Core Viewpoint - The company reported a revenue of 6.07 billion yuan in H1 2025, a year-on-year decrease of 5.4%, with a net loss of 980 million yuan compared to a net loss of 210 million yuan in the same period last year. The cash EBITDA was 1.48 billion yuan, down 2.5% year-on-year, aligning with previous performance forecasts [1][3]. Revenue and Sales Performance - In H1 2025, raw milk revenue decreased by 0.8% to 5.07 billion yuan, with sales volume increasing by 10.3% but average price declining by 10.1% to 3.29 yuan/kg due to weak domestic demand and falling market prices [2][3]. - The company has improved its herd management by eliminating low-yield cows and focusing on enhancing the core herd ratio, resulting in a total herd size of 472,000 heads, up 6.2% year-on-year, and a lactating cow count of 256,000 heads, up 13.4% year-on-year [2]. Profitability and Financial Metrics - The gross margin increased by 0.3 percentage points to 26.4%, while the gross margin for the raw milk business decreased by 0.1 percentage points to 30.2% [3]. - The company experienced a fair value loss of biological assets amounting to 1.82 billion yuan, an increase in loss of 670 million yuan year-on-year, primarily due to increased culling and declining raw milk prices [3]. Future Outlook - The company anticipates a recovery in the dairy product industry by 2026, expecting a return to supply-demand balance, which could lead to rising raw milk prices and improved profitability for upstream dairy farms [1][3]. - The company maintains its earnings forecast, projecting EPS of -0.17, 0.08, and 0.14 yuan for 2025-2027, respectively, and sets a target price of 1.58 HKD based on a 26-year PE of 18x [3].

Investment Rating - The investment rating for the company is "Buy" [9] Core Views - The report anticipates a resonance between the meat and dairy cycles, which is expected to reveal profit elasticity for the company [1] - The company has experienced a decline in revenue and increased net losses in the first half of 2025, but there are signs of potential recovery in the dairy and beef markets [1][4] Revenue and Performance Summary - In the first half of 2025, the company's revenue was 6.07 billion RMB, a year-on-year decrease of 5.4%, with a net loss of 980 million RMB compared to a net loss of 210 million RMB in the same period last year [1] - Raw milk revenue decreased by 0.8% year-on-year to 5.07 billion RMB, with sales volume increasing by 10.3% but average price per kilogram dropping by 10.1% to 3.29 RMB/kg [2] - The company has improved its core herd ratio and increased the annual average yield per lactating cow to 13.2 tons per head, a year-on-year increase of 1.5% [2] Profitability and Margin Analysis - The gross margin for the first half of 2025 increased by 0.3 percentage points to 26.4%, while the cash EBITDA was 1.48 billion RMB, a year-on-year decrease of 2.5% [3] - The company expects a reduction in biological asset impairment losses in the second half of 2025, which could improve profitability [3] Future Outlook and Valuation - The report maintains earnings forecasts, projecting EPS of -0.17, 0.08, and 0.14 RMB for 2025 to 2027, respectively [4] - The target price is set at 1.58 HKD, based on a 18x PE ratio for 2026, indicating potential upside from the current market price [4][5]

Core Viewpoint - The report from Guotai Junan indicates that the beef and dairy industries are entering a phase of supply-demand balance due to reduced supply pressures and improved demand conditions in the second half of 2025 [1][2]. Beef Industry Insights - The beef price has begun to reverse from low levels, with a projected increase in 2025 driven by supply reduction and decreased import pressures. Since the beginning of 2025, beef and live cattle prices have risen approximately 10% and 20% respectively from previous lows [1][4]. - The supply of beef cattle is expected to decrease due to ongoing losses in ranching, with a reported 2.1% year-on-year decline in national cattle inventory as of Q2 2025, totaling 99.92 million heads [4]. - The reduction in imported beef, which saw a 9.5% year-on-year decline in the first half of 2025, is anticipated to further support domestic beef prices [4]. Dairy Industry Insights - The price of raw milk has continued to decline, but a supply-demand balance is expected in the second half of 2025, aided by reduced dairy cow restocking and a recovery in demand [2]. - The implementation of a fertility subsidy policy in July 2025 is expected to boost dairy product consumption, alongside the introduction of new national standards for UHT milk, which will limit the use of reconstituted milk [2]. - The dairy industry is projected to see a strong upward trend in prices in 2026 due to the fading effects of previous expansion and a reduction in lactating cow restocking [2]. Profitability and Market Dynamics - The cyclical nature of the meat and dairy industries is expected to enhance the profitability of leading agricultural companies. A hypothetical 10% to 20% increase in milk prices could improve the gross margin of leading dairy companies by 6 to 10 percentage points [5]. - The valuation of breeding cattle and income from culling are expected to increase with a 20% to 40% rise in cattle prices, potentially adding 200 to 400 million yuan to the total income of leading ranching companies [5]. - Companies involved in both beef and dairy sectors, such as Aoyuan Group and China Shengmu, are likely to benefit directly from the recovery in live cattle prices and the reversal of milk prices [5].

Group 1: Military Industry - The military sector is experiencing an upward trend, driven by the intensifying geopolitical competition among major powers, with a long-term positive outlook for military investments [4][5][6] - The recent commemorative events for the 80th anniversary of the victory in the Anti-Japanese War have highlighted the importance of national defense, leading to increased military spending [5] - Key companies to focus on include major manufacturers and component suppliers such as AVIC Shenyang Aircraft Corporation, AVIC South Lake, and AVIC Xi'an Aircraft Industry [4] Group 2: Non-Metallic Building Materials - The implementation of new national standards for refrigerators is expected to accelerate the demand for VIP boards, with the company Reascent Technology poised for significant growth following its acquisition of Maikelong [8][9] - The company has integrated its supply chain from fiberglass cotton to VIP core materials and VIP boards, which is anticipated to enhance its competitive edge and profitability [9] Group 3: Dairy Industry - The price of raw milk continues to decline, and a supply-demand balance is expected in the second half of 2025, benefiting from reduced production and improved demand [11][19] - Beef prices are entering an upward cycle due to supply reduction and decreased import pressures, with a projected increase in profitability for livestock companies [12][20] - The cyclical resonance between meat and milk production is expected to enhance the profitability of leading livestock companies [11][21]

Core Viewpoint - The article highlights the ongoing decline in raw milk prices and anticipates a faster reduction in livestock inventory in 25H2, which is expected to benefit beef and live cattle prices due to supply reduction and diminished import impacts, indicating strong profit elasticity for livestock companies amid the resonance of meat and dairy cycles [1][2]. Summary by Sections Raw Milk Prices and Supply-Demand Balance - Raw milk prices continue to decline, with expectations for supply-demand balance in 25H2. The financial pressure on farms during the silage procurement season in August-September is likely to accelerate the reduction of social inventory. The industry is expected to enter a supply-demand balance channel due to reduced production from heat stress and the effects of previous heifer inventory reductions, alongside a seasonal demand increase [2][3]. Beef and Live Cattle Price Trends - Beef prices are expected to enter an upward cycle in 25, following a low point in 2023. The decline in beef prices from 2023 was primarily due to low-priced imported beef squeezing demand and increased domestic production capacity. In 25, the reduction in supply and diminished import impacts are anticipated to lead to a price rebound, with beef and live cattle prices rising approximately 10% and 20% from previous lows, respectively [3][4]. Profit Elasticity in Livestock Companies - The resonance of meat and dairy cycles is expected to enhance profit elasticity for livestock companies. The gross profit margin is projected to improve significantly due to rising milk prices and reduced unit costs. If sales milk prices increase by 10% or 20%, leading dairy companies could see gross margin improvements of over 6 percentage points or 10 percentage points, respectively. Additionally, the fair value of breeding cows is expected to benefit from the rebound in milk prices and lower feeding costs [4].

Group 1 - The core viewpoint is that raw milk prices continue to decline, and there is potential for supply-demand balance in H2 2025 due to accelerated herd reduction and improved demand during peak seasons [2][3] - The report suggests that the dairy industry is likely to see a price increase in 2026, driven by reduced dairy cow replenishment and a recovery in demand, supported by new policies aimed at boosting dairy consumption [2][3] - The beef market is expected to enter an upward cycle in 2025, as low beef prices have started to reverse, benefiting from reduced supply and diminished import pressures [3][4] Group 2 - The report highlights strong profit elasticity for livestock companies due to the resonance of meat and milk cycles, with potential improvements in gross margins driven by rising milk prices and cost reductions [4] - The valuation of breeding cows and income from culling are expected to increase with rising beef prices, which could enhance total revenue for leading livestock companies [4] - Companies like YouRan Dairy and Modern Farming are recommended for investment, while China Shengmu and Aoyuan Group are noted as companies to watch due to their involvement in the livestock sector [1][4]

Group 1 - The core viewpoint is that raw milk prices continue to decline, and by the second half of 2025, supply and demand are expected to balance, benefiting the dairy industry [1] - In the procurement season of August-September, the financial pressure on farms is significant, leading to an accelerated reduction in livestock numbers [1] - The implementation of the fertility subsidy policy in July 2025 is expected to boost dairy product consumption demand [1] Group 2 - Beef prices are reversing from low levels, entering an upward cycle in 2025 due to reduced supply and diminished import impacts [2] - The beef market has experienced three cycles, with the current cycle characterized by a decline in beef prices since 2023, primarily due to low-priced imported beef and increased domestic production [2] - The national cattle inventory decreased by 2.1% year-on-year to 99.92 million heads in Q2 2025, indicating a tightening supply [2] Group 3 - The resonance of the meat and dairy cycles provides strong profit elasticity for livestock companies, with potential gross margin improvements of 6% to 10% for leading dairy firms if milk prices increase by 10% to 20% [3] - The valuation of breeding cows and income from culling are expected to improve with a 20% to 40% increase in beef prices, potentially adding 200 million to 400 million yuan to total income for leading livestock companies [3] - Companies involved in beef operations, such as Australia Asia Group and China Shengmu, are likely to benefit directly from the rebound in live cattle prices [3]

Group 1 - Dairy stocks have seen significant gains, with Australia Asia Group rising by 35.62% to HKD 1.98, Modern Dairy up by 13.49% to HKD 1.43, and others like Original Ecology Dairy and China Shengmu also experiencing increases [1] - The implementation of the "Childcare Subsidy System" starting January 1, 2025, will provide annual subsidies of HKD 3,600 per child for infants under three years old, potentially leading to an annual distribution of approximately HKD 100 billion, which is expected to boost demand in the dairy sector [1] - The meat and milk cycle is positively impacting livestock companies, with rising beef prices expected to enhance profitability and cash flow for companies like Yuran Dairy, Modern Dairy, and China Shengmu, with projected revenue increases of HKD 440 million, HKD 340 million, and HKD 80 million respectively under a 40% increase in beef prices [1] Group 2 - The upward trend in beef prices is anticipated to accelerate the clearing of social ranch inventories, benefiting the raw milk supply structure and subsequently influencing raw milk prices [1] - There is a recommendation to prioritize investment in leading livestock companies listed in Hong Kong due to the favorable market conditions [1]

财通证券则指出，肉奶周期共振，从两个维度利好牧企。短期来看，肉牛价格上涨可直接增厚牧企淘牛 收益，带来可观的利润及现金流改善。经过测算，相较2024年水平，在淘牛价格上涨40%假设下，预计 优然牧业、现代牧业、中国圣牧通过淘牛或可分别增加收益4.4、3.4、0.8亿元。中期来看，肉牛价格上 行有望催化行业内社会牧场存栏加速出清，利好原奶供给格局改善，从而进一步传导至原奶价格。优先 关注港股牧业龙头公司。 消息面上，7月28日，《育儿补贴制度实施方案》出台，方案为2025年1月1日起，对符合法律法规规定 生育的3周岁以下婴幼儿发放每孩每年3600元的补贴，至其年满3周岁。国泰海通证券指出，"国补"正式 进入生育领域，测算年均发放育儿补贴约千亿，有望发挥乘数效应且有加码可能，提振乳品等行业需 求。 智通财经APP获悉，乳业股涨幅居前，截至发稿，澳亚集团(02425)涨35.62%，报1.98港元；现代牧业 (01117)涨13.49%，报1.43港元；原生态牧业(01431)涨9.21%，报0.415港元；中国圣牧(01432)涨7.95%， 报0.475港元；优然牧业(09858)涨8.19%，报4.36港元。 ...

Core Viewpoint - The introduction of a new child-rearing subsidy policy in China is expected to significantly boost demand in the dairy industry, leading to notable stock price increases for major dairy companies [1] Group 1: Stock Performance - Dairy stocks have seen substantial gains, with Australia Asia Group (02425) rising by 35.62% to HKD 1.98, Modern Farming (01117) up 13.49% to HKD 1.43, and others like Original Ecology Farming (01431) and China Shengmu (01432) also experiencing increases [1] - The overall positive sentiment in the dairy sector is reflected in the stock performance of leading companies [1] Group 2: Policy Impact - The newly implemented child-rearing subsidy scheme will provide annual subsidies of CNY 3,600 per child for children under three years old starting January 1, 2025, potentially leading to an annual distribution of approximately CNY 100 billion [1] - This subsidy is expected to have a multiplier effect, enhancing demand for dairy products and benefiting the industry as a whole [1] Group 3: Market Dynamics - The current meat and milk cycle is favorable for livestock companies, with rising beef prices expected to improve profitability and cash flow for these firms [1] - Projections indicate that under a scenario where beef prices increase by 40% compared to 2024 levels, companies like Yuran Farming, Modern Farming, and China Shengmu could see revenue increases of CNY 440 million, CNY 340 million, and CNY 80 million respectively from cattle sales [1] - The upward trend in beef prices is anticipated to accelerate the clearing of social ranch inventories, positively impacting the supply of raw milk and subsequently influencing raw milk prices [1]