Summary of the Conference Call for YouRan Agriculture Company Overview - YouRan Agriculture is the largest dairy cattle farming enterprise globally, controlled by Yili Group, covering the entire cycle of breeding, farming, and feed raw material production. Over 90% of its raw milk products are sold to Yili [2][5][10]. Industry Insights - Domestic beef prices are expected to reach historical highs within the next two to three years, while milk prices are rebounding after hitting a low. The industry has already reduced about 10% of its capacity, with further reductions anticipated in the second half of the year [2][3]. - The domestic beef cattle farming industry has experienced significant losses, with a reduction of nearly 30% in breeding and technical cows. A decrease in domestic beef supply is expected by the second half of 2025, indicating a clear price turning point [4][11]. - Globally, beef cattle production has decreased by about 5%, with beef prices starting to recover since 2024, having risen nearly 40% cumulatively [4][12]. Financial Performance - In 2024, YouRan Agriculture's revenue is projected to reach 20.1 billion yuan, but it is expected to incur a net loss of nearly 700 million yuan due to falling raw milk prices and biological asset impairments. Profitability is anticipated to improve starting in 2025 as costs decline and beef prices recover [2][6]. - YouRan's revenue composition includes 75% from goat milk with a gross margin of 30%-40%, and 25% from ancillary businesses like feed, which has a gross margin of 17% [2][7][8]. Capital Expenditure and Cash Flow - Capital expenditures have significantly increased since 2020, but no large-scale capacity expansion is planned in the short to medium term. A reduction in capital expenditures is expected starting in 2025 [9]. - The cash cost of producing raw milk is approximately 3.9 yuan per kilogram, with a sales average of 4.1 yuan per kilogram in 2023, indicating a premium of about 30% over industry costs [9]. Future Profitability and Market Dynamics - The company expects to sell approximately 100,000 culled cows annually, with prices currently at historical lows of 7,000 yuan per head, potentially rising to 14,000-15,000 yuan per head by 2026, contributing significantly to profits [15][16]. - The raw milk business is projected to significantly enhance profitability, with expected sales volumes reaching 4.1 million tons by 2025 and 4.3 million tons by 2026. An increase in raw milk prices could add approximately 2 billion yuan to profits by 2027 [17]. Valuation and Market Position - YouRan Agriculture's current price-to-book (PB) ratio is around 1.1, at historical lows, with potential for significant recovery. The price-to-earnings (PE) ratio is also expected to double as market conditions improve [18]. Conclusion - The overall outlook for YouRan Agriculture is positive, driven by anticipated price recoveries in both beef and raw milk markets, alongside strategic operational adjustments and a strong market position as a leading enterprise in the dairy sector [18].