[ET Net News Agency, 19 April 2018] HSBC Global Research tweaked its target price for
China Modern Dairy (CMD)(01117) to HK$1.57 from HK$1.55, and reiterated its "hold" rating.
The research house lowered its 2018-19 core net profit estimates by 7-8%, mainly to
reflect a lower contribution from the downstream branded milk business, as CMD obtained
minority shareholders' approval in early March 2018 to dispose of its 50% equity stake in
the downstream branded milk operation to Mengniu Dairy (02319) for RMB56m to form a joint
venture company with Mengniu Dairy.
HSBC forecast the JV will post a profit of RMB11m in 2018, with annual sales of around
RMB720m. It believes margin improvement will be the key earnings driver for CMD this year
given the reduction in downstream investment such as A&P and staff costs.
It lowered our core net profit forecasts 7-8% to reflect the downstream branded milk
business's smaller revenue contribution going forward. (KL)
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01117 CH MODERN D
Nominal 
0.620 0.000 (0.000%) Others
19/04/2018 17:47
[I-bank focus]HSBC ups China Modern Dairy (01117) to HK$1.57
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