HK Stock Market Move | YOURAN DAIRY(09858) rose nearly 12% during the trading day. The dairy industry may face accelerated clearance, and the company's cost management has significantly improved.

YOURAN DAIRY (09858) rose nearly 12% during the trading session, and as of the time of writing, it is up 7.98% to HK$1.76 with a transaction amount of 296.644 million Hong Kong dollars. CITIC SEC pointed out that the elimination and consolidation in the dairy industry will continue in 2024. The bank believes that with the arrival of the off-season after the Spring Festival, the industry as a whole is still in oversupply, and the price of raw milk may further decline, which could lead to a new peak in the industry consolidation. The Ministry of Commerce initiated a case review on imported beef on December 27, 2024, and the impact of low-priced imported beef on domestic beef may weaken, potentially stabilizing and increasing beef prices, which is favorable for accelerating the elimination and consolidation in the dairy industry. The bank continues to hold the view that the industry's supply and demand turning point will occur in the second half of 2025. Citi previously stated that YOURAN DAIRY's raw milk sales volume and gross profit margin in the first half of 2024 were better than expected. In terms of costs, YOURAN DAIRY achieved significant management effectiveness. During the reporting period, YOURAN DAIRY's feed cost per kilogram decreased by 12.9%, non-feed costs decreased by 2.9%, and overall costs decreased by 11%. This was due to the company's continuous optimization of the cost structure, resulting in a decrease in unit costs. Management expects that with further reductions in feed prices and improvements in operational efficiency, the gross profit margin will maintain a healthy level in the second half of the year.