Core Viewpoint - Mengniu Dairy is positioned as a leading player in the domestic dairy industry, leveraging its partnership with COFCO Group to drive growth through new product categories and international expansion [1] Company Overview - Mengniu Dairy's revenue composition for 2024 is projected to be 82.40% from liquid milk, 5.84% from ice cream, 3.74% from milk powder, 4.87% from cheese, and 3.15% from other dairy products, indicating a stable performance in its core liquid milk business [1] - The company has established six production bases overseas, contributing to its international business growth, with overseas revenue share increasing since 2019 [1] - Mengniu has over a thousand cooperative farms in China, with daily milk collection exceeding 20,000 tons, ensuring a solid supply chain [3] Industry Trends - The raw milk supply and demand are expected to rebalance, with a 24.53% decline in average raw milk prices from the end of 2021 to July 2023, indicating a potential price stabilization [2] - The industry is witnessing a shift towards high-quality and health-oriented products, with innovations such as low-temperature short-shelf-life milk and sugar-free yogurt gaining traction [2] Product Development and Strategy - Mengniu is expanding its product matrix beyond liquid milk to include fresh milk, cheese, ice cream, and milk powder, with increasing revenue contributions from these categories [3] - The company has implemented a "deep distribution" strategy since 2017, enhancing its penetration in rural markets and improving operational efficiency through digitalization [3] Financial Outlook - The company's net profit margin is relatively high compared to regional dairy companies, with expectations for improved profitability as raw milk prices stabilize and product upgrades continue [4] - Projected net profits for 2025 and 2026 are estimated at 5.08 billion and 5.69 billion respectively, with current PE ratios around 13 times and 12 times, indicating significant upside potential [4]

Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [9]. Core Views - The company is expected to benefit from a recovery in profitability as raw milk supply and demand approach balance, leading to a slowdown in price competition. The ongoing product upgrades, particularly in high-end segments like fresh milk and cheese, are anticipated to positively contribute to overall profitability [3][9]. Company Overview - The company is a leading player in the domestic dairy industry, backed by COFCO Group, and is diversifying its product categories. In 2024, the revenue breakdown is projected to be 82.40% from liquid milk, 5.84% from ice cream, 3.74% from milk powder, 4.87% from cheese, and 3.15% from other dairy products [6][14]. - The liquid milk segment remains the core business, with stable growth, while ice cream and cheese segments are expected to see further revenue increases, with cheese showing a year-on-year growth of 0.45 percentage points [6][26]. Industry Analysis - The raw milk supply and demand are expected to rebalance, with a potential price turning point on the horizon. Since 2018, milk production has increased for six consecutive years, but recent demand pressures have led to a 24.53% decline in average raw milk prices from late 2021 to July 2023. The stabilization of milk prices is anticipated to improve the profitability of dairy companies [7][9]. - The trend towards high-quality and health-oriented products is expected to drive long-term demand growth in the dairy sector. Innovations in product offerings, such as low-temperature short-shelf-life milk and sugar-free yogurt, align with the health-conscious consumer trend [7]. Business Strategy - The company is enhancing its upstream milk source through investments in farms and strategic partnerships. It currently collaborates with over a thousand farms, ensuring that 100% of its fresh milk comes from large-scale, intensive farms [8]. - The company is also focusing on digital transformation to improve operational efficiency and expand its distribution channels, particularly in rural areas [8][30]. Financial Performance - The company’s revenue is projected to reach 886.75 million in 2024, with a year-on-year decline of 10.09%, while the net profit is expected to be 1.05 billion, down 97.83% year-on-year. The revenue drop is attributed to weak industry demand, but ongoing product innovation and channel expansion are expected to enhance market presence [23][26].

Core Viewpoint - Mengniu Dairy has been actively repurchasing its shares, indicating a strategy to support its stock price amid recent declines [2][3]. Group 1: Share Buyback Activity - On May 13, Mengniu Dairy repurchased 200,000 shares at a price range of HKD 18.100 to HKD 18.380, totaling HKD 3.6505 million [2]. - Since May 6, the company has conducted share buybacks for six consecutive days, acquiring a total of 970,000 shares for a cumulative amount of HKD 18.3404 million, during which the stock price has dropped by 9.78% [2]. - Year-to-date, the company has completed 22 share buybacks, totaling 4.88 million shares and an aggregate amount of HKD 86.2205 million [3]. Group 2: Buyback Details - The buyback details for May 13 include a maximum price of HKD 18.380 and a minimum price of HKD 18.100, with a total expenditure of HKD 3.6505 million [3]. - The buyback activities from May 6 to May 12 show a consistent pattern, with the highest buyback price recorded at HKD 19.900 on May 6 and the lowest at HKD 18.100 on May 13 [3][4]. - A detailed table of buyback activities lists various dates, share quantities, maximum and minimum prices, and total amounts spent, reflecting a strategic approach to managing share value [3][4].

Group 1 - The core point of the news is that Mengniu Dairy has been actively repurchasing its shares, with a total of 423,000 shares repurchased this year, amounting to HKD 7,410.33 million [2][3] - On May 7, the company repurchased 300,000 shares at a price range of HKD 19.260 to HKD 19.660, totaling HKD 582.53 million, while the stock closed at HKD 19.260, down 3.60% for the day [2] - Since May 6, the company has conducted share buybacks for two consecutive days, repurchasing a total of 320,000 shares, with a cumulative buyback amount of HKD 622.33 million, during which the stock price fell by 4.42% [2] Group 2 - The detailed buyback history shows that the highest repurchase price this year was HKD 19.900 on May 6, and the lowest was HKD 14.980 on January 16 [3] - The buyback activity includes multiple transactions, with the largest single buyback of 800,000 shares on April 7, amounting to HKD 1,428.82 million [3] - The company has engaged in 18 buyback transactions this year, indicating a consistent strategy to support its stock price [3]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of 24.5 HKD per share, indicating a potential upside of 21.6% from the current price of 20.15 HKD [5][6]. Core Insights - The dairy industry is experiencing a reduction in cow inventory, leading to a stabilization of milk prices expected within the year. The report anticipates that the supply-demand dynamics will improve, resulting in a more balanced market by 2026 [2][8]. - The management has guided for a low single-digit revenue growth in 2025, focusing on improving profitability through cost reduction and efficiency measures. The company aims for a stable operating profit margin (OPM) and a gradual improvement in operating profit margin by 30-50 basis points annually over the next three years [3][10]. - The first quarter of 2025 showed slow demand recovery, but a gradual improvement in revenue is expected in the second quarter due to favorable market conditions and lower comparative bases from the previous year [4][11]. Financial Summary - The company’s projected earnings per share (EPS) for 2025, 2026, and 2027 are 1.33, 1.46, and 1.60 HKD, respectively. The target price corresponds to a price-to-earnings (PE) ratio of 17 times for 2025 [6][14]. - Revenue is expected to decline by 10.09% in 2024 but recover slightly in 2025 with a growth of 1.39%. The gross margin is projected to stabilize around 39.7% in 2025 [7][10]. - The net profit margin is anticipated to improve significantly from 0.1% in 2024 to 5.8% in 2025, reflecting a recovery in profitability [7][10].

蒙牛乳业（2319.HK） 目标价： 24.5 港元 预计升幅： 21.6% | 日期 | 2025-5-2 | | --- | --- | | 收盘价（港元） | 20.15 | | 总股本（亿股） | 39.16 | | 总市值（亿港元） | 789.07 | | 净资产（亿元） | 480.3 | | 总资产（亿元） | 1,063 | | 52 周高低（港元） | 11.82/22.55 | | 每股净资产（元） | 12.27 | 数据来源: Wind 、国元证券经纪(香港)整理 中粮集团 24.24% Mitsubishi 7.88% FIL 6.03% UBS 5.39% BBH 5.03% 蒙牛乳业首发报告-20191129 蒙牛乳业更新报告-20200327 蒙牛乳业更新报告-20200828 蒙牛乳业更新报告-20210430 蒙牛乳业更新报告-20210907 蒙牛乳业更新报告-20220425 蒙牛乳业更新报告-20230424 报 姓名：陈欣 SFC：BLO515 电话：0755-21516057 Email:chenxin@gyzq.com.hk 买入 聚焦精细化管理及降本增效 利 ...

Core Viewpoint - Mengniu Dairy has been actively repurchasing its shares, indicating a strategy to enhance shareholder value and confidence in its stock performance [2] Summary by Category Share Buyback Activity - On April 29, Mengniu Dairy repurchased 200,000 shares at a price range of HKD 18.940 to HKD 19.200, totaling HKD 3.8077 million [2] - The stock closed at HKD 19.020 on the same day, reflecting a decrease of 0.31% with a total trading volume of HKD 193 million [2] - Year-to-date, the company has conducted 15 buybacks, acquiring a total of 3.89 million shares for a cumulative amount of HKD 67.5025 million [2] Detailed Buyback Information - The buyback details are as follows: - April 29: 20,000 shares at a maximum price of HKD 19.200 and a minimum of HKD 18.940, amounting to HKD 3.8077 million - April 25: 20,000 shares at a maximum price of HKD 19.300 and a minimum of HKD 19.160, amounting to HKD 3.8495 million - April 24: 20,000 shares at a maximum price of HKD 19.200 and a minimum of HKD 19.120, amounting to HKD 3.8337 million - April 22: 30,000 shares at a maximum price of HKD 19.300 and a minimum of HKD 19.100, amounting to HKD 5.7650 million - April 17: 20,000 shares at a maximum price of HKD 19.500 and a minimum of HKD 19.460, amounting to HKD 3.8957 million - April 8: 15,000 shares at a maximum price of HKD 18.900 and a minimum of HKD 18.700, amounting to HKD 2.8225 million - April 7: 80,000 shares at a maximum price of HKD 17.980 and a minimum of HKD 17.640, amounting to HKD 14.2882 million - January 16: 46,000 shares at a maximum price of HKD 14.980 and a minimum of HKD 14.860, amounting to HKD 6.8767 million - January 10: 13,000 shares at a maximum price of HKD 15.320 and a minimum of HKD 15.280, amounting to HKD 1.9906 million - January 9: 12,000 shares at a maximum price of HKD 16.040, amounting to HKD 1.9248 million - January 8: 30,000 shares at a maximum price of HKD 16.100 and a minimum of HKD 16.060, amounting to HKD 4.8262 million - January 7: 18,000 shares at a maximum price of HKD 16.440 and a minimum of HKD 16.240, amounting to HKD 2.9470 million - January 6: 30,000 shares at a maximum price of HKD 16.260 and a minimum of HKD 16.200, amounting to HKD 4.8710 million - January 3: 18,000 shares at a maximum price of HKD 16.400 and a minimum of HKD 16.340, amounting to HKD 2.9472 million - January 2: 17,000 shares at a maximum price of HKD 17.020 and a minimum of HKD 16.680, amounting to HKD 2.8567 million [2]

Financial Performance - In 2024, the Group reported revenue of RMB 88,675 million, a year-on-year decrease of 10.1% due to an imbalance between supply and demand in the dairy industry[7]. - Profit attributable to owners of the Company was RMB 105 million, a significant decrease from RMB 4,809 million in the previous year[7]. - Net cash flows from operating activities were RMB 8,332 million, slightly down from RMB 8,349 million in 2023[7]. - The Group's revenue for the year ended December 31, 2024, was RMB 88,674.8 million, representing a year-on-year decrease of 10.1% compared to RMB 98,624.0 million in 2023[142][145]. - Gross profit decreased to RMB 35,090.4 million, with a gross profit margin increase of 2.4 percentage points to 39.6% due to lower raw milk prices[143][146]. - Operating profit increased by 17.6% to RMB 7,256.7 million, with an operating profit margin of 8.2%, up 1.9 percentage points year-on-year[150]. - The Group recognized impairment losses of RMB 3,981.4 million related to Bellamy's, impacting the overall financial results[151]. - The effective income tax rate increased to 77.5%, up 54.9 percentage points year-on-year, primarily due to decreased profit before taxation[166]. - The company recorded a goodwill impairment loss of RMB 599.2 million related to China Modern Dairy, contributing to a net loss of RMB 1.4168 billion attributable to owners[155]. - The board proposed to increase the dividend payout ratio for 2024 to 45%, excluding the effects of impairment losses[157]. Market Position and Strategy - Mengniu ranked ninth in the 2024 "Global Dairy Top 20" list published by Rabobank, highlighting its position in the global market[4]. - The liquid milk business maintained its leading market share position for twenty consecutive years[27]. - The company aims to deepen its "One Core, Two Wings" strategy, ensuring simultaneous growth in scale, profitability, market share, and brand strength across its six core businesses by 2025[40]. - Mengniu plans to expand its overseas platform, optimizing existing brand assets to create new growth engines for sustainable development[40]. - Mengniu's brand strategy focuses on enhancing its identity as an "Olympic Partner" through the 2024 Paris Olympics, which has strengthened brand awareness and global influence[53]. - The company is committed to meeting diverse consumer needs with exceptional products while rewarding shareholder trust with steady growth[41]. Product Development and Innovation - The revenue breakdown by product for 2024 included liquid milk at RMB 73,065.6 million, ice cream at RMB 5,175.4 million, milk formula at RMB 2,793.6 million, and cheese at RMB 4,319.7 million[9]. - Achieved double-digit growth in the Reeborne product line and launched the first global HMO-formula[30]. - Mengniu enriched its product portfolios, transitioning from "drinking milk" to "eating milk" and from "basic nutrition supply" to "greater health"[52]. - The infant formula business launched the world's first patented affinity formula and the first HMO formula, driving high-quality and innovative development in the industry[83]. - Mengniu's elderly-focused milk formula brand Yourui released industry-leading scientific papers and optimized its formulas to support bone, joint, and muscle health[88]. - The Champion brand launched a new-generation probiotic yogurt, reinforcing its position as a specialist in probiotic products[186]. - Mengniu's HMO Children's Care Nutrition Milk utilizes newly approved nutrient fortifier 2'-FL for enhanced child nutrition[191]. Sustainability and Corporate Responsibility - Mengniu's MSCI ESG rating of AA is the highest rating received by a comprehensive dairy company in China, reflecting its commitment to sustainability[4]. - Mengniu established a "1+N" Sustainability Report Disclosure System and initiated the first 4R1D green packaging strategy, promoting sustainable practices across its supply chain[36]. - The Group is committed to sustainable practices, promoting clean energy adoption and carbon emission management among ranch partners[135][138]. - In 2024, Mengniu initiated multiple support measures for dairy ranches to address supply-demand imbalances, focusing on technological innovation and financial assistance[129]. Challenges and Market Trends - The dairy industry faced supply-demand imbalances in 2024, leading to intensified pricing competition and a need for strategic adjustments[54]. - The ice cream business faced challenges due to insufficient consumer confidence, intense market competition, and high channel inventory, but saw opportunities in health-conscious consumer trends and the rapid development of online channels[91]. - The infant formula market is stabilizing, with leading companies increasing their market share despite challenges from declining birth rates[82]. Operational Efficiency and Digital Transformation - The Group's digital transformation strategy includes the integration of AI technologies to enhance operational efficiency and address supply-demand imbalances[136][138]. - The implementation of the Cold Chain 2.0 system allows for real-time temperature monitoring across warehouses and logistics, improving operational efficiency[127]. - Mengniu's quality digital transformation plan focuses on five core modules, enhancing performance monitoring and risk control across its operations[130]. Marketing and Consumer Engagement - Mengniu's marketing strategy includes innovative partnerships and co-branding activities to enhance brand vitality and consumer engagement[55]. - The chilled yogurt segment promoted its zero-sugar yogurt, leveraging celebrity endorsements to enhance its market presence[186]. - The Group's fruit milk drink brand introduced a new "Roselle Strawberry Flavor" targeting young Generation-Z consumers[184]. - Mengniu is focusing on consumer trends by developing differentiated products and expanding market penetration in towns and villages[65].

Group 1 - Morgan Stanley has raised the target price for Mengniu Dairy (02319.HK) to HKD 22.5 and adjusted earnings forecasts upward [1] - The firm expects continued weak demand for Mengniu's products this year, with new products requiring time to drive growth [1] - Sales forecasts for the next two years have been reduced by 2%, with expected growth rates of 1% and 4% respectively [1] Group 2 - Operating profit margin estimates for this year have been increased by 0.4 percentage points, while next year's estimates have been raised by 0.5 percentage points [1] - Earnings per share estimates have been raised by 7% and 9% for this year and next year, respectively [1] - The projected earnings per share for 2027 is set at RMB 1.72 [1]

Investment Rating - The report maintains an "Outperform" rating for China Mengniu Dairy [2][6]. Core Views - Supply depletion is occurring in the raw milk market, with prices stabilizing at a low level, indicating a potential reversal in the cycle [3][11]. - The reversal of milk prices is expected to positively impact Mengniu's profitability, as the company is increasingly affected by the upstream raw milk cycle [4][12]. - The company is focusing on improving operating profit margins and shareholder returns, with a planned increase in dividend payout [5][13]. Financial Summary - The current share price is HK$19.76, with a target price set at HK$27.60, indicating a potential upside [2]. - Market capitalization stands at HK$77.38 billion (approximately US$9.98 billion) [2]. - Revenue projections for 2025-2027 are estimated at Rmb 91.44 billion, Rmb 95.82 billion, and Rmb 101.30 billion, respectively, with year-on-year growth rates of 3.1%, 4.8%, and 5.7% [6][13]. - Net profit attributable to the parent company is forecasted to be Rmb 5.41 billion, Rmb 5.81 billion, and Rmb 6.42 billion for the same period, with significant growth expected in 2026 and 2027 [6][13]. - The diluted EPS is projected to increase from Rmb 1.38 in 2025 to Rmb 1.64 in 2027 [6][13]. Market Dynamics - The price of raw milk has been on a downward trend for nearly four years, reaching a 14-year low, which has led to a reduction in upstream production capacity [3][11]. - The national dairy herd has decreased by 5.8%, with expectations that a balance between supply and demand will be achieved at around 5.9 million heads [3][11]. - If the raw milk cycle reverses, it could lead to improved sales prices and reduced competition among dairy companies [4][12].