The Zhitong Finance App learned that CaiTong Securities released a research report saying that the supply and demand for ranches is tight and stable, and an inflection point in the raw milk cycle can be expected. The bank believes that with the support of reducing losses from cattle rushing and feed cost reduction, the inflection point in animal husbandry performance has reached an inflection point in the priority raw milk cycle. Currently, the reporting side mainly reflects non-cash profits, and the flexibility of cash profits supported by the reversal of milk prices is the core focus. Downstream dairy companies are also benefiting from the tight balance between supply and demand. Low temperatures and deep processing of dairy products are still industry trends.
CaiTong Securities's main views are as follows:
Leading livestock enterprises turn losses into profits in mid-term
Youran Animal Husbandry issued a positive profit forecast for 1H2026. The net profit for 1H2026 is expected to be between 739 million yuan and 903 million yuan (median of about 821 million yuan), a year-on-year profit. Main reasons: 1) Reduced losses due to changes in sales costs due to fair value of biological assets, narrowing of milk price declines, rising cattle prices, higher dairy yield, and lower feed costs; 2) Continued improvement in core business operations, compounded by declining feed costs, and gross profit increased year-on-year.
Supply is tight and demand is stable, and an inflection point in the raw milk cycle can be expected
1) On the supply side, bullfighting is nearing the balance point, and a cyclical rebound from September to October is expected. 2) On the demand side, the current overall demand for terminal dairy products is stable, and consumption of liquid milk may maintain a slight increase. The expected increase is mainly due to the release of production capacity from deep processing.
The inflection point in animal husbandry business performance is approaching first, and the release of flexibility may have just begun
Previously, Hyundai Animal Husbandry and the Australian and Asian Group all issued positive profit forecasts. The 1H2026 results all changed from loss to profit, and the logic of reversing losses was basically the same. The bank believes that with the support of reducing losses from cattle rushing and feed cost reduction, the inflection point in animal husbandry performance has reached an inflection point in the priority raw milk cycle. Currently, the reporting side mainly reflects non-cash profits, and the flexibility of cash profits supported by the reversal of milk prices is the core focus. The logic of reevaluating losses in the second half of the year is still expected to continue, and the performance of animal husbandry enterprises in the second half of the year is expected to be released at an accelerated pace in anticipation of a reversal in milk prices. Continuous attention: superior animal husbandry, modern animal husbandry.
Upstream and downstream resonance, focus on downstream dairy industry opportunities
Downstream dairy companies are also benefiting from the tight balance between supply and demand. Leading companies Yili Shares and Mengniu Dairy have bottom value. Low temperatures and deep processing of dairy products are still industry trends, and the Miracolanduo and New Dairy industries still have α. Continued attention: Yili Co., Ltd., Mengniu Dairy, Melco Land, New Dairy.
Risk warning: Consumption recovery falls short of expectations, increased industry competition, food safety issues, etc.