[ET Net News Agency, 21 May 2020] Morgan Stanley lowered its target price for China
Mengniu Dairy (02319) to HK$34 from HK$35 and maintained its "overweight" rating.
The research house factored in the headwinds in 1H: (1) Demand impact - distribution
channels and supply chain disruption during the COVID-19 outbreak: (2) destocking - with
demand yet to fully recover, the perishable nature of raw milk plus discounting and
deleverage put pressure on margins.
Morgan's recent channel checks indicate consistent sales improvement in April/early May,
while channel inventory is still higher than the normal level in some regions. As such,
promotional efforts continue in May, and channel sources expect price discounts to be
lessened in June.
It now factored in nearly flat organic sales growth and a meaningful OPM (operating
profit margin) decline in 1H for Mengniu. Morgan lowered its 2020 and 2021 earnings
forecasts by 22% and 7% for Mengniu, driven by lower sales, deleverage, and one-off
expenses related to COVID-19. (KL)
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02319 MENGNIU DAIRY
Nominal 
15.800 -0.200 (-1.250%) Research Report
21/05/2020 13:52
{I-bank focus}Morgan cuts Mengniu Dairy (02319) to HK$34
| Remark: | Real time quote last updated: 25/04/2024 16:14 |
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