YOURAN DAIRY (09858) saw its shares surge nearly 5% in early trading, with the stock up 4.55% to HK$4.02 as of writing, on a turnover of HK$20.9037 million.

The company expects a net profit attributable to shareholders of between approximately RMB 739 million and RMB 903 million for the first half of the year, marking a significant turnaround from a loss in the same period last year. This improvement is primarily attributed to a narrowing decline in raw milk prices, a sustained increase in culling cow prices, higher milk yield per cow, and lower feed costs, which collectively led to a notable reduction in losses from changes in fair value of biological assets in the first half. Additionally, the raw milk business benefited from volume growth and lower feed costs, while the ruminant farming system solution business enhanced profitability through product iteration and structural optimization, both contributing to a year-on-year increase in gross profit.

Where to start

According to a research report from Huatai Securities, the company's core operational performance continues to improve. Rising culling cow prices are generating better returns from culling cows, and the "milk + meat" dual cycle is entering an upward trajectory, likely driving a sustained narrowing of fair value losses. The brokerage added that the dual cycle resonance could further unlock profit growth in the second half of the year.