现代牧业（01117）：降本增效筑牢安全垫，静待奶肉双周期共振

Investment Rating - The report assigns a "Buy" rating with a target price of HKD 1.91, representing a potential upside of 38.5% from the current price of HKD 1.38 [6]. Core Insights - The company is expected to benefit from a rebound in both meat and milk prices, leading to significant revenue growth and a turnaround in profitability by 2026. The projected net profits for 2026, 2027, and 2028 are estimated at HKD 5.8 billion, HKD 14.2 billion, and HKD 20.1 billion respectively [7]. - The company has demonstrated strong operational resilience despite a challenging industry environment, with a notable improvement in cash EBITDA, which grew by 2.6% to HKD 3.063 billion, and a gross margin increase of 1.4 percentage points to 27.4% [7]. - The report highlights the company's effective cost control measures, with the cost of milk sales per kilogram reduced to HKD 2.32, an 8.3% decrease year-on-year, and feed costs down by 9.2% to HKD 1.77 [7]. Financial Summary - Revenue for the fiscal year ending December 31, 2025, is reported at HKD 12.6 billion, a decline of 4.9% year-on-year. However, the company is expected to return to growth with projected revenues of HKD 13.5 billion in 2026, HKD 14.6 billion in 2027, and HKD 15.7 billion in 2028 [4][9]. - The net profit for 2025 is reported at a loss of HKD 12.04 billion, but a significant recovery is anticipated with a net profit of HKD 579 million in 2026 and HKD 1.42 billion in 2027 [4][9]. - The company's earnings per share (EPS) is projected to improve from a loss of HKD 0.14 in 2025 to a profit of HKD 0.07 in 2026, and further to HKD 0.18 in 2027 [4][9]. Industry Dynamics - The report indicates a significant restructuring in the supply-demand dynamics of the raw milk industry, with a continued decline in national dairy cow inventory expected to lead to potential supply shortages in 2026-2027 [7]. - The demand for domestic raw milk is increasing as imports of bulk powder have halved, and the growth in downstream processing capacity is gradually improving the supply-demand relationship [7]. - The report notes that the beef cycle is also showing signs of recovery, with the price of culled cows rebounding over 30% from its low in 2024, which is expected to provide additional revenue opportunities for the company [7].