Recently, the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the People's Bank of China, the State Administration for Market Regulation, and the China Banking and Insurance Regulatory Commission jointly issued the "Notice on Promoting the Stable Development of Beef and Dairy Cattle Production", deploying measures to stabilize the production of beef and dairy cattle, and helping the breeding industry overcome difficulties.

The "Notice" specifies policy measures in seven aspects, the main contents include stabilizing the basic production capacity of beef and dairy cattle; reducing the cost of feed for breeding households, utilizing and optimizing the grain-to-feed policy, optimizing the implementation of county-level projects to improve dairy production capacity; financial and insurance support, making good use of central finance-related funds, granting subsidies to impoverished breeding households that meet support conditions; promoting beef and dairy consumption; promoting a number of efficient and practical technologies to achieve cost savings, quality improvement, and increased efficiency.

Market analysis indicates that under industry pressure, seven departments join hands to rescue the market, and this measure will have a profound impact on the entire dairy market. Looking at the development prospects, the per capita consumption of dairy products in China is still far below the global and Asian average. In the future, with policy support, changes in consumer demand, and continuous optimization of dairy product supply structure, the long-term development prospects of the industry remain bright. Citic Securities previously stated that in 2024, milk surplus will continue, with a possible turning point in raw milk prices by the end of the year, and the impact of milk surplus on dairy companies will be less than in 2023.

Youcan Dairy (09858) is a leading company in the dairy industry upstream, with a current scale of 6.01 million cattle, first-half revenue in 2024 of 10.055 billion yuan, a year-on-year increase of 10.8%, EBITDA up by 45.3% year-on-year, and the annual output per dairy cow increasing to 12.9 tons. Its market-to-book ratio is currently only 0.46%, indicating a significant undervaluation. Analysts believe that with the introduction of favorable government policies, increasing policy support, China's initiation of anti-subsidy investigations against EU dairy products, and the stock market entering a bullish cycle, Youcan Dairy will usher in a shining moment.