CLSA: MENGNIU DAIRY Main Beneficiary of Raw Milk Price Rebound

CLSA published a research report stating that raw milk prices in China have bottomed out, with industry overcapacity continuing to ease. Supported by the gradual release of capacity in infant formula and deeply processed dairy products, as well as stabilizing demand for liquid milk, raw milk prices are expected to rebound in 2H26. The broker believes that stabilizing raw milk prices will benefit leading dairy companies with strong upstream resource control, among which MENGNIU DAIRY (02319.HK) -0.090 (-0.516%) Short selling $49.06M; Ratio 25.903% , given its high exposure to liquid milk and considerable earnings rebound potential, together with its relatively low valuation, is expected to be a key beneficiary.Citing data, CLSA noted that the number of dairy cows in mainland China has continued to decline since 2024, falling from 6.5 million head in Dec 2023 to 5.8 million head in Mar 2026, reflecting solid progress in capacity reduction. Meanwhile, rising beef prices and the outbreak of foot-and-mouth disease are expected to accelerate the culling of low-productivity cows, further tightening raw milk supply. As capacity for deeply processed solid dairy products is gradually built in 2025, it is expected to be progressively released from 2H26, driving a recovery in raw milk demand.CLSA maintained its High-Conviction Outperform rating on MENGNIU DAIRY (02319.HK) -0.090 (-0.516%) Short selling $49.06M; Ratio 25.903% with an unchanged TP of HKD21.1. The broker is also positive on YILI (600887.SH) +0.310 (+1.126%) for its diversified business mix and generous dividend payout, assigning an Outperform rating with a TP of RMB35. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-08 16:25.) (A Shares quote is delayed for at least 15 mins.)