蒙牛乳业：行业承压，业绩下滑

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 16.4, indicating a potential upside of 28% from the current stock price [1][2][4]. Core Insights - The dairy industry is under pressure with oversupply leading to a decline in performance, resulting in a revenue drop of 12.6% to HKD 446.7 billion and a net profit decrease of 17.2% to HKD 25.3 billion in the first half of 2024 [1]. - The company has adjusted its net profit forecasts for 2024, 2025, and 2026 to HKD 44.4 billion, HKD 49.4 billion, and HKD 53.3 billion respectively, with corresponding EPS of HKD 1.20, HKD 1.33, and HKD 1.44 [1][2]. Revenue Breakdown - Liquid milk revenue fell by 12.9% to HKD 362.6 billion, while operating profit decreased by 9.5% to HKD 25.5 billion, maintaining a profit margin of 7.2% [1]. - Ice cream revenue dropped by 21.8% to HKD 33.7 billion, with operating profit down 46% to HKD 3.8 billion, resulting in a profit margin of 11.4% [1]. - Cheese revenue decreased by 6.3% to HKD 21.1 billion, but operating profit increased by 56% to HKD 1.2 billion, achieving a profit margin of 5.6% [1]. - Milk powder revenue fell by 13.7% to HKD 16.4 billion, but the business turned profitable for the first time in three years with an operating profit of HKD 0.23 billion [1]. Profitability and Cost Management - The company's operating profit for the first half of 2024 was HKD 31.2 billion, with an operating profit margin of 7%, and a gross margin of 40.3% [1]. - The report highlights the company's efforts in cost control, which led to a slight increase in operating profit margin despite rising sales expenses [1]. Shareholder Returns - The company announced a share buyback plan of up to HKD 2 billion, representing 4% of its total market capitalization, and plans to increase its dividend payout ratio, which was 40% in 2023 [2]. Valuation Analysis - The report employs comparable company analysis and DCF methods for valuation, concluding a target price of HKD 16.4 based on a 2025 forecast PE of 12x and a DCF valuation suggesting a price of HKD 16.8 [8]. Financial Forecasts - The company forecasts a revenue of HKD 90.1 billion for 2024, with a projected net profit of HKD 4.4 billion, reflecting a net profit margin of 4.9% [13]. - The report anticipates a gradual recovery in revenue growth rates in the following years, with expected growth rates of 4.5% for 2025 and 4.5% for 2026 [13].