China Mengniu Dairy 2319

[winston]

DJ MARKET TALK: Mengniu Down 22.6%; Risk Of Reputational Damage -GS

1359 [Dow Jones] Mengniu Dairy (2319.HK) is Hong Kong bears' top target, with HK$75.68 million worth of shorts in the morning, suggesting that punters are eyeing more short-term downside for the stock, which is beaten down 22.6% to HK$20.35 after news inspectors found elevated levels of a carcinogen in a batch of its milk.

Goldman Sachs says it keeps its "out-of-consensus" Neutral recommendation (vs consensus Buy) on the stock, as it believes that the still highly fragmented raw milk supply in China and commoditized nature of raw milk remains a food safety risk to the dairy industry and is at the root of Mengniu's problem this time.

It highlights that risks for Mengniu include reputational damage leading to lower sales and higher promotional spend, and impairment charges, though unlikely to be material.

Source: Dow Jones Newswire

[winston]

vested

Scandal sours shares of milk firm
Thursday, December 29, 2011

China Mengniu Dairy (2319) lost nearly a quarter of its market value yesterday, with its shares plunging to their lowest level in more than two years after it was hit by a tainted milk scandal over the Christmas holiday.

The nation's biggest dairy firm said it had destroyed products at a plant in Sichuan found by the mainland's quality watchdog to contain aflatoxin, a substance that can cause liver damage, including cancer.

Mengniu said none of the tainted milk had entered the market and it would work harder to meet all quality standards.

"Panic selling has dragged the stock down as the scandal hit in a quiet and nervous market," said Alfred Chan, chief dealer at Cheer Pearl Investment.

"But the impact is expected to be temporary."

Mengniu, however, faced an online backlash from consumers as calls for a boycott of its products were posted by tens of thousands of Sina Weibo users.

Mengniu shares fell as much as 26 percent in early trading to HK$19.46, the lowest since September 2009, before ending 24 percent down at HK$20.

Deutsche Bank downgraded the firm to hold from buy, cutting its 2012-13 net profit forecast by 6-7 percent and target price to HK$22.60 from HK$31.50.

Source: REUTERS

[winston]

not vested

DJ MARKET TALK:Mengniu Sets A 52-Week Low; CPY Stays L/T Positive

0943 [Dow Jones] Mengniu Dairy (2319.HK) is down 2.8% at HK$19.44, adding to its 24.0% slump Wednesday, on concerns over lower product sales following the discovery of elevated levels of a cancer-causing substance in a batch of its product.

Core Pacific-Yamaichi puts its target price of HK$32.00 under review, due to lingering concerns over raw milk sourcing and tracing, quality control systems, crisis management and brand reputation restoration. But it keeps its Buy rating "as we are constructive on Mengniu's long-term prospect."

The stock's intraday low so far of HK$19.12 marks a 52-week low; some bargain-hunting may emerge with the stock now down 30.6% from a recent peak of HK$28.00 hit Dec. 1.

Source: Dow Jones Newswire

[winston]

vested

DJ MARKET TALK: Mengniu's Reputation Damage Harder To Quantify

0824 [Dow Jones] While some investors may be thinking that a wipe-out of HK$11.1 billion market cap is too severe a punishment for Mengniu Dairy (2319.HK) following recent findings by government inspectors that a batch of its milk contained carcinogens, they may be under-estimating the extent of the incident's damage on Mengniu's reputation, particularly in the Internet age.

According to a WSJ blog, one of the newest way to curse people in China is: "Don't tell people they are brain-damaged, just tell them they grew up drinking Mengniu."

The stock slumped 24.0% to end Wednesday at HK$20.00, and was the most heavily-traded Hong Kong stock with HK$1.56 billion worth of shares changing hands.

Source: Dow Jones Newswire

[winston]

vested

DJ MARKET TALK: Mengniu Down 7.7%; FY12 Sales Harmed - Guotai

1503 [Dow Jones] Mengniu Dairy (2319.HK) falls more in the afternoon, sliding 7.7% to HK$18.50 on top of its 24.0% slump Wednesday, on lingering concerns over lower product sales.

"Consumers and investors are disappointed in Mengniu, as the company continues to engage in various food safety scandals even under COFCO management," says Guotai Junan International;

It adds that earnings visibility for FY12 is relatively low at this moment as sales volume growth in FY12 "could be harmed to a greater extent."

The house cuts Mengniu to Neutral from Accumulate, and slashes its target price to HK$20 from HK$30.

Source: Dow Jones Newswire

[iam802]

vested

DJ MARKET TALK: Mengniu Down 7.7%; FY12 Sales Harmed - Guotai

...

hahah.. I know you will be buying

[winston]

hahah.. I know you will be buying

Hmmm... too predictable

======================

vested

DJ MARKET TALK:Mirae Eyes Structural Issues In Mengniu Milk Woes

1106 [Dow Jones] While most market watchers have focused on the negative sales impact on Mengniu Dairy (2319.HK) of the tainted-milk incident, Mirae Asset takes a look at structural issues within the milk industry in China.

It believes that the fragmented raw milk supply, underdeveloped dairy sector supply chain and structural shortage of raw milk supply in China "have all made it almost impossible for major dairy companies like Mengniu to fully guarantee end-product quality."

The house adds its studies on China's raw milk supply and liquid milk market development over the past 11 years reflected a structural shortage of raw milk supply, which should support further raw milk price rises in the medium to long run, especially when considering the much-increased feed prices in the past few months.

Mengniu rebounds 2.3% to HK$18.94 after taking a 29.6% mauling over the previous two sessions.

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK: Mengniu Bounces 2.8%; HK$16 Target Worse Case - KE

1017 [Dow Jones] Mengniu Dairy (2319.HK) rebounds 2.8% to HK$18.66, snapping a three-session 31.0% slump, due to concerns over lower product sales after news of the carcinogen-tainted milk in its Meishan factory.

Kim Eng believes the incident should be "a short-term setback" and the long-term consolidation theme is still on, as it expects the three state-owned big dairy players would further grasp market shares from their domestic smaller rivals.

The house says its quick calculation (assuming 30% on-year drop in sales and profit in FY12) suggests a fair target price at HK$16 in a "worst case scenario," and investors can accumulate the stock if share prices fall below HK$16.

Source: Dow Jones Newswire

[winston]

vested

Mengniu Diary Co Ltd gained 5.7 percent in more than twice its 30-day average volume after China's quality watchdog said it had found no further cases of milk tainted by high levels of carcinogenic mildew in tests of products by major dairy producers..

Mengniu slumped 31 percent last week after its said its Sichuan plant had destroyed products found by a government quality watchdog to contain the cancer-causing substance aflatoxin.

Source: Reuters

[winston]

not vested

DJ MARKET TALK: Mengniu +5.2%; Too Big To Be Replaced - Nomura

1122 [Dow Jones] Mengniu Dairy (2319.HK) is up 5.2% at HK$20.20, rebounding for the second day, but is still down 23.6% vs its Dec. 23 close before news of carcinogen-tainted milk in its Meishan factory.

Further upside from here in the short run is likely to be limited, with a roughly one-third retracement of its 31% share-price tumble (Dec. 28-30) would take the stock to a tad below HK$21.00.

Nomura believes that the impact from the recent scandal will be short-lived and that Mengniu can maintain its leadership, since "Mengniu is too big to be replaced by any of its competitors," and Chinese consumers have been aware of the systematic risk for the dairy sector and they will come back to the leading brand at the end.

Nomura cuts Mengniu's target to HK$26.00 from HK$34.00 but keeps the stock at Buy. Mengniu is the third most heavily traded Hong Kong stock with HK$384.7 million.

Source: Dow Jones Newswire