[ET Net News Agency, 10 July 2020] Jefferies Research raised its target price for China
Mengniu Dairy (02319) to HK$43.6 from HK$36 and maintained its "buy" rating.
The research house said the National Health Commission of China on 13 February published
an official dietary guideline to prevent Covid-19 and suggested that everyone drink 300g
of milk each day. As a result, the demand for pure milk has surged in the past few months.
Jefferies expects Mengniu's margin to expand helped by increasing contribution from
high-end UHT milk from 2Q. Its recently acquired Bellamy IMF is due to be launched in
offline stores in China in 2H, and Jefferies expects this to become a new earnings driver.
In 2H, Jefferies forecast 16% sales and 21% core EBIT growth for its organic business
(excluding Junlebao and Bellamy). (KL)