CMSI issued a report stating that the bottoming of raw milk prices marks a critical inflection point for the upstream segment and the entire dairy industry, and is expected to trigger a cross-year valuation re-rating cycle. The broker believes the industry is actively achieving supply-demand rebalancing, laying a solid macro foundation for earnings recovery among industry leaders.After two years of capacity and inventory destocking, CMSI estimates that the supply-demand gap narrowed to single digits in 2H25, with raw milk prices stabilizing at RMB3 to RMB3.05 per kilogram in 4Q25. The prolonged downcycle accelerated the exit of small and medium-sized farms, reshaping the supply-side landscape and further concentrating the industry toward leading enterprises. This environment has effectively curbed irrational capacity expansion. As the market moves toward balance, it creates an optimal window for leading dairy companies to restore profit margins.Related NewsG Sachs: MENGNIU DAIRY (02319.HK) Liquid Milk Growth Recovers, Reiterates Buy RatingThe report noted that while clear signs of a strong recovery on the demand side have yet to emerge, this is seen as the final piece of the puzzle. A definitive rebound in end-market demand will mark the next stage of the current cycle and catalyze a comprehensive industry recovery. Against this backdrop and at the starting point of the current upcycle, CMSI upgraded MENGNIU DAIRY (02319.HK) +0.060 (+0.340%) Short selling $48.86M; Ratio 24.123% to Overweight with a TP of HKD19.5, and believes YOURAN DAIRY (09858.HK) +0.020 (+0.593%) Short selling $15.85M; Ratio 23.125% offers trading opportunities, naming it as the preferred upstream target. (ha/w)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-15 16:25.)
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