Guosen International·2025-09-02 11:05Investment Rating - The investment rating for the company is "Buy" with a target price raised from 16.4 HKD to 17.6 HKD, indicating a potential upside of 17% from the current stock price [1][6]. Core Views - The company experienced a revenue decline of 6.9% year-on-year in the first half of 2025, with total revenue reaching 41.57 billion RMB and a net profit decrease of 14.9% to 2.15 billion RMB. The weak recovery in dairy product demand has negatively impacted performance [1][3]. - The forecast for net profit has been revised downwards for 2025, 2026, and 2027 to 4.29 billion, 4.31 billion, and 5.15 billion RMB respectively, with corresponding EPS estimates of 1.14, 1.14, and 1.36 HKD [1][3]. Financial Performance Summary - The liquid milk segment saw a revenue drop of 11.2% year-on-year in the first half of 2025, totaling 32.19 billion RMB, while operating profit increased by 3.5% to 2.64 billion RMB, resulting in a profit margin of 8.2% [2]. - Ice cream revenue grew by 15% year-on-year to 3.88 billion RMB, with operating profit surging 60% to 620 million RMB, achieving a profit margin of 15.8% [2]. - Cheese revenue increased by 12.3% to 2.37 billion RMB, with operating profit rising 93.2% to 230 million RMB, reflecting a profit margin of 9.7% [2]. - The milk powder segment reported a revenue increase of 2.5% to 1.68 billion RMB, with a significant operating profit growth of 324.3% to 100 million RMB, resulting in a profit margin of 5.9% [2]. Valuation Analysis - The company’s financial metrics indicate a projected revenue decline of 10.09% in 2023, followed by a recovery with growth rates of 2.56% and 6.03% in 2026 and 2027 respectively [4]. - The average PE ratio for comparable companies is projected at 25.5x for 2026, while the company is assigned a PE of 15x based on its industry position and growth prospects [12]. - The DCF valuation estimates a reasonable market value of 71.4 billion HKD, corresponding to a price of 18.2 HKD per share [14]. Shareholder Structure - The major shareholders include COFCO Group with a 24.2% stake, followed by Pandanus Partners at 6.0% and Brown Brothers at 5.0%, with other shareholders holding 64.8% [7]. Stock Performance - The stock has shown relative returns of -10.90% over one month, -21.54% over three months, and -24.75% over twelve months, with absolute returns of -6.37%, -10.92%, and 17.66% respectively [9].