Understanding the Market | Mengniu Dairy fell over 6% in the afternoon, the company will release its performance at the end of the month, previously expecting a 90% year-on-year decline in net profit

Mengniu Dairy fell over 6% in the afternoon, and as of the time of writing, it was down 4.87%, trading at HKD 17.96, with a transaction volume of HKD 441 million. In terms of news, Mengniu Dairy plans to hold a board meeting on March 26 to approve its annual performance. The company previously issued a profit warning, expecting a net profit for the 2024 fiscal year to be between RMB 50 million and RMB 250 million, representing a year-on-year decline of approximately 94.8%-99%. This is mainly due to the impairment provisions for goodwill and related intangible assets of its subsidiary Bellamy's, as well as losses from fair value changes of dairy cows and related goodwill impairment at its joint venture Modern Dairy. Goldman Sachs released a research report stating that Mengniu Dairy recently issued a profit warning, but the stock price performance positively reflects Mengniu's good cost control and operational efficiency improvement during last year's economic downturn, while also believing that there is still further upside potential for earnings visibility and valuation reassessment. JP Morgan indicated that due to the decline in fresh milk prices, industry competition and price wars may continue into 2025, and the bank forecasts that sales and adjusted earnings will grow by 3% and 2%, respectively, this year