The essence of broker morning meeting | The dairy industry is expected to reach a turning point in supply and demand in 2026.

The market opened high and went high yesterday, with the Shanghai Composite Index and the Growth Enterprise Market Index both hitting new highs for the year. The total turnover of Shanghai and Shenzhen stock markets reached 1.7 trillion yuan for the whole day, an increase of 128.9 billion yuan from the previous trading day. In terms of sectors, cement, construction materials, steel, and ultra-high voltage sectors led the gains, while cross-border payments, banks, smart AI, and photolithography sectors led the declines. By the end of yesterday's trading, the Shanghai Composite Index rose by 0.72%, the Shenzhen Component Index rose by 0.86%, and the Growth Enterprise Market Index rose by 0.87%. At today's securities morning meeting, CICC pointed out that it is recommended to select banking stocks from the perspective of bank liability capacity and regional dividend; Zhongtai stated that it sees good long-term allocation opportunities in the real estate sector; Huatai believes that the dairy industry is expected to reach a turning point in supply and demand in 2026. CICC: Recommended to select banking stocks from the perspective of bank liability capacity and regional dividend CICC stated that for banking stocks, recent good stock price performance mainly comes from stable expectations of basic fundamentals amid macro uncertainties, and the attractiveness of bank dividends increase long-term funds like insurance. In the current environment, it is recommended to select banking stocks from the perspectives of bank liability capacity, regional dividend, and organizational efficiency, focusing more on profitability and stability. Large banks' injections may dilute dividends, focusing on large banks with lower dilution ratios than expected; recommending leading operational management ability stock banks and top banks with regional dividends. Zhongtai: Positive about mid-to-long-term allocation opportunities in the real estate sector Zhongtai indicated that current housing sales will have a long-term impact on the development of the real estate industry and the operating models of property firms. There is still a need to focus on the local implementation status and specific supporting policies. It continues to have a positive outlook on mid-to-long-term allocation opportunities in the real estate sector, recommending companies with strong fundamentals, high margins, and a presence in first-tier and second-tier cities; for Hong Kong stocks, it is advisable to focus on leading companies with valuation advantages and elasticity. Huatai: Dairy industry is expected to reach a supply and demand turning point in 2026 Huatai stated that the Chinese dairy industry is currently experiencing a period of low milk prices driving continued capacity reduction in the upstream farming industry, downstream dairy companies' channel inventory clearance, and waiting for the rebound in end-demand fundamentals. It is expected that under the reshaping of supply and demand relationships due to a decline in raw milk production and moderate improvement in demand for dairy products, the industry is expected to return to supply-demand balance by 2026. At that time, the increase in raw milk prices will directly catalyze profits and stock prices of upstream pastoral companies. As the milk industry chain value is heavily concentrated in downstream dairy companies, a moderate increase in milk prices historically benefits downstream companies in terms of margin improvement and profit enhancement. Currently, the two major leaders have tacitly entered the stage of profit enhancement. In the medium-to-long term, Huatai believes that there is still room for growth in the dairy industry, with sources of volume growth coming from channel penetration, habit improvement, and student milk popularization; and sources of price growth coming from the penetration of low-temperature milk or sustainability. This article is reprinted from "Cailianshe". GMTEight Editor: Jiang Yuanhua.