China's dairy industry is one of the few consumer sectors in China that also benefits from the evolution of long-term consumption trends and national development policies. We believe that China's dairy industry has four major advantages: 1) per capita sales are at a low level and there is plenty of room for future growth; 2) it benefits from trends such as increased consumer health awareness and consumption upgrades; 3) it is highly compatible with the country's strategic development direction and is supported by national policies for a long time; 4) the industry continues to integrate and competition is gradually improving. These four major advantages give China's dairy industry a high degree of certainty for long-term growth. For the first time, we covered Aoyu Dairy (1717.HK) and gave it a “hold” rating.