Summary of Modern Dairy's Conference Call Company Overview - Company: Modern Dairy - Year: 2024 - Revenue: RMB 13.254 billion, with a cash flow adjustment of RMB 2.986 billion, representing a year-on-year growth of 19.61% [3][4][7] - Loss: Reported a loss of RMB 1.469 billion due to non-cash items including a fair value loss of RMB 861 million and goodwill impairment of RMB 599 million [4][10] Key Financial Metrics - Adjusted Operating Profit Margin: Increased by 4 percentage points to 22.5% [3][4] - Dairy Cow Inventory: Exceeded 490,000 heads, a 9% increase year-on-year, including 30,000 organic dairy cows from acquisitions [4][5] - Raw Milk Production: Reached 3.01 million tons, a 16.1% increase year-on-year, with annualized yield per cow at 12.8 tons, up 1.6% [4][5] - Feed Costs: Decreased by 16.7% to RMB 1.95 per kg, with sales cost per kg of milk down 13.4% to RMB 2.53 [4][5] - Cash Flow Improvement: Operating cash flow, excluding working capital changes, grew 17% to RMB 2.8 billion [4][7] Strategic Developments - Specialty Milk Production: Accelerated focus on specialty milk, with organic milk production reaching 470,000 tons and a target of 10% specialty milk by 2027 [4][6] - A2 Milk Certification: Achieved for Zhangyuan Phase I and Shanghe Pasture, with plans to increase certified student pastures to 13 [4][6] Industry Insights - Inventory Reduction: Accelerated de-stocking in the industry, with small farms disappearing; a potential turning point in dairy supply-demand dynamics expected by Q3 2025 [4][8] - Import Reduction: Decrease in imported milk powder, with demand-side stimulus policies likely to address supply-demand discrepancies [4][8] - Future Impairment Outlook: Significant improvement in impairment expected in 2025, with no large-scale one-time impairment projects anticipated [4][10] Challenges and Risks - Market Dynamics: The industry faces challenges including sales issues, market expansion, and financial pressures, particularly for small-scale farms [20][25] - Supply Chain Issues: The trend of small farms exiting the market due to financial difficulties and inability to secure loans [20][25] - Feed Cost Uncertainty: Potential challenges from tariff countermeasures affecting feed costs in Q4 [9] Price Trends and Projections - Raw Milk Price: Expected to stabilize around RMB 3.45 per kg, with potential to approach RMB 4 per kg [16][22] - Consumer Demand: Current demand remains sluggish, with a potential turning point in the second half of 2025 [32][35] Conclusion - Modern Dairy is navigating a complex landscape with significant operational improvements and strategic initiatives in specialty milk production. However, the company faces industry-wide challenges, particularly from small-scale farms and fluctuating market dynamics. The outlook for 2025 suggests a cautious optimism with expected improvements in financial performance and market conditions.
现代牧业20250326