Contents
China Modern Dairy: it’s milking time ......................................................................................................... 4
Extensive farm investment is starting to pay off ....................................................................................... 4
Upgraded relationship with China Mengniu Dairy will be a big plus ......................................................... 7
A step into downstream products could enhance CMD’s own brand awareness ..................................... 7
CMD’s background information ................................................................................................................ 7
The upgrading of China’s dairy farming industry: Favorable policy to benefit leading players in the
long run .......................................................................................................................................................... 9
The rise of large-scale dairy farms could ease China’s domestic raw milk supply shortage .................... 9
China’s expansion of large-scale farming is accelerating ....................................................................... 10
Government support fuels the development of large-scale dairy farming .............................................. 13
China’s raw milk price uptrend will see CMD’s margin improve ............................................................. 15
Enlarged raw milk demand-supply gap since 2008 highlights need to upgrade China’s dairy farming
industry .................................................................................................................................................. 15
China’s raw milk supply shortage will persist, despite its narrowing outlook .......................................... 16
China’s raw milk demand increasingly driven by consumption of high value added dairy products ....... 17
China’s raw milk price will be in an uptrend, favorable to CMD’s margin outlook ................................... 18
Earnings forecasts ...................................................................................................................................... 19
Valuation ...................................................................................................................................................... 24
Risks............................................................................................................................................................. 26