[ET Net News Agency, 27 March 2020] Daiwa Research lowered its target price for China
Mengniu Dairy (02319) to HK$31.8 from HK$32.6 and maintained its "buy" rating.
The research house said Mengniu's 2019 underlying net profit of CNY3.8bn was 4% below
Daiwa's expectation due to a slight miss in revenue and more advertising expenses.
Management believes that revenue will decline in 1H on an organic basis due to COVID-19,
but return to double-digit growth in 2H with operating margin expansion.
Daiwa cut its 2020-21 revenue forecasts by 3-5% from less sales due to COVID-19 and
lower ice-cream sales, and EPS estimates by 9-11% due to promotions in 1H and more A&P
expenses. (KL)