Investment Rating - The report assigns an "Outperform" rating to the company for the first time, with a reasonable valuation range of HKD 4.39 to 4.73, indicating a potential upside of approximately 35-45% from the current stock price of HKD 3.50 [6][3]. Core Views - The company is positioned to benefit from the upward trend in both meat and milk prices, with expectations of significant profit recovery in the coming years. The original milk segment is projected to see profit increases of approximately HKD 14 billion and HKD 20 billion in 2026 and 2027, respectively, compared to 2024 [3][2]. - The report highlights the company's comprehensive business model, which includes breeding, feed, and large-scale dairy farming, making it a leader in the global raw milk supply chain [1][17]. Company Overview - The company, controlled by Yili Group, operates 97 large-scale farms across China's prime dairy regions, with a dairy cow inventory exceeding 600,000 heads and an expected raw milk production of around 3.7 million tons in 2024, ranking first globally [1][17]. - It is also the largest supplier of ruminant feed and alfalfa in China, with its subsidiary, Saikexing, being the largest dairy cattle breeding company in the country [1][17]. Industry Outlook - The report anticipates a turning point in the beef cycle in 2025, with domestic beef prices expected to rise until 2027 due to supply adjustments and increased demand [2][48]. - The domestic raw milk market has faced price declines for nearly four years, but the report suggests that the current high meat-to-milk price ratio may accelerate the culling of dairy cows, leading to a recovery in raw milk prices by 2025 [2][48]. Financial Projections - The company is projected to achieve net profits of HKD 6.7 billion, HKD 22.9 billion, and HKD 33.5 billion from 2025 to 2027, with earnings per share (EPS) expected to be HKD 0.17, HKD 0.59, and HKD 0.86, respectively [3][5]. - The report indicates that the company's revenue is expected to grow from HKD 20.1 billion in 2024 to HKD 24.8 billion in 2027, reflecting a compound annual growth rate (CAGR) of 6.6% [5][3].