Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 7.60, up from a previous value of HKD 6.73, based on a 18x PE for 2026 [5][4]. Core Insights - The company is positioned at the bottom of the industry cycle in 2025, with expectations of a rebound in beef prices and stabilization in raw milk prices. The fair value changes in biological assets are expected to reduce losses, potentially leading to a positive year-on-year profit in the second half of 2025 [1][3]. - A recovery phase is anticipated in 2026, with a "milk and meat resonance" expected to drive performance improvements. The peak of this dual-cycle resonance is projected for 2028, establishing a "stable milk and strong meat" scenario, which will solidify the company's profit base and enhance profit elasticity [1][3]. - The company is expected to achieve a cumulative pre-tax profit increase of approximately RMB 4 billion from the reversal of the meat and milk cycle from 2025 to 2028 [3]. Summary by Sections 2025 Review - The company is expected to maintain cash profitability despite being at the bottom of the cycle, with a projected revenue of RMB 20.89 billion, reflecting a 3.96% increase year-on-year. The net profit attributable to the parent company is forecasted to be RMB 407.63 million, a significant recovery from a loss of RMB 861.49 million in 2024 [9][10]. 2026 Outlook - For 2026, a balanced supply-demand situation in raw milk is anticipated, with milk prices expected to stabilize and rise. The company’s cash profitability is projected to improve, supported by rising beef prices and a reduction in biological asset impairments [3][10]. - The expected average price of fresh milk in China is forecasted to rise to RMB 3.6 per kilogram by 2028, with beef prices recovering to previous cycle highs, contributing to a robust profit structure for the company [3][4]. Profit Forecast and Valuation - The profit forecast for the company has been revised upwards, with net profits projected at RMB 4.1 billion, RMB 15.8 billion, and RMB 30.7 billion for 2025, 2026, and 2027 respectively. The corresponding EPS is expected to be RMB 0.10, RMB 0.38, and RMB 0.73 [4][9]. - The valuation is based on a comparison with peers, with a reference PE of 18x for 2026, leading to a target price of HKD 7.60 [4][11].