Industry Rating - The industry rating is maintained at "Outperform the Market" [2] Core Insights - The dairy sector is experiencing a significant supply contraction, with the potential end of capacity reduction in sight. The milk price has been declining for four years, leading to an industry loss for 1.5 years, resulting in an approximate 8% reduction in dairy cow capacity as of August 2025. The upcoming third-quarter silage feed procurement season may accelerate the clearing of livestock due to increased funding needs [4][27] - The beef sector is at a turning point in a super cycle, with domestic beef cattle capacity being fully cleared. The prolonged loss cycle has driven a deep reduction in breeding cows, which is expected to lead to a decline in beef cattle inventory starting in 2024. The supply of beef is anticipated to enter a contraction phase in the second half of 2025 [5][50] Summary by Sections Dairy Sector - Supply contraction is nearing its end, with milk prices expected to rebound due to a tightening supply-demand balance. The reduction in capacity is expected to stabilize by the end of 2025 or the first half of 2026, supported by seasonal demand during the upcoming holidays and long-term improvements in consumption driven by child-rearing subsidies [4][27] - The financial performance of dairy companies varies, with some showing resilience against falling milk prices due to unique business advantages, while others face significant pressure [6] - The dairy industry is characterized by a longer production cycle compared to other livestock, leading to a more prolonged adjustment period in capacity [6][27] Beef Sector - The beef cattle market is experiencing a super cycle, with a significant reduction in domestic beef cattle capacity. The prolonged loss cycle has led to a decrease in breeding cows, which will impact beef supply in the coming years [5][50] - External factors affecting beef supply are diminishing, with a long-term global beef supply gap emerging due to various pressures on major production areas [5] - The demand for beef is expected to grow steadily, driven by rising income levels and health consciousness among consumers, with a notable reliance on imported beef to meet domestic demand [50][51] Investment Recommendations - The report suggests focusing on companies that are well-positioned to benefit from the anticipated recovery in both the dairy and beef sectors. Specific companies to watch include China Shengmu, Guangming Meat Industry, and Fucheng Co., for beef, and Yuran Dairy, China Shengmu, and Modern Dairy for dairy [6][7]
牛专题深度:肉牛超级大周期、奶牛去化:进展到哪儿?