According to a research report released by Anxin International, the first “buy” rating was given to Mengniu Dairy (02319). The net profit for 2023/24/25 is expected to reach 52.1/56.7/6.24 billion yuan, and the corresponding EPS is HK$1.44/1.57/1.72; taking into account comparable company and DCF valuations, the target price is HK$28.4. Overall, the bank believes that the company has established deep competitive barriers. Against the backdrop of steady growth in the industry, the company will maintain steady growth while its profit margin continues to rise.
According to the report, as a leader in China's dairy industry, Mengniu has a rich brand matrix and has core advantages in terms of brands, channels, and milk sources. By business, 23H1's liquid, milk/milk powder/cheese/ice cream accounted for 81.5%/3.7%/4.4%/8.4% of revenue, respectively. Liquid milk is the company's basic market. Room temperature white milk has entered an oligopoly pattern, competition is slowing down, and profitability is expected to gradually increase in the future. The bank saw that the company has three business drivers: 1) the low-temperature fresh milk business, Mengniu has risen to prominence every day. With strong channels and supply chain building capabilities, its market share has rapidly climbed to second place. Profits have been achieved in 23 years; 2) in the cheese business, Mikolando's holding has strengthened its layout in the cheese field. It has faced some challenges in the short term, but a large number of advertisements have already shown brand awareness, and there is room for future growth; 3) The ice cream business is accelerating. The company's sub-brand, Ai Xue, is a leading ice cream brand in Southeast Asia, and products such as Tyran Shengxue and Maotai ice cream are also widely praised.