HK Stock Market Move | Raw milk prices continue to rise; CH MODERN D (01117) up over 8%, YOURAN DAIRY (09858) up over 7%.

Pasture leaders strengthened this morning. As of press time, CH MODERN D (01117) rose 8.46% to HK$1.475; YOURAN DAIRY (09858) rose 7.33% to HK$4.025. On the news front, raw milk prices have risen modestly and mildly from the bottom since the start of this year. The October contract milk price was RMB3.10/kg, up from the April low of RMB3.02/kg; in early November, the Ningxia bulk milk price reached RMB3.7/kg. Guosheng believes that raw milk supply and demand have entered a stage of tight balance. On the supply side, against the backdrop of natural culling of dairy cows and a limited proportion of replacement heifers, there is certain difficulty in subsequent restocking. On the demand side, efforts are being made to develop deep processing. The subsequent supply-demand pattern may push milk prices higher and drive the raw milk cycle upward. EB SECURITIES previously noted that YOURAN DAIRY and CH MODERN D, as leading pasture companies, are backed by leading dairy enterprises represented by Yili and Mengniu. In recent years, they have expanded herds against the trend, and in the subsequent period of milk price stabilization and upward movement, they are expected to expand their competitive advantages. Combined with the expectation of improved biological asset impairment, greater elasticity is expected to be released on the profit side. Therefore, the leading companies in the pasture industry, YOURAN DAIRY and CH MODERN D, are strongly recommended.