Credit Suisse lowers Mengniu Dairy's target price to 22.6 yuan and revises profit forecasts

Futu Securities published a research report indicating that Mengniu Dairy (02319.HK) had a net profit of RMB 1.545 billion last year, in line with earlier profit forecasts, with an operating profit margin of 8%, which is at the median of the guidance. Management guided for a low single-digit revenue growth this year and aims to drive operating profit margin expansion through cost control and improved operational efficiency.

The company expects high single-digit growth in its liquid milk business so far this quarter, while ice cream, milk powder, and cheese businesses are expected to achieve double-digit growth; the firm anticipates that the strong growth momentum from January to February will continue into March. It has now lowered its earnings forecasts for 2026 and 2027 by 22% to 24%, based on a downward revision of the operating profit margin expansion forecast, and introduced a forecast for 2028, with the target price reduced from HKD 24.3 to HKD 22.6, maintaining a "Buy" rating