Investment Rating - The report maintains a "Recommendation" rating for the food and beverage industry, expecting the industry index to outperform the benchmark index by over 5% in the next 3-6 months [24]. Core Insights - The Ministry of Commerce has announced a countervailing policy against EU dairy imports, which is expected to accelerate domestic product substitution and stabilize raw milk prices. The policy will impose temporary countervailing measures on EU dairy products starting December 23, 2025, with subsidy rates ranging from 21.9% to 42.7% [2][8]. - The policy targets high-fat dairy products, particularly cheese and cream, which have a high dependency on imports. This is expected to significantly increase the cost of EU products, thereby enhancing the price advantage for domestic manufacturers [8]. - The domestic dairy processing industry has historically relied on imports due to high raw milk costs and immature technology. The report estimates that the domestic production of similar products accounted for only 14%-18% in 2023, indicating a substantial market opportunity for local producers [8]. Summary by Sections Industry Overview - The food and beverage industry comprises 126 listed companies with a total market capitalization of 46,266.30 billion and a circulating market value of 45,144.74 billion [5]. Market Performance - The absolute performance of the industry over the past month is -2.1%, with a 6-month performance of 2.7% and a 12-month performance of -4.9%. Relative performance shows a decline of -5.9% over one month, -17.1% over six months, and -22.4% over twelve months [6]. Policy Impact - The countervailing measures are expected to create a market space of approximately 20 billion for cream and 14 billion for cheese, accelerating domestic substitution. The report highlights that the production capacity of deep processing projects is expected to consume over 400 million tons of raw milk, potentially leading to a reversal in the raw milk cycle by the second half of 2026 [8]. Investment Opportunities - The report identifies three main investment opportunities: - Domestic substitutes that will directly benefit from the policy, with a focus on companies like Lihigh and Miaoke, which are positioned to capture high-end market segments [8]. - Dairy farms such as Youran and Modern Dairy, which are expected to benefit from a reversal in raw milk prices [8]. - Leading dairy companies like Yili and Mengniu, which are anticipated to strengthen their competitive edge through accelerated deep processing business and improved operational stability [8].

Core Viewpoint - The Chinese Ministry of Commerce has imposed temporary anti-subsidy tariffs of up to 42.7% on EU dairy products, significantly impacting French companies and altering the global trade landscape [1][3][5]. Group 1: Tariff Details - The temporary anti-subsidy tariffs are categorized into three tiers: 21.9% to 42.7% for sampled companies cooperating with the investigation, a uniform rate of 28.6% for other cooperating EU companies, and a maximum rate of 42.7% for non-cooperating companies [1][3]. - The affected dairy products include fresh cheese, processed cheese, blue cheese, and cream, excluding infant formula [3][5]. - The new tariffs increase the effective tax rates on EU cheese exports to China by over 20 percentage points, with some products exceeding a total tax rate of 50% [3][5]. Group 2: Background and Investigation - The trade dispute began with a complaint from the China Dairy Industry Association in August 2024, leading to an investigation into EU subsidies affecting Chinese dairy companies [5][10]. - The investigation revealed that EU subsidies under the Common Agricultural Policy have significantly harmed Chinese dairy producers, with EU dairy exports to China reaching €1.7 billion in 2023, accounting for over 30% of China's total dairy imports [5][10]. Group 3: Impact on Companies - French dairy companies, particularly those producing high-end products like Roquefort and Camembert, are expected to face severe impacts, with prices for French cheese in China projected to rise by 30% to 50% [8][12]. - New Zealand is positioned to benefit significantly from this trade dispute, as it currently supplies 60% of China's cheese imports, and the new tariffs will likely allow New Zealand to capture the market share left by EU products [12][14]. - Domestic dairy companies in China, such as Yili and Mengniu, are expected to accelerate their production capabilities in response to the tariff changes, with Yili planning to expand its cheese production lines [12][14].

1 設立 公司的董事會（「董事會」）現組成和設立提名委員會（「提名委員會」），其權限、 責任和具體職責如下。 2 成員 3 秘書 提名委員會的秘書（「提名委員會秘書」）應由公司的公司秘書或提名委員會不時指定 的任何其他人士擔任。 4 權限 中國蒙牛乳業有限公司（「公司」） 提名委員會的職權範圍 5.1 提名委員會的職責包括： (a) 至少每年檢討董事會的架構、人數、組成（包括技能、知識及經驗方面）和多元 化程度（考慮因素包括性別、年齡、文化及教育背景、種族、專業、行業或管理 經驗、技能、知識及服務任期）、協助董事會編制董事會技能表，並就任何為配 合公司的策略和目標而擬對董事會作出的變動提出建議； (b) 將按人選的長處，物色具備合適資格可擔任董事的人士，並在考慮人選時以客觀 條件充份顧及董事會成員多元化的禆益，挑選提名有關人士出任董事或就此向董 事會提供意見； (c) 審議董事會的工作表現，評核獨立非執行董事的獨立性及審閱獨立非執行董事各自 對獨立性所作的確認； (d) 就董事委任或重新委任以及董事（尤其是公司主席及行政總裁）繼任計劃向董事 會提出建議並就繼任計劃作定期審閱； (e) 支援公司定期評估董事會表 ...

Group 1 - The Anhui Provincial Market Supervision Administration conducted a special sampling inspection of 200 batches of food products based on consumer feedback, focusing on 16 categories including edible oils, dairy products, and frozen foods [2] - Out of the 200 samples tested, 197 were found to be compliant with national food safety standards, while 3 samples were deemed non-compliant [2] - Local market supervision departments have initiated verification and disposal actions for the non-compliant food products identified during the inspection [2] Group 2 - The inspection included a wide range of food categories such as condiments, beverages, canned foods, and agricultural products, reflecting a comprehensive approach to food safety [2] - Specific non-compliant products included items with excessive bacterial counts and aluminum residue, indicating potential health risks associated with these products [2][3] - The announcement emphasizes the commitment of the Anhui Provincial Market Supervision Administration to ensure food safety and consumer protection [2]

Group 1 - Dairy stocks showed significant activity in early trading, with Modern Dairy (01117) up 3.42% at HKD 1.51, Original Ecology Dairy (01431) up 2.88% at HKD 0.25, Mengniu Dairy (02319) up 1.5% at HKD 15.56, and China Feihe (06186) up 1.42% at HKD 4.28 [1] - The Ministry of Commerce announced that starting from December 23, 2025, temporary countervailing duties will be imposed on imported dairy products from the EU, which is expected to benefit domestic dairy producers [1] - Changjiang Securities indicated that with the growth in domestic product demand and low-cost domestic milk prices, the domestic substitution of deep-processed products is likely to accelerate [1] Group 2 - Zhongyou Securities noted that the government is releasing policies to stimulate demand, including the National Healthcare Security Administration's goal for "no out-of-pocket" expenses for childbirth by 2026, along with local childcare subsidies [1] - The Ministry of Commerce and other departments are working to enhance coordination between commerce and finance to boost consumption [1] - After previous capacity adjustments and accelerated reduction in dairy cow inventory, raw milk prices have stabilized, and a supply-demand turning point is expected in 2026, increasing the certainty of rising milk prices [1]

Core Viewpoint - The dairy sector is experiencing active trading, with several companies showing positive stock performance amid new government policies aimed at boosting domestic demand and stabilizing prices [1] Group 1: Stock Performance - Modern Dairy (01117) increased by 3.42%, trading at HKD 1.51 [1] - Original Ecology Dairy (01431) rose by 2.88%, trading at HKD 0.25 [1] - Mengniu Dairy (02319) saw a 1.5% increase, trading at HKD 15.56 [1] - China Feihe (06186) gained 1.42%, trading at HKD 4.28 [1] Group 2: Government Policies - The Ministry of Commerce announced temporary countervailing measures on dairy products imported from the EU, effective December 23, 2025 [1] - Jiangsu Securities noted that the domestic demand for related products is increasing, and low domestic milk prices are expected to accelerate the domestic substitution of deep-processed products [1] Group 3: Market Outlook - Zhongyou Securities highlighted that policy measures are being released to stimulate demand, including a goal for "no out-of-pocket" expenses for childbirth by 2026 and local subsidies for childcare [1] - After previous capacity adjustments, the reduction in dairy cow inventory is accelerating, and raw milk prices have stabilized, indicating a potential supply-demand turning point in 2026 [1]

Investment Rating - The report maintains a "Buy" rating for the industry, with an upward adjustment in profit forecasts for key companies like Yili and Mengniu [13]. Core Insights - The dairy industry in China is experiencing a prolonged down cycle in raw milk prices due to rigid supply and weak demand, with prices expected to fall below production costs by July 2024 [1][2]. - The core dairy product categories have seen a decline in both volume and price since 2021, leading companies to adopt discount promotions to reduce inventory, further lowering raw milk purchase prices [1][4]. - The potential for a market reversal in raw milk prices may arise from the active elimination of high-yield farms and the loss of cost-effectiveness of imported bulk powder [5]. Summary by Sections Industry Overview - From 2018 to 2021, China's milk production increased, with fresh milk prices growing at a compound annual growth rate (CAGR) of 6.4%, while imported milk powder prices fell by 5% [1][2]. - The current supply-demand imbalance is exacerbated by high production costs and a significant number of farms facing prolonged losses [1][2]. Market Dynamics - The B-end dairy product consumption is growing rapidly, with fresh milk accounting for approximately 45% of this market, although it is currently dominated by imported brands [6]. - Domestic companies are accelerating their entry into the B-end market, benefiting from policy support and cost advantages [6]. Consumer Trends - There is a noticeable decline in demand for high-consumption categories like ambient milk and yogurt, with significant inventory pressures prompting companies to discount products [4][10]. - The trend towards low-temperature and health-oriented products is evident, with flavored milk beverages emerging as a new growth point [8][9]. Competitive Landscape - Yili has a stronger channel bargaining power compared to Mengniu, with a more efficient deep distribution model and a diversified strategy that has led to leading market shares in several segments [12]. - The report predicts stable performance for liquid milk over the next 2-3 years, while non-liquid dairy products are expected to achieve double-digit growth [13].

Core Insights - The Chinese dairy industry is at a critical juncture of consolidation and value enhancement, facing challenges such as overcapacity in long-life milk and fluctuating raw milk prices, while high-quality dairy products are increasingly in demand [2][3] - Mengniu has developed an innovative transformation path focusing on "basic research—technology transfer—product implementation—value creation," which is essential for building a competitive edge in the industry [3][12] Industry Overview - The dairy market is experiencing a shift towards "pure fresh" products, with low-temperature fresh milk and high-end categories growing against the backdrop of declining demand for long-life products [2] - As of mid-2025, China's dairy product output is projected to be 14.33 million tons, showing a slight year-on-year decrease of 0.3%, indicating a recovery from a 2% decline in 2024 [2] Mengniu's Strategic Initiatives - Mengniu is implementing a "one body, two wings" strategy, focusing on core business while expanding into "nutrition health platforms" and "overseas platforms" [3] - The company has made significant advancements in research and development, including the approval of its proprietary probiotic strain Lc19 and breakthroughs in lactoferrin and human milk oligosaccharides (HMO) technology [3][8] Research and Development Achievements - Mengniu has established a proprietary resource library with over 18,000 strains, achieving a breakthrough in independent strain development in 2010 [6] - The probiotic strain Lc19 has been recognized internationally, contributing to global health management and marking a significant milestone for Chinese research in nutrition [7] Production and Innovation - Mengniu's smart factory in Ningxia has been recognized as a "lighthouse factory," showcasing advanced digital integration in production processes, significantly enhancing efficiency [10] - The company has achieved a 55% reduction in production cycles and a 32% decrease in operational costs through its digital transformation initiatives [11] Financial Performance - In the first half of 2025, Mengniu reported revenues of 41.567 billion yuan, with operating profits increasing by 13.4% year-on-year to 3.538 billion yuan, demonstrating resilience amid industry challenges [12] Product Development and Market Positioning - Mengniu has developed a diverse product matrix addressing various consumer needs, including specialized nutrition for seniors and active individuals, and has introduced high-end fresh milk products [12][13] - The company is also advancing in deep processing of dairy raw materials, launching products like mascarpone and lactoferrin, which enhance domestic supply capabilities and reduce reliance on imports [13] Future Outlook - Despite significant achievements, challenges remain in high-end strain development and reducing import dependency in key areas [14] - Mengniu aims to enhance the resilience of the dairy supply chain and improve product structures through its strategic initiatives during the 14th Five-Year Plan period [14]

Group 1 - The "Annual ESG Pioneer Award (Large Market Capitalization)" recognizes companies that balance economic efficiency with social responsibility, highlighting their contributions to environmental, social, and governance (ESG) practices [1] - Ten companies, including Aier Eye Hospital, Beike, Bosideng, Mengniu Dairy, CATL, Tongcheng Travel, Weichai Power, China Feihe, China State Construction International, and Sinotruk, received the award [1] - The evaluation process involved quantitative data analysis and expert review to determine the final results of the award [1] Group 2 - The "Golden Award" aims to create a reference list of the most valuable listed companies and unicorns in the investment community, covering all listed companies on major exchanges including HKEX, SSE, SZSE, NYSE, and NASDAQ [2]

Core Insights - The "Golden Award" annual excellence company selection by Gelonghui will reveal a list of notable companies, highlighting those recognized for their contributions to ESG (Environmental, Social, Governance) principles [1][2] Group 1: Award Winners - Ten companies have been awarded the "Annual ESG Pioneer Award (Large Market Capitalization)," including Aier Eye Hospital, Beike, Bosideng, Mengniu Dairy, CATL, Tongcheng Travel, Weichai Power, China Feihe, China State Construction International, and Sinotruk [1] - The award aims to identify companies that balance economic efficiency with social responsibility, recognizing their outstanding contributions to promoting ESG concepts and pursuing high-quality sustainable development [1] Group 2: Evaluation Process - The selection process for the awards involved quantitative data analysis and evaluation by an expert review panel to determine the final results [1] - The "Golden Award" aims to create a reference list of the most valuable listed companies and unicorns in the investment community, covering all listed companies on major exchanges including the Hong Kong Stock Exchange, Shanghai Stock Exchange, Shenzhen Stock Exchange, New York Stock Exchange, and NASDAQ [2]