Core Viewpoint - The Ministry of Commerce of China has announced a preliminary ruling on anti-subsidy measures against imported dairy products from the EU, indicating that these products have received subsidies that harm the domestic dairy industry, with temporary anti-subsidy measures set to take effect from December 23, 2025 [1][2]. Group 1: Background and Rationale - The anti-subsidy investigation was initiated in August 2024 at the request of the China Dairy Industry Association and the China Dairy Products Industry Association [2]. - The preliminary ruling report, spanning 108 pages, details the existence of subsidies, the amount of subsidies, and the causal relationship between these subsidies and the damage to the domestic industry [2]. Group 2: Market Impact - The EU's subsidized dairy products, particularly cheese and cream, accounted for 23.6% to 34.6% of China's total dairy imports from 2020 to the first three months of 2024, making the EU a major source of these imports [4]. - The domestic dairy industry is currently facing challenges, including overproduction of raw milk and a lack of self-sufficiency in high-value processed products like cheese and butter [4]. Group 3: Industry Response and Future Outlook - There is a growing call for increased protection within the industry as raw milk prices decline, leading to widespread losses across the sector [5]. - The anti-subsidy measures are seen as a way to restore fair competition, allowing both domestic farmers and enterprises to compete under more equitable conditions [5]. - Industry experts suggest that domestic processing companies should leverage the current policy window to enhance product lines and processing capabilities, which will help them better compete against imports in the future [6]. - Companies like Feihe and Mengniu are already investing in high-value and deep-processing product projects, indicating a proactive approach to enhancing competitiveness [7].

Core Viewpoint - The Chinese dairy industry is entering a critical period for transformation and development, supported by government measures to counteract foreign subsidies that have negatively impacted domestic producers [1][5]. Group 1: Background and Context - The Ministry of Commerce initiated an anti-subsidy investigation into dairy products imported from the EU, responding to requests from the China Dairy Industry Association and the China Dairy Products Industry Association [2]. - The preliminary ruling found that EU dairy products received subsidies that caused substantial harm to the domestic industry, leading to the decision to implement temporary anti-subsidy measures starting December 23, 2025 [1][2]. Group 2: Market Impact - The EU accounted for 23.6% to 34.6% of China's total dairy product imports from 2020 to early 2024, indicating its significant role in the Chinese dairy market [4]. - The domestic dairy industry is currently facing challenges such as overproduction of raw milk and underdevelopment in high-value dairy products like cheese and butter, necessitating continued imports [4][5]. Group 3: Industry Challenges - The industry is experiencing widespread losses due to falling raw milk prices, high costs, and external pressures from imported dairy products, which have been exacerbated by EU subsidies [5]. - The China Dairy Products Industry Association highlighted that EU dairy products have entered the Chinese market at unreasonably low prices, harming domestic producers and reducing their capacity utilization [5]. Group 4: Future Opportunities - The anti-subsidy measures are seen as a way to create a fairer competitive environment, allowing domestic producers to strengthen their market position [5][6]. - Companies are encouraged to leverage the current policy window to enhance product lines and processing capabilities, which will help them better compete against imports in the future [6][7]. - The low prices of raw milk currently present an opportunity for processing companies to upgrade and innovate, particularly in high-value and deep-processing dairy products [7].

Core Viewpoint - Miaokelando (SH600882) achieved a remarkable 115% year-on-year growth in net profit attributable to shareholders in the first quarter, significantly outpacing revenue growth, indicating a strong internal growth trend despite industry challenges [1] Financial Performance - In the first quarter, Miaokelando reported revenue of approximately 1.233 billion yuan, a year-on-year increase of over 6%, with cheese business revenue growing by more than 17% [1] - The company's net profit growth rate reached a three-year high for the first quarter, contrasting with previous years where net profit growth was sluggish despite rising revenues [1] Industry Context - The domestic dairy market is facing challenges, with a 2.3% decline in overall dairy sales and a 3.7% drop in liquid milk sales in 2024 [2] - Major dairy companies like Yili, Mengniu, and Guangming reported significant declines in liquid milk revenue, with decreases of 12%, 11%, and 9% respectively [2] - The price of fresh milk continues to decline, with a reported price of 3.08 yuan per kilogram in March 2025, down 1.0% month-on-month and 13.1% year-on-year [2] Strategic Initiatives - Miaokelando's growth strategy includes product innovation, expanding consumption scenarios, and cost control [3][4] - The company has accelerated the launch of new products, diversifying its offerings to include various cheese formats and targeting both children and adults [3] - The expansion of consumption scenarios includes partnerships with restaurants and food brands to incorporate cheese into various dishes, enhancing market penetration [3] - Cost control measures involve sourcing domestic milk to reduce expenses and focusing on developing core products to streamline operations and improve margins [5][6] Value Chain Development - The company emphasizes the importance of managing the entire cheese production value chain, including the utilization of by-products like whey to create high-value products [6] - The development of high-value whey protein products is seen as a key opportunity for growth in the sports nutrition market, which is currently dominated by imports [6] - The focus on deep processing of cheese is expected to enhance the value chain and unlock significant industry potential, transforming the dairy sector [6]

Core Viewpoint - The company Miaokelando (妙可蓝多) achieved a remarkable 115% year-on-year growth in net profit for the first quarter, marking a significant turnaround compared to previous years where profit growth was sluggish despite revenue increases [1][4]. Financial Performance - In the first quarter, Miaokelando reported revenue of approximately 1.233 billion yuan, a year-on-year increase of over 6%, with its core cheese business revenue growing by more than 17% [4]. - The net profit growth significantly outpaced revenue growth, indicating a clear trend of internal growth and improved profitability [4]. Industry Challenges - The dairy industry is facing challenges, particularly in liquid milk sales, which have seen a decline. Major companies like Yili, Mengniu, and Guangming reported year-on-year revenue drops of 12%, 11%, and 9% respectively in their liquid milk segments [5]. - The overall sales of dairy products in China decreased by 2.3% in 2024, with liquid milk sales down by 3.7% [5]. Strategic Initiatives - Miaokelando's growth strategy includes product innovation, expanding consumption scenarios, and cost control [8]. - The company has accelerated the launch of new products, including various cheese formats, to maintain its position in the children's snack market while also targeting adult snacks and family dining [8][9]. - The company is expanding its partnerships with restaurants and beverage brands to incorporate cheese into their offerings, thereby increasing market penetration [9]. Cost Management - Cost control is a key focus for Miaokelando, with efforts to find domestic milk source alternatives to reduce costs. This strategy has been in place for over a year and has shown positive results [10]. - The company aims to create "super products" to streamline operations and reduce costs through economies of scale, focusing on fewer but more impactful product lines [10][11]. Value Chain Development - Miaokelando is working on enhancing its entire value chain, including the utilization of by-products like whey to create high-value products, which can significantly lower production costs [11]. - The company is positioning itself to tap into the growing market for sports nutrition and other high-value dairy products, which are currently dominated by imports [11].