Investment Rating - The report maintains a "Buy" rating for the company [9] Core Views - The current industry is at the historical bottom of the raw milk cycle, and the company's performance reflects the pressure from low milk prices. The company's earnings elasticity may come from the resonance of the "milk and meat" dual cycles, as the price of culled cattle (beef cattle) has entered an upward cycle, thereby reducing impairment losses on biological assets. With the industry's capacity reduction and the bottoming out of raw milk prices, the company is expected to see profit improvement in the second half of 2025 [2][8]. Summary by Relevant Sections Financial Performance - In the first half of 2025, the company achieved revenue of 6.073 billion yuan, a year-on-year decrease of 5.4%. The net profit attributable to shareholders recorded a loss of 913 million yuan, compared to a loss of 228 million yuan in the same period last year. The loss pressure mainly came from the fair value changes of dairy cows, which resulted in a loss of 1.823 billion yuan, an increase of 58.4% year-on-year. The cash EBITDA was 1.477 billion yuan, a slight decrease of 2.5% year-on-year, while the net cash generated from operating activities was 490 million yuan, a year-on-year increase of 23.3% [4][5]. Raw Milk Business - The raw milk business revenue was 5.069 billion yuan, a slight decrease of 0.8% year-on-year. The comprehensive breeding solution business (feed, digital platform, etc.) revenue was 1.004 billion yuan, a year-on-year decrease of 23.2%, mainly due to the company's proactive adjustment of sales strategy to control risks and focus on high-quality customers [5]. Cost Control and Efficiency - During the industry's price decline, the company's raw milk business demonstrated strong operational resilience. The average selling price of raw milk decreased by 10.1% to 3.29 yuan/kg, which is lower than the industry average decline of 11.66%. Benefiting from the expansion of herd size and improved yield efficiency, the total sales volume of raw milk increased by 10.3% to 1.542 million tons, offsetting some of the revenue decline due to price drops. The average unit cost of milk decreased to 2.32 yuan/kg (from 2.58 yuan in the same period last year), with core feed costs significantly reduced by 11.4% to 1.79 yuan/kg. The company's excellent cost control allowed the raw milk business gross margin to remain stable at a high level of 30.2%, compared to 30.3% in the same period last year [6]. Herd Structure Optimization - The pressure on the company's performance in the first half of 2025 was mainly due to the loss of 1.823 billion yuan from the fair value changes of biological assets, which is related to the company's proactive culling of low-yield and inefficient cattle and the reduction in cattle valuation. This short-term impact on the profit statement lays a solid foundation for long-term development. The herd structure has improved, with the proportion of dairy cows in the total herd increasing by 3.5 percentage points to 54.1%, leading to higher production efficiency. The average annual yield per dairy cow reached a record high of 13.2 tons, a year-on-year increase of 1.5% [7]. Market Outlook - The current industry is at the historical bottom of the raw milk cycle, and the company's performance reflects the pressure from low milk prices. The company's earnings elasticity may come from the resonance of the "milk and meat" dual cycles, as the price of culled cattle (beef cattle) has entered an upward cycle, thereby reducing impairment losses on biological assets. With the industry's capacity reduction and the bottoming out of raw milk prices, the company is expected to see profit improvement in the second half of 2025 [2][8].
现代牧业（01117）：2025年半年度业绩点评：牛群结构优化，成本优势凸显