According to the research report released by HTSC, it rated Ch Modern D as a 'buy' with a cash EBITDA of 1.52 billion yuan for 24H1, a year-on-year increase of 19.2%, in line with the previous performance forecast (achieving cash EBITDA of 14.8-1.54 billion yuan, a year-on-year increase of 16%-21%). In 24H1, the company actively improved its product structure, implemented cost reduction and efficiency improvement measures, and is expected to gradually release profit elasticity as the market supply and demand stabilize. In recent years, the company has developed new business sectors such as fodder sales and data intelligence platforms, leveraging cost advantages and organic synergy between new and old businesses to provide new momentum for the company's stable development.

The main points of the report are as follows:

The revenue from raw milk in 24H1 increased by 1.3% year-on-year, and the sales volume increased by 13.4%.

The revenue from raw materials milk in 24H1 increased by 1.3% to 5.112 billion yuan, and the sales volume increased by 13.4%. The company continues to strengthen lean management of the dairy farms, focusing on improving the proportion of core cows and the health level of cows. In 24H1, the inventory of dairy cows continued to grow, with a total population of 0.445 million, an increase of 6.3% year-on-year. The inventory of mature cows reached 0.225 million, an increase of 10.4% year-on-year, and the proportion of mature cows in the total number of cows increased to 50.6%. The annual average milk yield of mature cows in 24H1 reached 13.0 tons per cow, a year-on-year increase of 3.2%, and the efficiency of milk production continues to improve. The new business revenue from fodder sales and data intelligence platforms in 24H1 reached 1.307 billion yuan. During the period, there were adjustments in operational strategies with a focus on high-quality customers, which caused some disturbance to short-term revenue, but the development quality improved.

The gross margin of 24H1 increased by 3.2 percentage points, and the net margin, excluding impairment impact, increased by 3.4 percentage points.

The gross margin of 24H1 increased by 3.2 percentage points to 26.1%, among which the gross margin of the raw milk business increased by 2.0 percentage points to 30.3%. This is mainly due to a greater decrease in fodder costs compared to milk prices, and the continuous improvement of the product structure. The selling expense ratio of 24H1 increased by 0.7 percentage points to 3.3%, and the administrative expense ratio decreased by 0.1 percentage points to 5.6%. In 24H1, the company took the initiative to increase the number of cows eliminated to optimize the cow population structure, and the decrease in the price of eliminated cows caused changes in the fair value of biological assets. Taking into account the overall impact, the net margin, excluding impairment, for 24H1 was 14.7%, a year-on-year increase of 3.4%. The cash EBITDA for 24H1 was 1.52 billion yuan, a year-on-year increase of 19.2%.