Mengniu Dairy (02319) had earlier anticipated that sales would grow by medium to low units in the 2024 fiscal year.
The Zhitong Finance App learned that Morgan Stanley released a research report stating that it gave Mengniu Dairy (02319) an “increased” rating, with a target price of HK$26. Management remains conservative about the company's short-term growth. The company previously anticipated that sales in the 2024 fiscal year would achieve medium to low unit growth; the core operating margin would expand by 30 to 50 basis points; the operating expense ratio would increase slightly; and the non-operating income should be similar to last year.
Damo pointed out that Mengniu's sales situation from the beginning of the year to date continues the situation in the second half of last year, showing only a slight increase. As for inventory, it maintained a healthy level. At the same time, the bank pointed out that the oversupply of raw milk continues this year, and the price of raw milk will show a downward trend. However, Mengniu management predicts that the downward cycle of raw milk prices will change as soon as 2025. Furthermore, Damo believes Mengniu's balance ratio will remain below 60%. Management has also indicated that as future capital expenditure declines, there may be more room for dividends in the future.