HK Stock Market Move | YOURAN DAIRY (09858) rose more than 5% during trading and was included in the MSCI Global Small Cap Index. The company's profit margin from milk sales leads the industry.

YOURAN DAIRY (09858) rose more than 5% in midday trading and, as of the time of writing, was up by 5.26% at HK$2.2, with a trading volume of HK$161.42 million. In terms of news, on February 12th, MSCI announced the results of its index review for February, with adjustments set to take effect after the close on February 28th. The MSCI Global Small Cap Index will include stocks in China, including YOURAN DAIRY. Orient pointed out that YOURAN DAIRY is the largest raw milk supplier in the country, with 96 ranches and 600,000 cows at the end of 24H1, producing 3.02 million tons of milk in 2023. The company's revenue has increased from HK$6.3 billion in 2018 to HK$18.7 billion in 2023, with revenue from raw milk business increasing from HK$2.6 billion to HK$12.9 billion (CAGR of 38%); achieving revenue of HK$10.1 billion in 2024H1 (yoy +11%), benefiting from increased raw milk production. The bank continued to point out that the company's raw milk sales structure is excellent, with a significant proportion of fresh milk sales, and the average selling price of raw milk in 24H1 was HK$4.16/kg; the milk margin on sales is leading in the industry. With profitable milk sales, the company's leading dairy herd size and high yield per cow create good returns for the company. The strategic layout of ranch construction has been completed, with expected significant reductions in future investment, and capital expenditures are expected to decrease; the company's operational cash flow is steadily increasing, with the bank believing that the company's cash flow has reached a turning point. It is estimated that the fair value of dairy cows will decrease by around HK$1 billion in 2024; if the decline in milk prices narrows in 2025, the decline in the fair value of dairy cows of the company will also narrow simultaneously, indicating that the company's profit turning point is earlier than the milk price turning point.