The Zhitong Finance App learned that Huaxi Securities released a research report saying that in a context where domestic demand is gradually becoming more important, the consumer sector focuses on preferring and must-choose consumption. The dairy industry logic is defensible, and leaders in the dairy industry are expected to have a strong win rate, and the focus is on recommending this sector. The leading dividend in the dairy industry is Eri+Mengniu, which is optimistic that the advantages of traditional white milk faucets will increase in the procyclical cycle. Under other circumstances, it still has the advantage of stable performance and scarce consumption dividend attributes; the growth preferred track, the leading new dairy industry+ Myoko, low temperature and deep processing tracks are all important directions for the future upgrading of the dairy industry; the raw milk cycle rebounds, the core is superior animal husbandry and modern animal husbandry, and continues to be optimistic that the raw milk cycle reverses and returns to the historical average price level.
Huaxi Securities's main views are as follows:
Incident Overview:
Currently, the market is facing stylistic changes, macroeconomic changes and liquidity. Thinking about investment ideas for 26Q4 and '27, the bank believes that in the following four situations, the dairy industry leaders are expected to have a strong win rate, and focus on recommending this sector by focusing on the consumer sector and the preferred dairy sector.
Analysis and judgment:
Domestic demand game: pro-cyclical undervaluation switching, dairy products can be attacked and defended
Looking ahead to next year, the AI hardware dividend on the export side will be affected by the reduction in capital expenditure, compounding the base effect. If the export growth rate is under pressure, from a macro-narrative assumption, domestic demand expectations are expected to rise, and the dairy industry logic can be defended. Attack can look at the expansion and channel penetration of high-margin categories, and the upturn in traditional categories and basic product cycles. The dairy sector can earn the industry's beta valuation flexibility+performance+dividend income+excess income.
Fluctuations have no main line: improved operation, stable performance+enhanced dividends, holding returns
Assuming that external factors (geopolitics, oil prices, global economy, US debt, inflation, etc.) have not changed, and the general market is expected to remain volatile and lack a main line. Under stable defensive demand, leading companies can expect to enhance profit stability through operational improvements, while the 3-year cycle will improve performance. Combined with Erie's three-year dividend promise and Mengniu's annual dividend enhancement expectations, they can earn performance+excess+dividend income.
Growth dominates: the technology sector picks up, and dairy products earn definite results
Assuming an improvement in peripheral liquidity or a breakthrough in growth sector logic, the growth sector (including the technology sector) is expected to rebound, and the market siphon effect may reappear, suppressing the overall consumer market beta. However, due to defensive attributes and the certainty of the upward cycle, the dairy sector can still be expected to obtain excess and performance benefits within the consumer sector, and earn performance+dividend income under reasonable valuations.
Bear market and stagflation: low undervaluation chips, necessary rigidity for defense
Assuming that it enters a bear market phase where both valuation and profits are sluggish, the dairy sector will return to the traditional attributes of mandatory rigidity and obtain dividend protection in a situation where the global economy is weak and assets generally fall. If we enter a stagnant environment, even if demand is weak, the dairy sector will still have cyclical profit elasticity, and demand is just what is needed, and excess earnings are expected to be obvious.
Investment advice
The leading dividend in the dairy industry is Yili+Mengniu. They are optimistic that the advantages of traditional white milk faucets will increase proactively. Under other circumstances, they still have the advantage of stable performance (improvement in investment income/impairment, etc.) + scarce consumption dividend attributes (based on the 25-year dividend amount, the closing price on October 26 corresponds to the Yili/Mengniu dividend rate of 5.1%/3.3%, respectively).
The profit forecast for Yili Co., Ltd. (600887.SH) remained unchanged, with operating income of 1207/1261/129.4 billion yuan in 26-28; net profit of 103/135/14.2 billion yuan; and EPS of 1.62/2.14/2.25 yuan. On October 26, 2026, the closing price of 28.6 yuan corresponded to P/E of 18/13/13 times, respectively, maintaining the “buy” rating.
The profit forecast for Mengniu Dairy (02319) remained unchanged, with operating income of 888/949/99.2 billion yuan for 26-28; net profit of 48/61.66 billion yuan; EPS of 1.23/1.57/1.71 yuan; closing price of HK$18.63 (exchange rate 0.86) on October 26, 2026, corresponding 13/10/9 times the PE valuation. Maintain a “buy” rating.
New Dairy Industry+ Myoko, the leader in the growth and preferred track, is an important direction for the future upgrading of the dairy industry. At the same time, both tracks are showing a trend of increasing scale and diversifying competition as penetration rate increases; leading racetrack profits rebound from undervaluation and excess revenue.
The profit forecast for New Dairy (002946.SZ) remained unchanged, with 26-28 operating income of 118.9/126.4/13.31 billion yuan; net profit to mother of 8.5/10.1/1.13 billion yuan; and EPS of 0.99/1.18/1.31 yuan. The closing price of 15.2 yuan on October 26, 2026 corresponded to P/E of 15/13/12 times, respectively, maintaining the “buy” rating.
The profit forecast for Mikolanduo (600882.SH) remained unchanged, with operating income of 68/80/9 billion yuan in 26-28; net profit of 3.2/4.6/570 million yuan; and EPS of 0.63/0.90/1.11 yuan. The closing price of 19.92 yuan on October 26, 2026 corresponds to a P/E of 32/22/18 times, respectively. Maintain a “buy” rating.
The upward rebound in raw milk cycle performance is the core superior animal husbandry+modern animal husbandry. The rebound in loose milk prices has become a leading indicator of the cycle bottoming and upward. Continuing to be optimistic that the raw milk cycle will reverse to the historical average price level, and focus on the improvement in traditional demand and the incremental release of deep processing demand in 26-27. This will be a key factor driving the raw milk cycle to break through the historical average price and further increase; I am optimistic that the performance will continue to improve in '26, driven by impairment.
The profit forecast for Youran Animal Husbandry (09858) remained unchanged, with operating income of 215/242/24.6 billion yuan in 26-28; net profit to mother of 17.5/35.0 billion yuan; and EPS of 0.39/0.78/0.81 yuan. The closing price of HK$3.385 (exchange rate 0.86) on October 26, 2026 corresponds to 7/4/4 times PE, respectively, maintaining the “buy” rating.
Maintain Hyundai Animal Husbandry's (01117) profit forecast unchanged, with operating income of 136/154/15.9 billion yuan in 26-28; net profit to mother of 70/16.7/1.94 billion yuan; EPS 0.09/0.21/0.24 yuan. The closing price of HK$1.31 (exchange rate 0.86) on October 26, 2026 corresponds to 13/5/5 times PE, respectively, maintaining the “buy” rating.
Risk Alerts
Food safety risks; sharp rise in raw material prices; increased competition affects revenue performance; sales of new products fall short of expectations, etc.