CMB Securities: Profit of dairy companies improved in Q1 financial reports, and the overall outlook for the year is expected to further enhance.

CITIC Securities released a research report stating that the demand for dairy products industry will come under pressure in 2024, with various regions continuously introducing policies on fertility subsidies this year, which is expected to further stimulate the recovery of demand for dairy products. Leading companies like Yili and Mengniu are clearing their inventory and streamlining distribution channels, while also making a one-time provision for goodwill impairment, lightening their burden and entering the market in a more prepared manner. At the same time, as milk prices decline, the gross profit margin of the sector has improved, costs are being more efficiently invested, and the profitability of the enterprises in the first quarter of 2025 is showing signs of improvement. Looking at the whole year, the industry's supply-side upstream ranches are accelerating clearance, with expectations of stronger policy support on the demand side, making it possible to achieve further improvements in supply and demand balance this year, boosting sentiment and increasing certainty in the improvement of leading sector performance.