China Mengniu Dairy 2319

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BofAS Chops MENGNIU DAIRY (02319.HK) TP to $24.5, Lowers EPS Forecasts

MENGNIU DAIRY (02319.HK) 's results missed expectation, BofA Securities released a research report saying.

BofA Securities lowered its EPS forecasts for 2024 and 2025 by 8% each, and chopped its target price by 18% from $30 to $24.5, reflecting the industry's de-rating.

Despite the lack of catalysts in the near term and the expected decrease of the market's forecasts, BofA Securities reiterated rating at Buy on MENGNIU DAIRY, due to its extremely attractive valuation, which is now believed to be 13x of 2024 projected PE ratio, 41% lower than the average of the past decade, representing a 15% underperformance over the HSI since 2023, and its continued expansion of its market share in the dairy industry of China.

Related News: M Stanley: MENGNIU DAIRY 2023 NP 7%/ 12% Below Forecasts of M Stanley/ Street

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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vested

<Research>Haitong Int'l Chops MENGNIU DAIRY TP to $29.8 as Non-recurring Profit & Loss Shakes NP

MENGNIU DAIRY (02319.HK) 's 2023 net profit margin was 4.9%, down 85 bps YoY, falling more than expected, mainly due to the net profit fluctuation brought by non-recurring gains and losses, including the impairment in mixed flour of RMB320 million, up 36% YoY, Haitong International issued a research report saying.

This project is expected to be reduced QoQ this year.

Haitong International expected MENGNIU DAIRY's operating revenue from 2024 to 2026 to be RMB101.49 billion/ RMB105.53 billion/ RMB109.6 billion respectively, up 2.9%/ 4%/ 3.9% YoY.

Net profit was expected to be RMB5.42 billion/ RMB6.22 billion/ RMB6.75 billion, up 12.7%/ 14.7%/ 8.6% YoY.

Related News: CLSA Reduces MENGNIU DAIRY (02319.HK) TP to $24, Rates Buy

EPS was forecasted to be RMB1.38/ RMB1.58/ RMB1.72, respectively. Haitong International chopped its target price from $41.5 to $29.8, with rating kept at Outperform.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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vested

<Research>M Stanley: MENGNIU DAIRY (02319.HK) Mgmt Remained Conservative on Short-term Growth

Morgan Stanley commented in a report that MENGNIU DAIRY (02319.HK) management remained conservative on the company's short-term growth.

The company forecasted earlier that for FY24, sales growth will reach mid- to low-single-digit, core operating profit margin will expand by 30 to 50 bps, operating expenditure ratio will increase slightly, and non-operating income should be similar to last year's.

According to the broker, MENGNIU's year-to-date sales situation has continued from 2H23, with only a small increase.

Inventories remained at a healthy level.

The broker also pointed out that the oversupply of raw milk will continue this year, and raw milk prices will be on a downward trend.

However, MENGNIU management expected the downward cycle of raw milk prices to change by 2025 at the earliest.

Morgan Stanley believed MENGNIU's gearing ratio will remain below 60%.

Company management also indicated that there may be more room for dividend payout in the future as capital expenditure declines.

The broker therefore set a target price of $26 for MENGNIU and rated it Overweight.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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vested

<Research>Citi Cuts MENGNIU DAIRY (02319.HK) TP to $25.65; Rating Kept Buy

Citi's research report pointed out that, in view of the feeble sales in the industry in 1H24, the broker trimmed the revenue forecast for MENGNIU DAIRY (02319.HK) for 2024 and 2025 by 5% and 9%, respectively, and the net profit forecast by 19.8% and 16%, respectively.

The broker expected the company's sales to remain flat YoY in 2024 and hike by 4% in 2025, and its EBIT margin to rise by 50 and 30 bps YoY to 6.8% and 7.1%, respectively.

Citi lowered MENGNIU's target price from $31.9 to $25.65, maintaining its Buy rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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vested

MENGNIU DAIRY(2319)

Analysis：

In 2023, the revenue of China Mengniu Dairy Company Limited (02319) amounted to RMB98,624.0 million, representing a year-on-year increase of 6.5%.

Due to a year-on-year decrease in raw milk prices and a year-on-year improvement in product structure during the year, the company`s gross profit for the year increased to RMB36,640.1 million, and the gross profit margin increased by 1.9 percentage points to 37.2% year-on-year.

The operating profit increased by 13.8% year-on-year to RMB6,170.6 million, while its operating profit margin increased by 0.4 percentage points year-on-year to 6.3%.

As of 31 December 2023, Mengniu had 45 product ion bases in China, 2 production bases in Indonesia, 2 production bases in Australia, 1 production base in the Philippines, and 1 production base in New Zealand, respectively.

It had a total annual production capacity of 14.04 million tons.

In 2023, due to a short-term slowdown in growth rates, declining raw milk prices, and the reorganisation of online and offline sales channels, the dairy product industry faced certain challenges.

However, the nutritional and health needs of Chinese consumers have been growing in recent years. The more diversified, functional and precise nutritional needs of various consumers have also brought new consumption growth points and structural consumption upgrades, which will drive the long-term positive development of dairy products and nutritional and health products.

Strategy：
Buy-in Price: $14.70, Target Price: $16.14, Cut Loss Price: $13.87

Source: Phillips

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vested

<Research>CLSA Lowers MENGNIU DAIRY (02319.HK) TP to $22, Rates Outperform

CLSA believes that the 12% YoY drop in the price of raw milk in China in 2024 YTD reflects unbalanced supply and demand due to a slower-than-expected overcapacity reduction process.

The broker's channel checks indicate softer demand for liquid milk, with a double-digit YoY decrease in sales in May and June.

Seeing the current discount as more of a passive reaction to soft demand, the broker expects product prices to return to normal levels when demand picks up and destocking ends.

CLSA prefers MENGNIU DAIRY (02319.HK) on its undemanding valuation, unchanged leading position, and potential to improve shareholder returns.

It believes MENGNIU DAIRY's share price has already reflected the challenges it is facing.

CLSA lowered its net profit forecast for MENGNIU DAIRY from 2024 to 2026 by 10%-14% and its target price to $22, while maintaining its Outperform rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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not vested

<Research>JPM Downgrades MENGNIU DAIRY (02319.HK) to Neutral, Chops Target Price 57% to $13

MENGNIU DAIRY (02319.HK) shares came under pressure this morning (30 July).

It last printed at $12.82, plummeting 5% and becoming the biggest blue-chip loser.

JPMorgan forecasted in a report that MENGNIU will continue to face challenges next year, and decided to downgrade its investment rating from Overweight to Neutral.

The broker slashed its target price by 57%, from $30 to $13, which is equivalent to 10x 2025 P/E ratio, compared with 15x for peer YILI (600887.SH) -0.350 (-1.415%) .

The broker attributed the downgrade of MENGNIU to several factors. Raw milk costs may fall further due to weak demand, leading to increased discounts and provisions for bulk milk powder, which will weigh on the company's sales and profit margins.

The company lacked new strong products to drive sales, while its execution flexibility was relatively weak during Mainland's economic downturn.

Finally, the broker believed MENGNIU's dividend payout ratio is unlikely to increase rapidly from the current 40% to YILI's 73%.

JPM projected MENGNIU's sales and earnings this year to decline by 1% and 10.5% respectively, with sales and net profit growing at a compound annual growth rate of 3% and 8% from 2024 to 2026.

The broker's 2024 EPS forecast for MENGNIU is 21% lower than the market consensus.

JPM estimated that MENGNIU's sales in 1H24 will decline 5.6% YoY, a decline worse than the 3.6% logged by YILI.

MENGNIU's liquid milk sales are also predicted to fall 8% YoY, while formula sales will reduce 3.5% YoY.

The broker forecasted MENGNIU's 1H24 earnings to plummet 19.4% YoY, compared to the slight 0.9% YoY dip for YILI.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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July 31, 2024

<Research>Macquarie Cuts TP of MENGNIU DAIRY to $23; Raw Milk Price Fall Enough to Offset Negatives From Competition

Macquarie expected in a report that MENGNIU DAIRY (02319.HK) 's 1H24 results would be weak, with revenue and net profit expected to fall by 6% and 24% YoY due to weak demand for milk and fierce competition in the market.

However, given that industry raw milk prices fell further by more than 10% in 1H, Macquarie believed lower raw material prices would more than offset the negative impact of competition.

MENGNIU's core operating margin is expected to improve by 0.3 ppts in the half-year, in line with the group's guidance of a 0.3 to 0.5 ppt improvement in operating profit margin.

Macquarie added that unfavourable factors such as impairment losses on whole milk powder inventories and losses on pasture investments are not expected to continue into next year, and the industry may reach a balanced supply and demand situation in 2H24 at the earliest.

The broker lowered its revenue and profit forecasts for MENGNIU by 4% and 20% this year. Furthermore, Macquarie expected MENGNIU to control capital expenditure and enhance shareholder returns in the face of weak industry demand, with a full-year dividend yield of 3.8%.

Accordingly, Macquarie dropped its target price on MENGNIU from $32 to $23 and maintained its Outperform rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

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MENGNIU DAIRY Advances 5% as It Plans to Buy Back Max. $2B Worth of Shrs

MENGNIU DAIRY (02319.HK) recorded a 19% drop in 1H24 profit, but announced its intention to repurchase shares up to $2 billion in value.

MENGNIU DAIRY announced after the market closed yesterday that its 1H24 revenue amounted to RMB44.671 billion, down 12.6% YoY.

Net profit was RMB2.446 billion, down 19%, mainly due to the oversupply cycle of raw milk, the impairment of raw milk powder inventories and share of profits and losses of associates turned from profit to loss.

EPS was RMB0.623, with no interim dividend declared.

MENGNIU DAIRY also announced that it has resolved to, subject to market conditions, it may repurchase shares of the Company on the Stock Exchange during the following 12 months up to $2 billion in value, pursuant to shareholders' mandate.

The share repurchase plan is expected to enhance the EPS.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

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not vested

China Mengniu Dairy (2319 HK) 1H24: Efficiency Improvement On Track;

Conservative Sales Outlook With Profitability Improvement To Be Prioritised

1H24 net profit decreased 19% yoy, dragged by losses of associated companies and inventory impairments.

However, its efficiency improvement was on track.

Management expects mid-single-digit revenue decline in 2024 and has a conservative industry outlook.

Mengniu should still prioritise profitability improvement.

Efficiency improvement will support dividend distribution, and a HK$2b share buyback plan has been initiated.

Maintain BUY. Cut target price by 19% to HK$19.60.

Source: UOBKH

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