Core Viewpoint - The implementation of the new national standard for sterilized milk marks a significant upgrade in China's dairy industry, transitioning from a reliance on reconstituted milk to a focus on fresh milk as the sole ingredient, thereby enhancing product quality and consumer trust [1][2][3]. Group 1: Regulatory Changes - The new national standard prohibits the use of reconstituted milk in sterilized milk, mandating that only fresh milk be used as the sole raw material [1][2]. - This regulatory change aims to improve transparency and consumer choice, reducing the confusion between "pure milk" and "reconstituted milk" [3][7]. Group 2: Market Dynamics - The new standard has led to simpler product labels, with a noticeable increase in products marketed as "100% fresh milk" [2]. - The demand for fresh milk is expected to rise, benefiting domestic dairy farming and increasing farmers' income [7][8]. Group 3: Industry Impact - The implementation of the new standard is seen as a test of the entire dairy supply chain's capability, particularly in sourcing high-quality fresh milk [7]. - Larger dairy companies with established supply chains are likely to thrive, while smaller companies may struggle due to their reliance on external sources [8]. Group 4: Quality and Production - China's fresh milk production capacity has significantly improved, with 40.794 million tons of milk produced in 2024 and a 100% pass rate in quality inspections [4][5]. - The new standard is expected to enhance the overall quality of dairy products, promoting higher standards in production processes and consumer satisfaction [6][7].

Group 1 - Starting from September 16, 2023, the use of reconstituted milk in sterilized milk is prohibited, requiring only raw milk as the ingredient [1] - The new regulation aims to enhance the nutritional value and taste of milk, as reconstituted milk undergoes multiple heat treatments that reduce active calcium and lactoferrin content [1] - Major dairy companies like Guangming Dairy and Yili have already transitioned to using only raw milk, with no reconstituted milk found in their products [1][2] Group 2 - The impact of the new national standard on most dairy companies is minimal, as many large enterprises had already stopped using reconstituted milk due to an oversupply of raw milk and declining prices [2] - Historically, the use of reconstituted milk was more common when there was a shortage of raw milk, but current market conditions have shifted, making it unnecessary for large companies to revert to this practice [2]

Group 1 - The company "Renyang Yitou Niu" has shifted its financing strategy after terminating its IPO in February 2023, opting for a pledge of 100% equity in its subsidiary Hebei Kanghong Animal Husbandry for 103 million yuan to raise funds for business expansion and farm construction [1][2] - Kanghong Animal Husbandry is a core part of the company's dairy segment, established in October 2020 with a registered capital of 103 million yuan, and is recognized as one of the largest dairy farms in China with a herd size of 27,000 cows as of 2022 [1][3] - The company's IPO journey faced significant challenges, including high marketing costs and insufficient R&D investment, leading to multiple regulatory feedbacks and ultimately the withdrawal of its IPO application [2][3] Group 2 - The dairy industry is currently experiencing intense competition, with a projected 2.8% decline in raw milk production in 2024, marking the first decrease since 2018 [3] - Among 21 listed dairy companies, only 5 have achieved growth in both revenue and net profit, while 13 have seen declines in both metrics [3] - The company's previous plans for significant investments in smart farm construction and information system upgrades are now under scrutiny following the termination of its IPO, raising questions about its strategic adjustments and competitiveness in a challenging market [3]