Xinjiang Tianrun Dairy (SH:600419) GOLDEN SUN SECURITIES·2025-07-22 01:03Investment Rating - The report maintains an "Accumulate" rating for the industry [6] Core Insights - The current state of China's raw milk and beef industries is at the bottom of the cycle, with the dairy industry gradually clearing capacity towards a balance in supply and demand [1] - The beef industry has seen a price recovery, with live cattle prices rebounding since February 2025, driven by reduced imports and a tightening supply [2] - The report indicates that the dairy cycle's darkest moment is expected to end within 1.5 years, with signs of marginal improvement in the first half of 2025 [1] Summary by Sections Raw Milk Industry - As of July 10, 2024, the price of fresh milk is 3.04 CNY/kg, down 6.17% year-on-year, with over 90% of the dairy industry experiencing losses [1] - The China Dairy Association forecasts a 4.5% year-on-year decrease in dairy cow inventory for 2024, with further price declines expected in 2025 [1] - There are indications of a narrowing decline in raw milk prices in the first half of 2025, with a significant reduction in milk powder spray volume [1] Beef Industry - The beef industry is entering a replenishment phase, with a 2.9% growth in cattle inventory in 2023, but a projected 4.4% decline in 2024 [2] - Live cattle prices and market averages have increased by 8.3% and 7.4% respectively since February 2025 [2] - The industry is experiencing a culling cycle for breeding cows, leading to a decrease in the number of calves born [2] Company Performance YouRan Agriculture - In 2024, YouRan achieved revenue of 20.1 billion CNY, a year-on-year increase of 7.5%, with fresh milk production rising by 24.1% to 3.747 million tons [3] - Despite a decrease in average selling price of fresh milk to 4.1 CNY/kg, the company managed to improve its gross margin [3] - The company reported a loss of 690 million CNY for the year due to declining raw milk and beef prices [3] Modern Farming - Modern Farming's revenue decreased by 1.5% year-on-year to 13.25 billion CNY, with fresh milk production increasing by 13.6% [4] - The average selling price of fresh milk fell by 10.3% to 3.6 CNY/kg, resulting in a loss of 1.47 billion CNY for the year [4] - Future price increases in milk and beef are expected to positively impact the company's core business [4] China Shengmu - China Shengmu reported a revenue decline of 7.6% to 3.13 billion CNY in 2024, with fresh milk sales price down by 6.1% [7] - The company is positioned to benefit from the rising beef prices due to its dual focus on dairy and beef production [7] Tianrun Dairy - Tianrun's revenue for 2024 is projected at 2.8 billion CNY, a 3.3% increase, but net profit is expected to drop by 69.3% due to losses from cattle disposal [8] - The company is expected to improve its operations as it reduces cattle disposals in subsequent quarters [8]