9月25日中国牛肉均价71.1元/kg，相较2月低点+9.4%，肉牛价格参考陕西、山东、河南等省份，均在春 节后进入上行通道。肉牛价格的提振，一方面在2021-2024年牛肉价格下行阶段，行业已经历存栏去 化，且肉牛养殖以散户为主，行业去化程度较高，截至2025年6月末牛存栏9992万头，相较于2023年峰 值减少517万头；另一方面中国对进口牛肉依存度较高，24H1进口牛肉供给量占比约31%，2024年末商 务部对进口牛肉进行保障措施立案调查，25H1进口130万吨牛肉，同比-9.5%，结束8年增长趋势，2025 年8月商务部决定进一步延长调查期限至2025年11月26日，进口量的收窄进一步扩大国内牛肉供需缺 口。 国盛证券主要观点如下： 短期奶价上行，长期拐点可期 当前中秋国庆期间，乳制品需求迎来小高峰，伴随供给端陆续出清，原奶价格实现阶段性稳定，肉牛价 格已开始回升，后续奶价稳定及淘牛减亏将显著催化牧业板块机会，原奶供需平衡也有望带动乳企竞争 趋缓，带动乳制品机会。 原奶周期进入尾声，25H2去化有望提速 原奶价格经过4年下行周期，近期迎来阶段性稳定，全国主产区原奶均价从8月3.02元/kg陆续提升至9 ...

乳业：周期之中辩趋势 摘要 中国乳制品市场短期虽有下滑，但长期刚需属性不变，消费者健康意识 提升和政策支持将驱动需求稳定增长。 原奶价格经历多轮波动，受需求、政策和国际市场影响，对牧场经营和 产业链产生深远影响。当前供需呈现供给过剩与需求疲软并存局面。 国内原奶自给率快速回升，下游乳企对上游奶源把控增强，与牧场形成 稳定战略合作关系，有利于平稳过渡原奶周期。 原奶价格下跌时，大型乳企通过持股上游、增加促销等方式维稳产业链， 中小乳企享受红利但竞争加剧，盈利能力承压。 判断原奶价格走势需关注生鲜牛肉需求供给增速差，存栏量下降趋势明 确，行业整体亏损面接近 90%，或预示 2026 年原奶周期有望反转。 乳制品行业销售额下降主要因价格下降，消费力疲软提升性价比，国家 倡导"喝得起的奶"，影响产品结构。白奶表现优于酸奶，下沉市场韧 性较好。 中国乳制品行业具备长久期、高壁垒特征，去库到位及资产减值损失收 敛后，经营逐步走出底部，原奶周期反转和需求回暖有望带来业绩与估 值双击。 Q&A 乳制品行业复苏的三个阶段是什么？ 乳制品行业复苏的三个阶段分别是：第一阶段，2025 年第二季度企业主动去 库存，尽管需求仍然承压且 ...

Investment Rating - The report maintains a "Buy" rating for the company [9] Core Views - The current industry is at the historical bottom of the raw milk cycle, and the company's performance reflects the pressure from low milk prices. The company's earnings elasticity may come from the resonance of the "milk and meat" dual cycles, as the price of culled cattle (beef cattle) has entered an upward cycle, thereby reducing impairment losses on biological assets. With the industry's capacity reduction and the bottoming out of raw milk prices, the company is expected to see profit improvement in the second half of 2025 [2][8]. Summary by Relevant Sections Financial Performance - In the first half of 2025, the company achieved revenue of 6.073 billion yuan, a year-on-year decrease of 5.4%. The net profit attributable to shareholders recorded a loss of 913 million yuan, compared to a loss of 228 million yuan in the same period last year. The loss pressure mainly came from the fair value changes of dairy cows, which resulted in a loss of 1.823 billion yuan, an increase of 58.4% year-on-year. The cash EBITDA was 1.477 billion yuan, a slight decrease of 2.5% year-on-year, while the net cash generated from operating activities was 490 million yuan, a year-on-year increase of 23.3% [4][5]. Raw Milk Business - The raw milk business revenue was 5.069 billion yuan, a slight decrease of 0.8% year-on-year. The comprehensive breeding solution business (feed, digital platform, etc.) revenue was 1.004 billion yuan, a year-on-year decrease of 23.2%, mainly due to the company's proactive adjustment of sales strategy to control risks and focus on high-quality customers [5]. Cost Control and Efficiency - During the industry's price decline, the company's raw milk business demonstrated strong operational resilience. The average selling price of raw milk decreased by 10.1% to 3.29 yuan/kg, which is lower than the industry average decline of 11.66%. Benefiting from the expansion of herd size and improved yield efficiency, the total sales volume of raw milk increased by 10.3% to 1.542 million tons, offsetting some of the revenue decline due to price drops. The average unit cost of milk decreased to 2.32 yuan/kg (from 2.58 yuan in the same period last year), with core feed costs significantly reduced by 11.4% to 1.79 yuan/kg. The company's excellent cost control allowed the raw milk business gross margin to remain stable at a high level of 30.2%, compared to 30.3% in the same period last year [6]. Herd Structure Optimization - The pressure on the company's performance in the first half of 2025 was mainly due to the loss of 1.823 billion yuan from the fair value changes of biological assets, which is related to the company's proactive culling of low-yield and inefficient cattle and the reduction in cattle valuation. This short-term impact on the profit statement lays a solid foundation for long-term development. The herd structure has improved, with the proportion of dairy cows in the total herd increasing by 3.5 percentage points to 54.1%, leading to higher production efficiency. The average annual yield per dairy cow reached a record high of 13.2 tons, a year-on-year increase of 1.5% [7]. Market Outlook - The current industry is at the historical bottom of the raw milk cycle, and the company's performance reflects the pressure from low milk prices. The company's earnings elasticity may come from the resonance of the "milk and meat" dual cycles, as the price of culled cattle (beef cattle) has entered an upward cycle, thereby reducing impairment losses on biological assets. With the industry's capacity reduction and the bottoming out of raw milk prices, the company is expected to see profit improvement in the second half of 2025 [2][8].

Core Viewpoint - Yili has demonstrated resilience as a leading dairy company, with both revenue and net profit returning to positive growth after a deep adjustment period in the raw milk industry in 2024 [1] Financial Performance - Yili's revenue reached 61.9 billion yuan in the first half of the year, a year-on-year increase of 3.4%, with Q2 revenue at 28.9 billion yuan, up 5.8% year-on-year [1] - The company's net profit attributable to shareholders, excluding non-recurring items, increased nearly 32% year-on-year to 7.016 billion yuan, benefiting from lower raw milk costs and optimized sales expense ratios [2] - Despite a decline in cash flow from operating activities, Yili's confidence in achieving its annual targets of 119 billion yuan in revenue and 12.6 billion yuan in total profit remains strong [2][3] Operational Challenges - Yili faces dual pressures from weak demand and low milk prices, leading to a significant decline in net cash flow from operating activities, which fell over 44% year-on-year [3][28] - The company's interest-bearing liabilities reached 65.78 billion yuan by the end of the first half, an increase of over 5 billion yuan since the beginning of the year [4] - Cash reserves decreased by 7.8 billion yuan to 17.6 billion yuan due to dividend distribution for the 2024 fiscal year [5] Market Position and Strategy - Yili's liquid milk business has stabilized, with revenue of 36.126 billion yuan in the first half, a slight decline of 2% compared to a 13% drop in the same period last year [7] - The company has successfully reduced inventory by 7.6% and shortened inventory turnover days from 55 to 46 days [12] - Yili has introduced high-quality products in emerging channels and lower-tier markets, with non-traditional channels accounting for 30% of liquid milk revenue [15] Growth in Milk Powder Segment - The milk powder segment has become a significant growth driver, with revenue increasing from 26.3 billion yuan in 2021 to 29.7 billion yuan in 2024, reflecting a compound annual growth rate of 6.5% [18] - In the first half of 2025, milk powder revenue grew 14.26% year-on-year to 16.58 billion yuan, accounting for 26.8% of total revenue [19] - Yili's market share in the infant formula segment reached 18.1%, an increase of 1.3 percentage points year-on-year, positioning it as the market leader [20] Competitive Landscape - The competition in the infant formula market remains intense, with both Yili and Feihe offering subsidies to new parents, although their strategies differ [23] - Feihe is currently undergoing inventory adjustments, which has impacted its revenue and profit, while Yili's market position appears more stable [22][24] Future Outlook - Yili anticipates that the liquid milk industry will eventually stabilize, with a focus on achieving a balance between supply and demand [29] - The company believes that long-term growth potential exists in the liquid milk sector, driven by demographic trends and increasing consumer health awareness [35]

Summary of Modern Dairy's Conference Call Company Overview - **Company**: Modern Dairy - **Industry**: Dairy Farming Key Points and Arguments Industry and Company Performance - As of June 2025, the dairy herd size was 472,000 heads, a decrease of 19,000 heads from the end of 2024, but the proportion of lactating cows increased to 54.1% [2][5] - Raw milk production reached 1.66 million tons in the first half of 2025, a year-on-year increase of 14.6% [2][5] - The average yield per cow in traditional agriculture was 13.2 tons, up 1.5% year-on-year [2][5] - Revenue for the first half of 2025 was RMB 6.073 billion, with cash EBITDA at RMB 1.477 billion, a slight decrease of 2.5% year-on-year [3][31] Cost Management and Financials - Feed costs decreased by 11.4% year-on-year to RMB 1.79 per kilogram, while other cash costs fell by 6.8% to RMB 0.4 per kilogram [2][5] - The gross margin for raw milk remained around 30% [2][5] - Operating cash flow increased by 23% year-on-year to over RMB 400 million [6] - Capital expenditures decreased by over 16% to approximately RMB 1 billion [6] Market Outlook - The company anticipates continued pressure in the market for the fall and fourth quarter of 2025, with a potential market turning point in 2026 [4][9] - The dairy herd is expected to drop below 6 million heads in 2025, continuing to decline to about 5.8 million heads in the second half of the year [4][9] - The price of raw milk is projected to rise to RMB 3.3-3.5 per kilogram, with the company potentially reaching RMB 4 per kilogram [13] Specialty Milk and Product Development - The company operates five organic dairy farms with over 40,000 heads, and the proportion of specialty milk reached 8%, expected to exceed 10% by 2027 [6] - The company has secured 20%-30% of its soybean meal supply for the next year at a price lower by RMB 200-300 per ton compared to this year [4][23] Supply Chain and Import Dynamics - Domestic bulk powder prices are significantly lower than imported prices, leading to a decrease in import volumes [11] - The construction of new processing plants is expected to increase the demand for fresh milk [12] Challenges and Risks - The company faces challenges from heat stress affecting milk production and fluctuating market demands during peak seasons [7][8] - The elimination of dairy cows, particularly heifers, is a concern, with 210,000 heads culled in the first seven months of the year, impacting future supply [14][15] Future Projections - The company plans to maintain its herd size around 472,000 heads in the coming years, focusing on improving the proportion of lactating cows to enhance financial performance [20] - The expected yield per cow is projected to increase from 12.8 tons last year to over 13 tons this year [19] Conclusion - Modern Dairy is actively managing its herd size and costs while navigating market pressures and supply chain challenges. The focus on specialty milk and cost control measures positions the company for potential growth despite the current market volatility.

Core Viewpoint - Yili Group's half-year report shows strong performance with revenue of 61.933 billion yuan, a year-on-year increase of 3.37%, and a net profit of 7.016 billion yuan, up 31.78%, exceeding market expectations [1][3] Financial Performance - In the second quarter, Yili's revenue grew by 5.77%, with net profit increasing by 44.65% year-on-year, indicating a clear profitability turning point [3] - The overall gross margin for Yili reached 36.21%, an increase of 1.27 percentage points year-on-year, while the net profit margin hit a historical high of 11.33% [4] Business Segments - Yili's liquid milk business generated revenue of 36.126 billion yuan, maintaining the largest market share in the industry, while the milk powder and dairy products segment saw revenue of 16.578 billion yuan, a growth of 14.26% [3] - The company achieved over 30% revenue growth in goat milk powder, increasing its market share to 34.4%, and the cheese and dairy fat business targeting professional clients also grew by over 20% [3] Diversification and Growth Strategy - Yili's diversified business now accounts for over 40% of its revenue, contributing significantly to its profitability [4] - The company is focusing on high-end markets and optimizing its product matrix to enhance overall gross margins [4] Industry Outlook - The dairy industry is expected to see structural growth, with demand factors becoming more prominent as supply issues are resolved [5] - Yili is well-positioned to benefit from the recovery in liquid milk supply and the anticipated rise in raw milk prices, which could lead to a new growth phase [6]

Summary of Conference Call Records Industry Overview - The conference call discusses the **dairy industry** in China, focusing on the **raw milk** segment and its impact on dairy products [1][2][3]. Key Points and Arguments - **Demand and Price Trends**: From 2015 to 2023, the demand for dairy products in China has remained stable or slightly declined, while prices have consistently risen. However, by 2023 and 2024, the industry faces pressure on both volume and price due to a decrease in the youth population, which is the core consumer group [2]. - **Urban-Rural Consumption Disparity**: There are significant differences in per capita dairy consumption between urban and rural areas, as well as between high-tier and lower-tier markets. Northern regions have higher dairy production and consumption compared to the South, where resources are limited [3]. - **Importance of Raw Milk**: Raw milk constitutes about 50% of the production cost in dairy products, making it a critical component of the supply chain. The high level of product homogeneity in dairy products means that fluctuations in raw milk prices directly affect end product pricing [4][5]. - **Impact of Raw Milk Price Decline**: The continuous decline in raw milk prices over the past three years has negatively impacted the profitability of dairy companies. The future trajectory of these prices is crucial for understanding the industry's financial health [6]. - **Raw Milk Cycle Dynamics**: The raw milk cycle is influenced by multiple factors, including the growth cycle of dairy cows, farm profitability, feed costs, and policy subsidies. The current losses in farms may lead to a reduction in cow populations, affecting future supply [7]. - **Demand Side Influence**: Demand upgrades and structural explosions are key to rising milk prices. A shortage in supply can lead to rapid price increases, while an increase in supply may cause prices to decline [8]. - **Effects of Price Decline on Dairy Farms**: During periods of declining milk prices, the capacity reduction in farms is slow as operators expect a price rebound. Despite financial losses reported, cash flow remains stable, indicating a challenging investment environment [9]. - **Impact of Imported Milk Powder**: The domestic raw milk market has seen a decrease in the share of imported milk powder, which has dropped from over 40% a decade ago to around 25% due to price inversions [10][11]. - **Investment Opportunities**: The elasticity of stock prices in the dairy farming sector is greater than that in the dairy product sector. A stabilization or increase in milk prices could significantly benefit the financial statements of dairy farms [12]. - **Profitability Outlook for 2025**: The dairy industry is expected to see improved profitability in 2025, aided by reduced promotional spending and a tightening supply of low-priced milk [13]. - **Key Companies to Watch**: Major companies such as Yili and Mengniu, along with second-tier companies like New Dairy and Tianrun, are highlighted for their growth potential, particularly New Dairy for its focus on low-temperature milk and innovative products [14]. - **Milk Price Trends**: The outlook for milk prices suggests that after a sharp decline, the industry may experience a reduction in competitive pressure, leading to improved profitability. The focus should be on the performance of leading companies rather than immediate cost pressures from rising milk prices [15]. Additional Important Insights - The conference emphasizes the need to monitor the balance between supply and demand closely, as changes in consumer behavior and market dynamics can significantly impact the dairy industry's future [1][8].

Investment Rating - The report gives an investment rating of "Overweight" for the dairy industry, indicating an expectation for the industry to outperform the overall market [65]. Core Insights - The dairy industry is experiencing a cyclical downturn in fresh milk prices, with a potential turning point expected in 2025. The price of fresh milk reached a low of 3.04 yuan/kg in July 2025, following a peak of 4.38 yuan/kg in August 2021. This cycle typically spans approximately eight years [21][30]. - The overall production of dairy products in China has increased from 26.518 million tons in 2014 to 29.618 million tons in 2024, with a compound annual growth rate of 1.11% [32][33]. - The report highlights a trend of consolidation in the dairy supply chain, with larger farms increasingly dominating the market. The number of farms with over 1,000 head of cattle has risen to 12% by 2022 [26][30]. Summary by Sections Dairy Industry Overview - The dairy industry has a long supply chain, including feed, dairy farming, processing, and retail. Major dairy companies are concentrated in regions such as Northwest, North China, and East China, particularly in Inner Mongolia and Zhejiang [3][11][17]. Fresh Milk Price Cycle - The fresh milk price cycle has shown a pattern of peaks and troughs approximately every eight years. The last peak was in February 2014 at 4.27 yuan/kg, followed by a decline that stabilized around 3.4 yuan/kg until 2015. The current cycle began in 2018, peaking in 2021 and declining to 3.04 yuan/kg by July 2025 [21][28][30]. Companies in the Dairy Sector - The report identifies 17 dairy-related companies listed on the New Third Board and the Beijing Stock Exchange. Notable companies include Knight Dairy, Jule Dairy, and Southern Dairy, with Knight Dairy being a listed entity and others in the process of listing [4][35]. - Knight Dairy has shown a steady revenue growth trend, with a revenue of 3.70 billion yuan in Q1 2025, marking a year-on-year increase of 55.88%. However, its net profit has declined by 38.70% [4][39]. - Jule Dairy, known for its "Suanle Milk" product, reported a revenue of 1.641 billion yuan in 2024, a 5.06% increase year-on-year, with a net profit of 232 million yuan, up 18.35% [5][52]. - Southern Dairy, recognized as a key enterprise in Guizhou, achieved a revenue of 1.817 billion yuan in 2024, reflecting a 0.65% growth, with a net profit of 209 million yuan, up 4.36% [6][59].

Summary of the Conference Call for YouRan Dairy (优然牧业) Industry Overview - **Accelerated Culling in Dairy Industry**: Due to rising beef prices, financially pressured farms are accelerating the culling of dairy cows. It is expected that production capacity will clear more rapidly in Q3, although the overall raw milk output will not be significantly affected [2][3]. - **Consumer Recovery Expectations**: The upcoming Mid-Autumn Festival and National Day are anticipated to stimulate consumption, with social raw milk prices already showing an increase, indicating marginal supply-demand improvement. A moderate recovery in milk prices is expected by the end of the year to early next year [2][3]. Company Performance - **Stable Raw Milk Business**: In early July, the decline in raw milk prices narrowed. The company’s unique milk products account for a high proportion, leading to stable gross margins. Raw milk business revenue achieved mid-double-digit growth, outperforming the industry average [2][7]. - **Revenue Growth**: Overall revenue in the first half of the year showed steady growth, primarily driven by the raw milk business. However, the solutions business faced pressure due to the breeding cycle, impacting overall performance [2][8]. - **Gross Margin Improvement**: In the first half of 2025, the gross margin for the raw milk business increased by over 1 percentage point year-on-year, benefiting from a larger decline in feed and sales costs compared to raw milk prices [2][9]. Production and Capacity - **Stable Annual Production**: The company expects its annual raw milk production and sales to remain stable, with over 2 million tons produced in the first half of the year. The full-year target is set at 4 million tons, with a slight single-digit growth in stock expected by year-end [2][12][13]. - **Biological Asset Value Improvement**: The rise in beef prices has increased income from culling cows, reducing fair value fluctuations of biological assets. A positive profit trend is anticipated for the second half of the year, with a decrease in capital expenditures [2][14][15]. Market Trends and Pricing - **Raw Milk Demand and Pricing**: The first half of the year saw a 2% year-on-year decline in dairy product output, indicating weak consumption. However, seasonal factors and holiday consumption are expected to improve trends in the second half [5][6]. - **Collaboration with Yili**: YouRan Dairy is the largest producer of specialty milk in the country, with pricing based on cost-plus and profit contribution, collaborating with Yili to set prices annually. The company expects to increase the proportion of raw milk supplied to Yili to over 40% in 2025 [11][20][21]. Strategic Outlook - **Diversification of Downstream Clients**: YouRan Dairy has a three-year long-term agreement with Yili, ensuring a supply ratio of no less than 70%. The company is also open to expanding its customer base beyond Yili, with existing clients including Guangming and Junlebao [22]. - **Impact of Industry Policies**: Government policies have been supportive of both upstream and downstream sectors, with measures to assist small and medium-sized farms and subsidies for downstream dairy companies [24]. - **Long-term Demand from Deep Processing**: The domestic deep processing capacity for raw milk is expected to significantly enhance demand for raw milk, particularly as the consumption structure shifts from liquid milk to processed products [25]. Financial Considerations - **Capital Expenditure Trends**: Capital expenditures are expected to decrease this year, primarily due to reduced costs associated with new farm constructions and biological asset management [17][18]. - **Profitability and Dividend Plans**: The company will consider dividend distribution based on overall cash flow, prioritizing debt repayment due to high leverage. Shareholder returns will be a focus when appropriate [19]. Competitive Positioning - **Differentiation in Raw Milk Business**: YouRan Dairy's specialty milk accounts for nearly 30% of its raw milk business, significantly higher than competitors. The company offers a diverse range of specialty milk products, maintaining stable pricing and margins [26].

Group 1 - Modern Dairy is a pioneer in large-scale farming and is undergoing a digital transformation to enhance operational resilience through cost reduction and efficiency improvement [1] - The company has shifted its strategic focus from capacity expansion to technology-driven high-quality development, optimizing cost structure and resource utilization [1] - The cyclical nature of raw milk prices is influenced by supply expansion or contraction and the time lag in dairy cow reproduction and lactation [1][2] Group 2 - The supply-demand gap in dairy products is expected to narrow, with raw milk prices likely to stabilize and recover in mid to late 2025 [2] - Modern Dairy's core business is raw milk, which is projected to generate revenue of 10.454 billion yuan in 2024, accounting for 78.83% of total revenue [2] - The company has enhanced its vertical integration by launching feed and digital platform businesses to improve synergy within the industry chain [2] Group 3 - The productivity of dairy cows is improving, with an expected yield of 12.8 tons per head per year in 2024 [3] - Modern Dairy has strategically acquired FuYuan Dairy and ZhongYuan Dairy to achieve scale integration and diversify its operations across breeding, feed, deep processing, and digital platforms [3] - The company operates 47 dairy farms in China with over 490,000 dairy cows, focusing on core dairy farming regions, and has established quality forage bases in the U.S. [3] Group 4 - The tightening supply-demand gap in raw milk is expected to create investment opportunities, with profitability improvements anticipated in the second half of 2025 [3] - The company's projected EPS for 2025 and 2026 are 0.01 yuan and 0.10 yuan, respectively, with corresponding PE valuations of approximately 73 and 11 times, indicating significant upside potential [3]