HK Stock Market Move | The reversal signal of raw milk has emerged, with an increase in the interim report's profit forecast. CH MODERN D (01117) rose by 6%, and YOURAN DAIRY (09858) rose by more than 5%.

The livestock stocks rose in early trading. As of the time of writing, CH MODERN D (01117) is up 6.69%, priced at HK$1.515; YOURAN DAIRY (09858) is up 5.45%, priced at HK$4.16. In terms of news, since May, affected by factors such as foot-and-mouth disease and heat stress, the price of spot milk has risen and surpassed the contract milk price. On July 24, the price of fresh milk in major production areas reached 3.06 yuan/kg, showing a year-on-year increase. Industry insiders indicate that the contract milk price is a lagging reflection of the downstream dairy companies' judgment on the supply and demand of raw milk. Its year-on-year growth suggests that the downstream sector is also beginning to sense a tightening of supply, signaling a clear bottoming out. Additionally, both CH MODERN D and YOURAN DAIRY, leading raw milk companies, previously issued earnings forecasts indicating improved operational performance in the first half of this year, achieving profitability. China Securities Co., Ltd. pointed out that the recent rise in spot milk prices has surpassed contract prices, while daily spray-dried fresh milk has decreased to its lowest level in two years. The prices of milk in the main production areas have slightly rebounded, showing clear signals of a reversal in the raw milk cycle. As upstream continues to reduce inventory, it is expected that the raw milk output will gradually tighten, while the downstream deep processing capacity increases demand. There is an optimistic outlook for a mild rise in raw milk prices, and leading livestock groups will exhibit operational flexibility, with a recommendation for YOURAN DAIRY. During the rising phase of milk prices, the competitiveness of midstream dairy companies in liquid milk enhances, upstream-related impairments decrease, and investment returns increase, positively affecting performance improvement.