Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][9]. Core Insights - The company is the world's largest raw milk supplier, with a strong operational base and a significant market position. It is expected to benefit from a potential upward cycle in beef and raw milk prices, leading to improved performance for leading farms [8][19]. - The raw milk price has been on a downward trend since August 2021, but a supply-demand turning point is anticipated as production capacity continues to decline [8][9]. - The company has a robust financial outlook, with projected revenues and profits expected to grow significantly from 2025 to 2027, driven by a recovery in raw milk prices and increased beef prices [9][10]. Summary by Sections 1. Company Overview - The company operates a full industry chain in the dairy sector, covering breeding, feed, and milk production, which creates a positive cycle of operations [19]. - It has established a strong relationship with Yili, a major dairy manufacturer, with over 90% of its raw milk sales directed to Yili [36]. 2. Raw Milk Market Dynamics - Raw milk prices have hit a ten-year low, leading to significant losses in the industry, but a recovery is expected as production capacity decreases [8][14]. - The company has seen a decline in cow inventory, with a projected reduction of approximately 550,000 to 600,000 cows over the next two years [8][14]. 3. Beef Price Trends - A new upward cycle in beef prices is anticipated, which is expected to positively impact raw milk prices due to their historical correlation [8][20]. - The company is projected to benefit from increased income from culling cows as beef prices rise [8][20]. 4. Financial Projections - Revenue forecasts for 2025-2027 are set at 200.3 billion, 217.3 billion, and 247.5 billion yuan, respectively, with corresponding net profits of 0.5 billion, 13.9 billion, and 34.1 billion yuan [9][10]. - The company is expected to achieve an EPS of 0.01, 0.33, and 0.81 yuan for the same period, with a PE ratio of 10X and 4X for 2026 and 2027 [9][10]. 5. Market Position and Competitive Advantage - The company is recognized as a leading provider of systematic solutions for ruminant animal husbandry, with a strong focus on feed and breeding services [46]. - It has a well-established R&D team and a comprehensive product line that covers the entire lifecycle of ruminant animals [50].

Investment Rating - The report maintains an "Outperform" rating for the agriculture, forestry, animal husbandry, and fishery industry [1][4]. Core Views - The report anticipates a reversal in the livestock cycle, particularly benefiting Hong Kong dairy farming stocks [1]. - The monthly recommended stock portfolio includes leading companies in various segments: Yuran Agriculture, Modern Farming, Muyuan Foods, Dekang Agriculture, and Lihua Co., among others [1][3]. - The report highlights the expected upward trend in domestic beef and milk prices, driven by a recovery in the livestock cycle and improved cash flow for leading companies [1][14]. Summary by Sections Livestock Sector - The livestock sector is expected to experience a significant turnaround, with recommendations for Yuran Agriculture and Modern Farming as key beneficiaries [1][14]. - The report notes that domestic beef production capacity is decreasing, which may lead to price increases through 2028 [14]. - The improvement in raw milk prices is anticipated to benefit dairy farming companies, with a projected profit increase for Yuran Agriculture and Modern Farming [17]. Swine Sector - The swine sector is highlighted for its potential recovery, with leading companies like Huazhong, Dekang Agriculture, and Muyuan Foods recommended for investment [1][14]. - The report indicates that the industry is moving towards a more stable price center, supported by a reduction in production capacity and improved cash flow for leading firms [15][20]. Poultry Sector - The poultry sector is expected to see a recovery in demand, with recommendations for Lihua Co. and Shengnong Development [1][18]. - The report notes that the supply of white feather chickens is increasing, but demand is expected to improve, leading to potential price recovery [22][24]. Pet Sector - The pet food market is identified as a growing segment, with a focus on domestic brands like Guibao Pet [1][16]. - The report emphasizes the long-term growth potential of the pet sector, driven by rising consumer sentiment and market expansion [16]. Feed Sector - The feed sector is expected to benefit from deeper industrialization in livestock farming, with leading companies like Haida Group recommended [1][18]. - The report notes that feed prices are at historical lows, providing a strong support level for future price recovery [18].

Core Insights - The report emphasizes a favorable outlook for the livestock sector, particularly dairy farming, anticipating a significant cyclical reversal in the industry [1][12] - The recommended stocks include leading companies in various segments such as dairy, pork, poultry, and pet food, indicating a diversified investment strategy [1][3] Livestock Sector - The livestock sector is expected to experience a cyclical reversal, with both beef and milk prices projected to rise, benefiting companies like Yuran Agriculture and Modern Farming [14][17] - The domestic beef market is anticipated to improve due to reduced production capacity and favorable pricing dynamics, with beef prices currently at 61.88 yuan/kg, reflecting a month-on-month increase of 1.59% [29] - The report highlights the potential for significant earnings recovery for dairy farming companies as milk prices are expected to rebound, driven by improved market conditions [14][17] Pork Sector - The pork sector is witnessing a stabilization in prices, with January 2026 pork prices at 12.16 yuan/kg, down 4% month-on-month, while piglet prices have surged by 57.86% [20][21] - Leading companies in the pork industry, such as Muyuan Foods and Huazhong Holdings, are expected to benefit from improved cash flows and dividend returns as the market stabilizes [15][19] - The report notes that the industry is undergoing a rationalization process, with a focus on reducing production capacity and enhancing profitability for leading firms [20][21] Poultry Sector - The poultry sector is experiencing a slight increase in supply, with broiler prices showing a month-on-month increase of 2.94% to 7.70 yuan/kg, indicating a potential recovery in demand [22][23] - The report suggests that the white-feathered chicken industry is poised for price recovery as domestic demand stabilizes, supported by seasonal consumption trends [22][24] - The overall outlook for poultry remains positive, with expectations of improved profitability driven by demand recovery and supply adjustments [22][24] Pet Food Sector - The pet food market is identified as a high-growth area, with domestic brands gaining market share and expected to benefit from rising consumer sentiment [16][18] - The report highlights the strong performance of leading pet food companies, which are focusing on product upgrades and direct sales strategies to capture market opportunities [16][18] - The pet food export volume has increased by 12.99% month-on-month, indicating robust demand in international markets [16][18] Feed Sector - The feed industry is expected to benefit from the deepening industrialization of livestock farming, with leading companies leveraging technological and service advantages to enhance competitive positioning [1][3] - The report notes that feed prices are at historical lows, providing a supportive cost structure for livestock producers [20][21] Agricultural Products - The report tracks agricultural product prices, indicating that soybean meal prices are at historical lows, while corn prices have shown a slight increase to 2333 yuan/ton [2][21] - The overall agricultural market is characterized by a focus on supply-demand dynamics, with expectations of tightening supply for key commodities like soybeans and corn [20][21]

Core Insights - The report emphasizes a favorable outlook for the livestock sector, particularly dairy farming, anticipating a significant cyclical reversal benefiting Hong Kong-listed dairy farming companies [1][12] - The investment strategy highlights a recommended monthly portfolio including leading companies in various segments such as dairy, pig farming, and pet food [1][3] Livestock Sector - The livestock sector is expected to experience a cyclical reversal, with both beef and milk prices projected to rise, driven by a reduction in domestic beef production and a historical low in milk prices [14][29] - Key recommendations include Yuran Dairy and Modern Farming, which are positioned to benefit from the anticipated price recovery in raw milk and beef [14][17] Pig Farming Sector - The pig farming sector is witnessing a stabilization in prices, with a notable increase in piglet prices, indicating a potential recovery in profitability for leading companies [20][21] - Recommended companies in this sector include Muyuan Foods, Wens Foodstuffs, and Huazhong Holdings, which are expected to benefit from improved cash flow and dividend returns [3][15] Poultry Sector - The poultry sector is seeing a slight increase in supply, with expectations of demand recovery supporting price stability, particularly for broiler chickens [22][24] - Leading companies such as Lihua Agricultural and Shengnong Development are highlighted for their competitive advantages in cost management and market positioning [18][19] Pet Food Sector - The pet food market is identified as a high-growth area, benefiting from rising consumer sentiment and the emergence of domestic brands [16][18] - Companies like Guibao Pet Food are recommended for their strong growth potential in this segment [3][16] Feed Sector - The feed industry is expected to deepen its industrialization, with leading companies leveraging technological and service advantages to enhance competitive positioning [1][3] - The report notes that feed prices are at historical lows, providing a supportive cost structure for producers [20][21] Agricultural Products - The report tracks agricultural product prices, noting fluctuations in pork, chicken, and feed prices, with implications for overall market dynamics [2][21] - The analysis indicates that soybean meal prices are at historical lows, while corn prices are stabilizing, suggesting a tightening supply-demand balance in the medium term [20][21]

Group 1 - The core viewpoint of the report is that the policy strengthening the "meat and milk resonance" logic is favorable for the reversal of the raw milk cycle, with rising beef prices improving cash flow from cattle sales and indicating a potential turning point in the raw milk cycle by 2026 [1] - The Ministry of Commerce announced safeguard measures for imported beef, which will be implemented from January 1, 2026, to December 31, 2028, involving country-specific quotas and an additional 55% tariff on imports [2] - The combination of quotas and tariffs is expected to tighten the overall beef import market, impacting supply and supporting beef prices [2] Group 2 - Domestic beef and beef prices have been strengthening since 2025, primarily due to tightened import policies and ongoing reductions in domestic cattle inventory, leading to a sustained supply constraint [3] - The import quotas for beef from 2026 to 2028 are set at 2.688 million tons, 2.742 million tons, and 2.797 million tons respectively, representing a 6% reduction compared to the 2024 import volume of 2.87 million tons [3] - The combination of quotas and tariffs is expected to support beef prices by restricting both supply and price dynamics in the market [3]

Core Insights - The report maintains an "Outperform" rating for the agriculture, forestry, animal husbandry, and fishery sector, anticipating a rebound in the meat and dairy cycles, benefiting industries related to dairy and beef cattle [1][4] - The monthly recommended stock portfolio includes leading companies in various segments, such as YouRan Agriculture, Modern Farming, and Muyuan Foods, indicating a focus on industry leaders poised for recovery [1][3] Livestock Sector - The livestock sector is expected to experience a significant reversal, with a focus on beef and dairy cattle. The domestic beef production capacity is anticipated to decrease to levels seen during the 2019 pig cycle, with prices expected to rise until 2028 [14] - The report highlights that the domestic raw milk price has been in decline for nearly four years, leading to production capacity pressures. The "meat and milk ratio" has reached historical highs, which may accelerate the culling of dairy cows [14][36] - Recommended companies in the livestock sector include YouRan Agriculture and Modern Farming, which are expected to benefit from improving raw milk prices and the upward trend in beef prices [14][17] Swine Sector - The swine sector is characterized by a gradual recovery in prices, with the average price of live pigs at 12.67 yuan/kg, reflecting a 13% month-on-month increase [20] - The report emphasizes the importance of leading companies in the swine industry, such as Huazhong Holdings and Muyuan Foods, which are expected to see significant cash flow improvements and higher dividend returns due to their low-cost advantages [15][19] - The overall industry is projected to stabilize, with a focus on valuation recovery for leading firms as the market adjusts to supply and demand dynamics [20][21] Poultry Sector - The poultry sector is witnessing a slight increase in supply, with expectations for demand recovery. The price of broiler chickens has shown a month-on-month increase of 9% [22] - The report notes that the structure of parent stock is changing, which may impact actual supply growth. However, demand is expected to benefit from domestic stimulus policies and macroeconomic improvements [22][28] - Key companies in the poultry sector include Lihua Food and Shengnong Development, which are positioned to maintain good profitability amid these changes [18][22] Pet Industry - The pet industry is identified as a promising consumer segment, with domestic brands rapidly gaining market share. The emotional consumption trend is expected to drive long-term growth in this sector [16][18] - Recommended companies include Guibao Pet, which is focusing on product upgrades and direct sales transformation to capture market opportunities [16][18] Feed and Grain Sector - The feed sector is benefiting from deeper industrialization in livestock farming, with leading companies expected to widen their competitive advantages through technology and service [1][3] - The report indicates that corn prices are at a historical low, with strong support expected from cost structures, while soybean meal prices are also at low valuations, awaiting a cyclical rebound [18][21]

Investment Rating - The industry investment rating is "Outperform the Market" (maintained) [1] Core Insights - The Ministry of Commerce has implemented temporary anti-subsidy measures on imported dairy products from the EU, which is expected to boost domestic raw milk demand [2][3] - The preliminary ruling indicates that the anti-subsidy tax rates for sampled companies range from 21.9% to 42.7%, with the overall import volume of subsidized products from the EU accounting for 23.61% to 34.63% of China's total dairy imports from 2020 to Q1 2024 [3][4] - The raw milk price cycle is currently at the bottom, with cash loss pressures in the dairy industry expected to continue into 2025, but a recovery is anticipated in 2026 [3][6] - The supply of dairy cows has shown signs of reversal, with the proportion of breeding cows reaching historical highs, indicating that the elimination of milking cows will outpace replenishment, leading to a supply gap [6] - The meat and milk cycle is expected to resonate positively, with beef prices having reversed in 2025 and anticipated supply gaps continuing to widen into 2026 [3][15] Summary by Sections Section: Anti-subsidy Measures - The Ministry of Commerce announced temporary anti-subsidy measures on EU dairy imports starting December 23, 2025, due to evidence of subsidies causing substantial harm to domestic industries [2][4] Section: Raw Milk Market - The average price of fresh milk in major production areas was approximately 3.0 CNY/kg by the end of December 2025, continuing a downward trend [6] - The domestic dairy industry is accelerating the development of deep processing capacities, with projects expected to enter production between late 2025 and 2026, which will further enhance raw milk demand [6][11] Section: Investment Recommendations - The report recommends focusing on dairy farming stocks, as improvements in raw milk prices will benefit core profitability, and the upward cycle in beef prices is expected to enhance profits from cow elimination and calf sales [3][17] - Key stocks highlighted include Yurun Dairy and Modern Dairy, which are expected to benefit from the synergy between meat and milk cycles [17]

Core Viewpoint - Yuran Dairy (09858) has seen its stock price rise over 7%, reaching a new high of 4.91 HKD, driven by favorable market conditions and industry trends [1]. Company Summary - Yuran Dairy is the largest raw milk supplier in China, operating 100 farms and raising approximately 620,000 dairy cows. The company is projected to produce about 3.74 million tons of raw milk in 2024, accounting for 12.1% of the national total [1]. - The company is also the largest provider of ruminant feed in China, with its subsidiary, Saikexing, being the largest dairy cattle breeding enterprise in the country [1]. - In the first half of this year, Yuran Dairy reported an average feed cost of 1.91 HKD per kilogram, with a leading cow yield of 12.9 tons per cow [1]. Industry Summary - Recent reports indicate that the price of raw milk has rebounded to around 3 HKD per kilogram, which has slowed the industry's destocking rate. However, the industry continues to face significant financial pressure and ongoing losses, suggesting that capacity reduction may persist [1]. - It is anticipated that as supply-side capacity reduction gradually takes effect, raw milk prices may stabilize and recover next year [1]. - In the beef cattle sector, prices for calves and live cattle have recently increased, indicating the potential for a new beef cattle cycle, which could enhance the overall sector's performance [1].

Core Viewpoint - The stock of YouRan Dairy (09858) has risen over 7%, reaching a new high of 4.91 HKD, driven by positive market sentiment and expectations of price stabilization in the raw milk sector [1] Company Summary - YouRan Dairy is the largest raw milk supplier in China, operating 100 farms and raising approximately 620,000 dairy cows, with an expected raw milk production of about 3.74 million tons in 2024, accounting for 12.1% of the national total [1] - The company is a leading player in the upstream industry, also being the largest supplier of ruminant feed in China, with its subsidiary, Saike Xing, recognized as the largest dairy cattle breeding enterprise in the country [1] - In the first half of this year, the average feed cost for raw milk was 1.91 HKD per kilogram, with the average yield per cow reaching 12.9 tons, which is considered industry-leading [1] Industry Summary - According to a report from Guojin Securities, the price of raw milk has recently rebounded to around 3 HKD per kilogram, which has slowed the industry's destocking rate [1] - Despite significant financial pressures and ongoing losses within the industry, there is an expectation for continued destocking of production capacity, which may lead to a stabilization and potential increase in raw milk prices next year [1] - The prices of calves and live cattle have also seen an increase recently, indicating the potential for a new cycle in the beef cattle market, which could enhance the overall sector's performance [1]

Core Viewpoint - Yurun Dairy (09858) has seen its stock price increase by over 7%, reaching a new high of 4.91 HKD, driven by rising raw milk prices and expectations of industry recovery [1] Company Summary - Yurun Dairy is the largest raw milk supplier in China, operating 100 farms and raising approximately 620,000 dairy cows, with an expected raw milk production of about 3.74 million tons in 2024, accounting for 12.1% of the national total [1] - The company is a leading player in the upstream industry, being the largest supplier of ruminant feed in China, and its subsidiary, Saikexing, is the largest dairy cattle breeding company in the country [1] - In the first half of this year, Yurun Dairy reported an average feed cost of 1.91 HKD per kilogram for raw milk, with a per cow yield of 12.9 tons, which is considered industry-leading [1] Industry Summary - Recent reports indicate that the price of raw milk has rebounded to around 3 HKD per kilogram, which has slowed the industry's destocking rate [1] - Despite significant financial pressures and ongoing losses within the industry, capacity reduction is expected to continue, leading to a stabilization and potential recovery of raw milk prices next year [1] - In the beef cattle sector, prices for calves and live cattle have recently increased, suggesting the possibility of a new beef cattle cycle, which may enhance the overall sector's performance [1]