Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [9][11]. Core Insights - Modern Dairy is a pioneer in large-scale farming, with digital transformation and refined operations driving cost reduction and resilience. The company is positioned as a leader in China's raw milk production and full industry chain operations, with a clear trend of tightening raw milk supply and demand gap, suggesting potential profitability improvement by the second half of 2025 [3][6][9]. Summary by Sections Company Overview - Modern Dairy, established in 2005 and listed on the Hong Kong Stock Exchange in 2010, is headquartered in Ma'anshan, Anhui Province. The company aims to be a global leader in the dairy industry through a strategy focused on industry chain layout, digital innovation, and collaboration with strategic partner Mengniu [6][17]. Market Dynamics - The report discusses the cyclical nature of raw milk prices, indicating that prices may stabilize and improve by mid to late 2025 due to a combination of steady demand and accelerated capacity reduction in the upstream dairy sector [7][9]. Business Performance - In 2024, the company's raw milk business generated revenue of 10.454 billion yuan, accounting for 78.83% of total revenue. The company has also expanded into feed and digital platform businesses to enhance vertical synergy within the industry chain [8][54]. Financial Metrics - Modern Dairy's EBITDA for 2024 reached 2.986 billion yuan, a year-on-year increase of 19.6%. The company reported a total revenue of 13.254 billion yuan, a slight decrease of 1.52% year-on-year, with a net profit attributable to shareholders of -1.417 billion yuan [18][61]. Growth Strategy - The company has focused on high-quality development driven by technology, optimizing cost structures, and improving resource utilization efficiency. This strategic shift aims to consolidate its leading position in the industry amid increasing market concentration [30][37]. Future Outlook - The report anticipates that the tightening supply-demand gap in raw milk will create investment opportunities, with significant upside potential in the company's earnings and valuation expected in 2025 and 2026 [9][61].