,000 cattle, with 147,000 being dairy cows. The proportion of breeding cows is about 42%, which is lower than the industry average, allowing for potential growth when milk prices recover [7]. - **Valuation of Cattle**: The average valuation per cow is less than 20,000 RMB, not fully reflecting the organic certification value, indicating significant asset appreciation potential in a market upturn [9]. Market Dynamics - **Beef Price Impact**: Rising beef prices positively affect profits through increased cash recovery from culling cows and direct profitability from beef operations. The price of culled cows has risen from under 500 RMB to approximately 1,000-1,200 RMB per head [14]. - **Culling Strategy**: The company plans to maintain a culling rate of about 70,000 dairy cows annually, with a focus on retaining more heifers to enhance future production capacity [41]. Industry Challenges - **Current Market Conditions**: The dairy industry is facing cash flow challenges due to low milk prices and high operational costs, leading to widespread losses among farms [12][13]. - **Future Price Outlook**: It is unlikely that milk prices will return to the highs of 2021 due to weaker demand and structural changes in the industry [32][33]. Future Prospects - **Production Growth**: The company anticipates a modest annual growth of 5%-7% in herd size under current market conditions, with no significant expansion plans due to market uncertainties [40]. - **Investment in Genetics**: Recent imports of high-quality dairy cattle are expected to improve herd quality and production efficiency in the long term [38]. Additional Insights - **Cash Flow Assessment**: The evaluation of cash flow is primarily based on free cash flow, which includes regular milk sales and capital expenditures related to raising calves [20][21]. - **Market Recovery Potential**: The company remains cautiously optimistic about future profitability, contingent on market recovery and improved demand dynamics [40]. This summary encapsulates the key points from the conference call, highlighting the strategic direction, financial health, market dynamics, and future outlook of China Shengmu in the organic dairy industry.

Summary of the Conference Call Company and Industry Overview - The conference call discusses the dairy industry in China, specifically focusing on the company China Shengmu (中国圣牧) and its operations in the dairy farming sector, including milk and beef cattle production. Key Points and Arguments Dairy Cattle Market Dynamics - **Slower Culling Rate**: The culling rate of dairy cows has slowed down due to stable sales channels, alleviated cost pressures, high raw milk prices, and rising beef prices. The market turning point may be delayed until 2026 [2][3][4]. - **Raw Milk Prices**: The price of raw milk is expected to remain low, with some farms potentially opting for quicker culling under current beef prices [5][6]. - **Profitability Challenges for Social Farms**: Social farms face significant profitability challenges, with a breakeven point around 3 RMB/kg for raw milk. Including calf costs leads to widespread losses [2][7][8]. Beef Cattle Market Influence - **Rising Beef Prices**: Beef prices have increased from 14-15 RMB/kg to approximately 19 RMB/kg, prompting some farms to cull inefficient dairy cows. However, some farmers are holding out for a milk price recovery [9][10]. - **Market Strategy Adjustments**: Social farms are adjusting their strategies more flexibly, with some opting to shift towards beef cattle farming due to better market certainty [9][12]. Financial and Credit Environment - **Tightened Bank Credit Policies**: Banks have become stricter with credit policies compared to last year, although support may still be available for farms with stable sales channels [14][15]. - **Feed Supply Issues**: Many social farms faced low feed reserves last year, leading to feed shortages and potential quality issues [16][17]. Market Expectations and Price Fluctuations - **Divergent Expectations on Milk Price Recovery**: There are differing opinions on when milk prices will recover, with some expecting a rise in Q3 or Q4 of 2025, while others believe it may take longer [4][18]. - **Impact of Downstream Dairy Companies**: The strategy of downstream dairy companies regarding milk collection significantly impacts farm cash flow, often more than milk price fluctuations [4][20]. Cost Structures and Profitability - **Cash Cost Composition**: The cash cost of fresh milk is complex, with current costs around 2.3-2.4 RMB/kg excluding calves, and approximately 3 RMB/kg including calves [35][36]. - **Profitability Under Current Prices**: At current milk prices (around 3 RMB/kg), farms are likely operating at a loss, with losses estimated between 0.1 to 0.5 RMB/kg depending on calf numbers [36]. Future Outlook - **Potential for Price Stabilization**: If demand conditions do not change significantly, a clear turning point in the fresh milk market is unlikely in the short term, with potential stabilization only expected in early 2026 [5][23]. - **Beef Price Impact on Industry**: A significant increase in beef prices in 2025 could positively affect the entire industry, while stable prices would maintain market balance [32]. Specialty Milk Products - **Organic and Specialty Milk**: The company has a strong focus on organic milk, with about 75-80% of its products being organic. The company aims to increase the proportion of specialty milk to counteract low ordinary milk prices [42][43]. Other Important Insights - **Market Structure and Trends**: The average dairy cow's production cycle and culling age are around 2.9 lactations and 5 years, respectively, indicating a relatively short production cycle driven by economic factors [40][41]. - **A2 Milk Production**: A2 milk production has lower barriers but currently faces limited market demand, with only one farm producing it [44][45]. This summary encapsulates the key insights from the conference call, highlighting the challenges and dynamics within the dairy industry, particularly for China Shengmu.

Production and Capacity - By the end of the reporting period, China Shengmu owned 34 farms with a total of 144,000 dairy cows and a daily fresh milk production of approximately 2,015 tonnes, achieving an annual production capacity of 600,000 tonnes of ecological organic raw milk[4]. - As of December 31, 2024, the Group owned 144,448 cows, including 62,842 milkable cows, and sold a total of 699,803 tonnes of raw milk, representing a slight decrease of 1.6% year-on-year[25][26]. - The Group produced 2,015 tonnes of raw fresh milk per day in 2024, with 21 organic certified farms contributing 1,534 tonnes per day[52][55]. - The Group's herd size increased by 5.7% to 156,481 cows as of December 31, 2024[53][56]. - The average milk yield per milkable cow reached 12.05 tonnes in 2024, representing a year-on-year increase of 0.67 tonnes[58]. Financial Performance - Revenue for the year was RMB 3,126.2 million, reflecting a year-on-year decrease of 7.6% due to declining raw milk prices[25][26]. - The total sales revenue for 2024 was RMB 3,126.2 million, representing a year-on-year decrease of 7.6% from RMB 3,383.6 million in 2023[90]. - The gross profit for 2024 was RMB 925.9 million, down from RMB 1,025.0 million in 2023, with a gross profit margin of 29.6% compared to 30.3% in the previous year[94]. - The average sales price of the Group's comprehensive raw milk was RMB 4.47/kg, reflecting a year-on-year decrease of RMB 0.29/kg[63]. - The loss attributable to owners of the parent company was RMB 65.5 million in 2024, a decrease of RMB 151.6 million compared to a profit of RMB 86.1 million in 2023[121]. Cost Management - The cost of sales per kilogram of milk decreased by 5.2% year-on-year, benefiting from lower feed prices and internal cost control measures[25][26]. - The sales cost per kilogram of milk in 2024 was RMB 3.14/kg, with feed costs at RMB 2.54/kg, representing a year-on-year decrease of RMB 0.11/kg[64]. - Administrative expenses decreased by 8.3% year-on-year to RMB 152.6 million in 2024, accounting for 4.88% of sales revenue[105]. - Selling and distribution expenses decreased by 21.8% to RMB 49.1 million from RMB 62.7 million in 2023 due to cost optimization strategies[100]. Sustainability and Ecological Initiatives - The company has transformed 350,000 mu of desert into high-quality pasture and planted over 98 million sand-fixing trees, creating a robust ecological environment[3]. - China Shengmu's end-user brand organic milk won the Gold Award at the 17th Asia International Organic Product Expo, highlighting its commitment to sustainable practices[6]. - The company has built 11 reservoirs, 9 organic manure fermentation plants, and 1 bio-organic fertilizer processing plant to support its ecological initiatives[3]. - The Group's unique ecological model integrates desert governance with the organic dairy industry, contributing to sustainable development[79]. - The Group was recognized by the United Nations Global Compact for its best practices in "Sustainable Production and Consumption"[6]. Market Trends and Industry Challenges - The dairy industry in China is experiencing increased concentration, with small and medium-sized farms being phased out, leading to a dominance of large-scale and standardized farms[21]. - The supply-demand situation in the industry remains severe, but the Group maintains a firm belief in refining management and aligning with government strategies[156]. - In 2024, China's total raw milk production was 40.79 million tonnes, a year-on-year decrease of 2.8%, marking the first decline since 2018[49][50]. - The average price of raw fresh milk in primary producing regions was RMB 3.11/kg by the end of December 2024, a decrease of 15.0% compared to the previous year[49][50]. Strategic Focus and Future Outlook - Looking forward to 2025, the Group anticipates improved consumption growth in dairy products, supported by government initiatives to boost consumption[33]. - The Group's strategic focus includes sustainable development and enhancing corporate value amidst industry challenges[28][30]. - The Group aims to ensure the growth of Mengniu's Deluxe Desert Organic business with high quality as a core business goal for 2025[156]. - The Group will focus on comprehensive cost control, efficiency improvement, environmental protection upgrading, and water resource guarantee to achieve operational breakthroughs[156]. Debt and Financing - The gearing ratio was maintained at 50.7%, with a credit facility of RMB 10 billion, ensuring solid liquidity[28][30]. - The proportion of long-term loans increased to 57.3% in 2024, up from 51.4% in 2022[38]. - The annual average financing rate decreased to 2.44% in 2023 from 2.67% in 2022[40]. - The Group maintained a credit limit of RMB 10 billion in 2024, with a stable credit utilization rate of less than 30%[124]. Employee and Operational Efficiency - The Group's total employee costs decreased to RMB 326.8 million in 2024 from RMB 377.4 million in 2023, despite a reduction in total employees from 2,701 to 2,217[84]. - The Group's refined cost management and risk governance capabilities were enhanced through its digitalization efforts[74]. - The Group's "Cow Identification + AI Model Algorithm" and the industry-level "Cow Milk Calibration Model" achieved over 95% accuracy, enhancing individual cow efficiency management[74]. Awards and Recognition - The Group's organic products won the Gold Award at the Asian Organic Expo, reinforcing its commitment to high-quality organic practices[73]. - The Group achieved 100% ESG disclosure for three consecutive years and received a comprehensive "B-level" certification from the Carbon Disclosure Project (CDP) in climate change, water security, and forest risk[79]. - The Group's Electronic Records Management System won the "Digital Intelligence Pioneer Product - Best Practice Award," accelerating its digital transformation[74].

Core Points - China Shengmu (01432) reported a loss attributable to shareholders of 65.495 million yuan for 2024, a shift from profit to loss year-on-year [1] - The company's operating revenue was approximately 3.374 billion yuan, a decrease of 4.1% compared to the previous year [1] - Sales revenue fell to 3.126 billion yuan, down 7.6% year-on-year [1] Financial Performance - The average selling price of raw milk decreased by 6.1% to 4,467 yuan per ton, compared to 4,756 yuan per ton in 2023 [1] - Total raw milk production increased by 1.6% despite a decline in the number of lactating cows [1] - The total volume of raw milk sold was 700,000 tons, a slight decrease of 1.6% from 711,000 tons in 2023 [1] Operational Strategies - The company implemented flexible operational strategies, focusing on refined feeding systems for calves and converting raw milk into whole milk powder [1] - Cost reduction and efficiency improvement measures led to a 5.2% decrease in the cost of milk sales per kilogram [2] - The average milk yield per lactating cow increased by 5.9%, surpassing the historical threshold of 12 tons [2] Market Conditions - The dairy product market faced an oversupply situation, leading to a continuous decline in raw milk prices [1] - The company aims to uphold public health by committing to high-quality organic food, being the first dairy farming enterprise in China to obtain ISO22000 food safety management system certification [2]

Financial Performance - For the fiscal year ending December 31, 2024, the company's operating revenue decreased by 4.1% to RMB 3,374,327,000 compared to RMB 3,520,212,000 in 2023[3] - Sales revenue fell by 7.6% to RMB 3,126,184,000 from RMB 3,383,629,000 in the previous year[3] - The company reported a gross profit of RMB 925,890,000, down 9.7% from RMB 1,025,020,000 in 2023[3] - The net loss attributable to equity holders of the parent was RMB 65,495,000, compared to a profit of RMB 86,076,000 in the previous year[3] - Cash EBITDA decreased by 3.3% to RMB 957,843,000 from RMB 991,013,000 in 2023[3] - In 2024, the company achieved a total sales revenue of RMB 3,126.2 million, a decrease of 7.6% compared to RMB 3,383.6 million in 2023[62] - The company reported a loss attributable to equity holders of RMB 65,495 thousand for 2024, compared to a profit of RMB 86,076 thousand in 2023[35] - The company experienced a loss of RMB 807.3 million from changes in the fair value of biological assets, an increase of RMB 101.0 million compared to RMB 706.3 million in 2023[65] Cost Management - The cost of milk sold per kilogram decreased by 5.2% to RMB 3.14 from RMB 3.32 in the previous year[5] - The cost of goods sold for the year ended December 31, 2024, was RMB 2,200,294 thousand, compared to RMB 2,358,609 thousand in 2023, indicating a reduction in costs[30] - The total employee benefit expenses for 2024 were RMB 326,791 thousand, a decrease from RMB 377,381 thousand in 2023[32] - The company reduced logistics costs by 21.8%, with sales and distribution expenses falling to RMB 49.1 million in 2024 from RMB 62.7 million in 2023[67] Asset and Liability Management - Non-current assets totaled RMB 6,342,946,000 as of December 31, 2024, a slight decrease from RMB 6,361,869,000 in 2023[15] - Current assets amounted to RMB 2,121,306,000, down from RMB 2,155,042,000 in the previous year[15] - Total liabilities decreased to RMB 4,288,460,000 in 2024 from RMB 4,280,656,000 in 2023, indicating a stable financial position[16] - The company reported a net current liability of RMB 517,847,000, improved from RMB 867,205,000 in 2023, reflecting better liquidity management[22] - The company's non-current liabilities rose to RMB 1,649,307,000 in 2024, up from RMB 1,258,409,000 in 2023, indicating increased long-term borrowing[16] - The total bank borrowings increased to RMB 2,274,285,000 in 2024, up by 6.7% from RMB 2,131,239,000 in 2023[40] - As of December 31, 2024, total bank borrowings amounted to RMB 22,743 million, an increase from RMB 21,312 million in 2023, with net debt rising by 14.8% to RMB 12,090 million[77] Equity and Dividends - Total equity decreased slightly to RMB 4,175,792,000 in 2024 from RMB 4,236,255,000 in 2023, reflecting a minor decline in shareholder value[16] - The company did not recommend a final dividend for the fiscal year ending December 31, 2024, compared to a dividend of HKD 0.23 in 2023[3] - The proposed final dividend for the year ended December 31, 2023, is RMB 17,588 thousand, significantly lower than RMB 87,184 thousand in 2022[33] - The board does not recommend a final dividend for the fiscal year ending December 31, 2024, maintaining the previous year's dividend of 0.23 HKD[95] Operational Efficiency - The company achieved a 5.9% increase in milk yield per dairy cow to 12.05 tons per year, up from 11.38 tons[5] - Daily fresh milk production for the group reached 2,015 tons in 2024, with 21 organic certified farms producing 1,534 tons[47] - The average milk production per dairy cow reached 12.05 tons, an increase of 0.67 tons year-over-year, marking the highest level since the company's establishment[50] - The group strategically optimized its herd structure, increasing the culling rate of less productive cows while maintaining high breeding performance indicators[52] Market and Industry Trends - The average price of fresh milk in major producing provinces was RMB 3.11 per kilogram by the end of December 2024, down 15.0% year-on-year[45] - The total production of raw milk in China decreased by 2.8% in 2024, marking the first decline since 2018, with a total output of 40.79 million tons[45] - The total imports of dairy products decreased by 9.5% in 2024, totaling 2.768 million tons, marking the third consecutive year of decline[44] - The Engel coefficient for household consumption remained stable at 29.8%, indicating consistent consumer spending patterns[43] Sustainability and Corporate Governance - The company has made significant progress in digital transformation, developing an industry-first milk yield calibration model with over 95% accuracy[6] - The company joined the World Business Council for Sustainable Development (WBCSD) in 2024, enhancing its commitment to sustainable development and ESG practices[55] - The company is committed to sustainable development and plans to leverage its experience in ESG to provide more sustainable solutions in the future[57] - The company maintained compliance with all applicable environmental protection laws and regulations in 2024[84] - The company has adopted and complies with the corporate governance code as per the Hong Kong Stock Exchange regulations[90] Future Outlook - The company aims to enhance the organic milk business growth as a core objective for 2025, focusing on high-quality raw milk supply[89] - The company plans to strengthen the construction of five major milk source bases to support the liquid milk industry[89] - The company will continue to improve management and align with government strategies to meet public demand and enhance corporate value[89]