Group 1 - The core viewpoint of the news is that the dairy industry is entering a new phase characterized by "structural differentiation," with companies facing performance pressures in 2025 and a slowdown in liquid milk business growth [1] - The market is experiencing a significant shift, with traditional liquid milk consumption declining due to changing consumption scenarios, leading to intense price wars as a survival strategy for companies [1] - High-value segments such as premium milk powder, low-temperature fresh milk, and life-cycle nutrition products are rapidly emerging, creating new growth trajectories for the industry [1] Group 2 - Companies are now competing on a broader scale, moving beyond simple size and price comparisons to a systematic contest involving technology, supply chain, and brand value [1] - The industry is expected to see new development prospects by 2026 amid structural adjustments and transformations [1] Group 3 - In the stock market, dairy stocks in Hong Kong saw a rebound, with Yurun Dairy leading with a nearly 8% increase, followed by Modern Dairy with over 5%, and Australia Asia Group with a 2.3% rise [2] - Other companies such as Original Ecology Dairy, Mengniu Dairy, and China Feihe also experienced gains, albeit smaller, indicating a positive market response [2]

Summary of Dairy Industry Conference Call Industry Overview - The dairy industry is experiencing a recovery in 2026, with total milk production stable at approximately 8.3 to 8.4 million tons, unchanged from the previous year. This stability is attributed to increased yields from large farms and the reduction of capacity in social farms, while major companies like Yili and Mengniu have not faced limitations in their own milk source development, maintaining a stable overall supply [8][9]. Key Points Milk Pricing - The price of milk supplied to Yili from farms in Xuzhou is around 3.45 to 3.48 CNY per kilogram, including a transportation cost of 0.17 CNY. In contrast, prices in Inner Mongolia are lower, ranging from 2.83 to 2.86 CNY per kilogram, highlighting regional price disparities [6]. - Northern bulk milk prices increased from 2.4 CNY per kilogram at the beginning of last year to 3.2 CNY, then fell back to a stable range of 2.8 to 2.9 CNY. Southern prices have remained higher, between 3.1 and 3.7 CNY since October, driven by improved sales from Yili and Mengniu and increased competition among small dairy producers [7]. Supply Chain Dynamics - In the first half of 2026, Yili limited the purchase of fresh milk from social farms to about 75% of their quota. However, this restriction eased in October, and by November and December, full purchases resumed, with expectations of potential limitations lasting four months post-Spring Festival [5][14]. - The overall consumption of dairy products has improved in 2026, with a notable increase in market consumption compared to 2025, driven by the performance of large dairy companies [8]. Cattle and Feed Costs - The price of beef cattle has stabilized, with cull cow prices rising to around 21 CNY per kilogram, allowing for profitability in raising replacement heifers. The profit from culling a mature cow is approximately 8,000 CNY [11][20]. - Feed costs vary by region, with southern feed costs at about 1.85 CNY per kilogram and cash flow costs between 2.6 and 2.7 CNY. Northern feed costs are lower at approximately 1.63 CNY per kilogram, with cash flow costs around 2.3 CNY. The decline in feed prices has allowed most social farms to avoid cash flow losses [12][13]. Future Outlook - Yili is expected to continue limiting supply after the Spring Festival for about four months, but no further price reductions are anticipated. The market outlook for the second half of the year appears positive, with expectations of price stabilization due to competition from small dairy producers [14]. - The price of bulk milk is projected to rise in the second half of 2026, with reasonable ranges expected between 2.6 and 2.9 CNY per kilogram, and potential increases to 3 to 3.5 CNY during September to October [17]. Challenges and Risks - The proportion of calves in the Baotou region is currently low at about 30%, while a healthy range should be between 35% and 40%. This shortage poses a risk to future development and could lead to increased operational risks if not addressed [2][37]. - Some social farms have exited the industry due to financial pressures and limitations imposed by major companies, with approximately three to four farms ceasing operations in 2026 [10]. Additional Insights - The government has been supporting the development of small dairy processing plants since late 2020, which has led to increased competition for milk sources and higher prices for producers [29][30]. - The overall cash flow situation for farms in the Baotou region is relatively balanced, aided by government subsidies ranging from 5 million to 10 million CNY annually [34]. This summary encapsulates the key insights and dynamics within the dairy industry as discussed in the conference call, highlighting pricing trends, supply chain challenges, and future outlooks.

Group 1 - The core viewpoint of the news highlights a rebound in Hong Kong dairy stocks, with significant gains in companies like Yurun Agriculture, Modern Farming, and Australia Asia Group, amidst a challenging performance outlook for the dairy industry in 2025 [1] - The dairy industry is entering a new phase characterized by "structural differentiation," with liquid milk business growth slowing down and intense price competition becoming a survival strategy for companies [1] - High-value segments such as premium milk powder, low-temperature fresh milk, and life-cycle nutrition products are emerging rapidly, creating new growth trajectories for the industry [1] Group 2 - The competitive landscape has shifted from simple scale and price competition to a comprehensive contest involving technology, supply chain, and brand value [1] - Structural adjustments and transformations are expected to lead to new development prospects for the industry by 2026 [1] Group 3 - Specific stock performance includes Yurun Agriculture rising by 7.91% to 4.640, Modern Farming increasing by 5.37% to 1.570, and Australia Asia Group up by 2.30% to 2.670 [2] - Other companies such as Original Ecology Agriculture, Mengniu Dairy, and China Feihe also experienced slight increases in their stock prices [2]

Core Viewpoint - UBS reports that Mengniu Dairy faced ongoing pressure on overall performance last year, with annual revenue expected to decline in the mid to high single digits due to weak consumer demand, oversupply of raw milk, and fragmented distribution channels [1] Group 1: Financial Performance - Mengniu's revenue is projected to decline in the mid to high single digits for the year [1] - The decline is attributed to weak performance in liquid milk, oversupply of raw milk, and fragmented distribution channels [1] Group 2: Future Outlook - Looking ahead to 2026, Mengniu's management aims to rely on product innovation, expansion of new retail channels, and improvement of product mix to support a return to positive sales growth [1] Group 3: Shareholder Returns - Shareholder returns remain a priority for the company, including stable dividends and consideration of potential share buybacks [1] Group 4: Analyst Rating - UBS slightly lowered the target price for Mengniu from HKD 20.6 to HKD 20.5 while maintaining a "Buy" rating [1]

Summary of Key Points from Conference Call Records Industry Overview - The conference call primarily discusses the dairy and frozen food industries, focusing on major players such as Mengniu and Yili in the dairy sector, and Anjins Foods in the frozen food sector. Dairy Industry Insights - **2025 Performance**: Mengniu's performance growth is partially attributed to a low base from reduced market investment in 2024, with potential negative growth exceeding 20% if investments had not been cut. Yili's classic series saw a significant decline of approximately 8%, while its premium series, Telunsu, declined by about 12% [1][2]. - **Liquid Milk Sales**: Yili's liquid milk sales experienced a negative growth of about 7% for the year, while Mengniu's sales dropped nearly 16%. However, Mengniu showed a monthly growth of about 3% in December 2025 due to the low base effect [2]. - **Low-Temperature Fresh Milk**: Yili's low-temperature fresh milk grew by approximately 10.07%, while Mengniu's growth was around 12%. Both companies faced declines in low-temperature yogurt, with Yili down about 9% and Mengniu down about 3% [5][6]. - **Sales Growth Expectations**: The dairy industry is expected to see slight overall sales growth in 2026, with major brands collectively growing by about 6%. Notably, Miaokelan Duo's performance was outstanding, achieving a growth rate of approximately 13% [15]. Frozen Food Industry Insights - **Market Conditions**: The frozen food sector is expected to see a year-on-year growth of about 7% in the first quarter of 2026, with January's growth significantly influenced by the timing of the Spring Festival [18]. - **Anjins Foods Strategy**: Anjins Foods has reduced subsidies and implemented indirect price increases while maintaining support for key products. This strategy has not significantly impacted sales, as they continue to adapt to market demands [19][20]. - **Consumer Behavior Changes**: The recovery in the restaurant sector is sluggish, while retail consumption is rebounding well. The shift in consumer preferences towards home consumption has led to a diversification of product offerings beyond traditional hot pot ingredients [21]. Key Product Performance - **Miaokelan Duo**: The cheese category, particularly Miaokelan Duo, has shown robust performance, with family consumption products driving significant growth, although they still represent less than 30% of total sales [15]. - **New Product Launches**: Miaokelan Duo's new products are in the distribution phase, showing potential for future sales growth if they become popular [17]. Market Dynamics - **Price Competition**: The fresh milk market is expected to experience a small peak, with price competition easing. The lowest price range is stabilizing between 45.9 to 46.9 yuan, compared to 39 to 42 yuan in 2024 [13]. - **Consumer Demand Trends**: Overall consumer demand is declining, but extended sales periods may lead to increased purchasing frequency, particularly during festive seasons [12]. Future Outlook - **2026 Growth Strategies**: Companies are optimistic about market recovery in 2026, focusing on underperforming regions and expanding product lines, including halal products and new retail strategies [28]. - **Profit Margin Expectations**: Profit margins are expected to improve significantly starting in Q4 2026 due to declining raw material prices and optimized factory policies [27]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the dairy and frozen food industries.

Core Viewpoint - The Inner Mongolia Autonomous Region has announced the addition of 49 new "North Border Craftsmen" for the year 2025, highlighting the region's commitment to cultivating skilled talent in various industries [1] Group 1: North Border Craftsmen Selection - The selection process for the 2025 North Border Craftsmen involved recommendations from various units, expert evaluations, training to enhance the "Five Strengths of Craftsmen," and comprehensive assessments [1] - Notable individuals among the 49 selected craftsmen include Kang Heping, workshop director at Jinyu Baoling Biological Pharmaceuticals Co., Ltd., Ye Wenhui, medical deputy director at Inner Mongolia Yili Industrial Group Co., Ltd., and Zhang Xiaofeng, general manager of the product development center at Inner Mongolia Mengniu Dairy (Group) Co., Ltd. [1] Group 2: Industry Impact - The initiative reflects ongoing reforms in the construction of the industrial workforce in Inner Mongolia, leading to the emergence of numerous skilled craftsmen across various sectors [1] - The newly recognized craftsmen have demonstrated exceptional technical skills and embody the spirit of craftsmanship through their dedication to excellence and innovation [1] - As of now, Inner Mongolia has a total of 134 recognized North Border Craftsmen, indicating a growing pool of skilled professionals in the region [1]

Group 1: Capital Market Development - Inner Mongolia has achieved continuous IPOs for five consecutive years, with 12 new companies listed, and the total market capitalization of A-shares surpassing 1 trillion yuan [1][7] - The region has established a multi-level market system, enhancing direct financing and supporting the growth of strategic emerging industries [1][7] - The "Tianjun Plan" has been implemented to assist companies in listing, integrating high-quality services and financial resources to boost economic development [6][7] Group 2: Industry Highlights - Inner Mongolia is a significant player in the dairy industry, with leading companies like Yili and Mengniu driving green development and digital transformation [1][2] - The region's unique ecological initiatives have led to the creation of the world's largest organic milk source base, showcasing the integration of ecology and industry [1][2] - The rare earth industry is a cornerstone of Inner Mongolia's economy, with companies like Northern Rare Earth leading in production and market value [3][4] Group 3: Financial Performance - Inner Mongolia's listed companies have seen significant capital operations, with major asset restructurings and a total of approximately 23.77 billion yuan raised through refinancing [8] - Cash dividends from 28 companies reached 93.03 billion yuan, doubling the amount from the previous five-year period, indicating a strong commitment to shareholder returns [8] - The region has maintained a zero-default record on public market bonds for five consecutive years, reinforcing its creditworthiness [9]

Core Insights - The dairy industry is entering a new phase characterized by "structural differentiation" as liquid milk business growth slows down, leading to intensified competition focused on technology, supply chain, and brand value [1][2][4] Group 1: Industry Performance - In the first three quarters of 2025, 13 out of 19 listed dairy companies in A-shares reported revenue declines, primarily due to the slowdown in liquid milk business [2] - For example, Yili's liquid milk revenue fell to 54.939 billion yuan in the first three quarters of 2025, a year-on-year decrease of 4.44% [2] - The overall sales of liquid milk in China dropped by 7.5% year-on-year from January to May 2025, with a further decline to 9.6% in June [2] Group 2: Market Dynamics - The market is experiencing intensified price wars, with significant price reductions observed in various milk products, leading to profit erosion for companies [3] - In the first three quarters of 2025, the total revenue of 19 listed dairy companies reached 140.852 billion yuan, with Yili, Guangming, and New Dairy accounting for 83.07% of this total [3] Group 3: Strategic Shifts - The industry is shifting from a focus on volume growth to quality and structural improvements, with companies emphasizing diversified and refined consumer needs [4] - Companies are increasingly investing in product innovation and new consumption scenarios to adapt to changing market demands, indicating a potential structural improvement in the liquid milk market by 2026 [4] Group 4: Capital Market Activity - In 2025, niche dairy companies and regional brands are increasingly pursuing IPOs, with companies like Baifei Dairy and Yipin Nutrition making significant moves in the capital market [5][6] - The trend indicates a growing interest in high-value segments such as water buffalo milk and goat milk powder, as well as regional brands with local supply chain advantages [6] Group 5: Mergers and Acquisitions - The dairy industry is witnessing accelerated mergers and acquisitions as companies seek to optimize asset portfolios and enhance efficiency amid increasing competition [8][10] - Notable transactions include Mengniu's sale of its New Zealand factory and Guangming's asset sale to Abbott, reflecting strategic adjustments to market changes [8][10] - Analysts suggest that the consolidation trend will continue, focusing on acquiring quality milk sources and enhancing regional distribution channels [10]

11 January 2026 | 12:34PM HKT Equity Research Mengniu Dairy (2319.HK): Consumer & Leisure Corporate Day: UHT milk still under pressure, with Chilled milk/IMF/Cheese driving growth; To We hosted Mengniu at our Consumer & Leisure Corporate Day on Jan 9, 2026. Key takeaways: 1) 2025 update: Mgmt reiterated the MSD%-HSD% sales decline guidance in FY25 (likely MSD%-HSD% decline in 2H25), and maintains its target for a flattish OPM yoy in 2025 despite some potential downside pressure in 2025 from liquid milk pres ...

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The supply-demand structure of raw milk is improving, and the snack food sector continues to show upward momentum. The food and beverage index increased by 2.1% from January 5 to January 9, ranking 24th among 28 sectors, underperforming the CSI 300 by approximately 0.7 percentage points. Sub-sectors such as processed foods (+6.7%), soft drinks (+5.8%), and snacks (+4.5%) performed relatively well [3][10][12]. Summary by Relevant Sections Weekly Insights - The supply-demand dynamics for raw milk are optimizing, and the snack food sector is experiencing sustained growth. The recent policy by the Ministry of Commerce to implement safeguard measures on imported beef is expected to alleviate the impact on domestic industries, leading to a potential increase in beef prices over the next 2-3 years. The domestic dairy sector is facing challenges, with a continuous reduction in dairy cow inventory, which may lead to a widening supply-demand gap post-Spring Festival [10][11]. Market Performance - The food and beverage index rose by 2.1% from January 5 to January 9, ranking 24th out of 28 sectors, and underperformed the CSI 300 by about 0.7 percentage points. Leading individual stocks included Qianwei Yangchun, Anji Food, and Yangyuan Beverage, while stocks like Jiabi You, *ST Chuntian, and Xianle Health saw declines [12][13]. Upstream Data - As of January 6, the GDT auction price for whole milk powder was $3,407 per ton, reflecting a 10.4% year-on-year decrease. The domestic fresh milk price was 3.03 yuan per kilogram, down 2.9% year-on-year. The domestic milk price is expected to remain under pressure in the short to medium term [19][21]. Recommended Stocks - The report recommends focusing on companies that are likely to benefit from the improving raw milk supply-demand balance and the growth in the snack food sector. Notable mentions include: - Yuran Agriculture: Expected to benefit from the recovery in raw milk prices. - Modern Dairy: Anticipated to gain from the overall industry improvement. - Yili Group and Mengniu Dairy: Expected to see positive impacts from the anticipated recovery in milk prices [10][11]. Snack Food Sector - The snack food sector is projected to continue its upward trend, particularly during the Spring Festival season. Companies such as Weilang Delicious, Ganyuan Food, and Yanjin Food are highlighted for their potential growth due to seasonal demand and strategic initiatives [11][12].