[ET Net News Agency, 8 July 2020] Credit Suisse raised its target price for China
Mengniu Dairy (02319) to HK$40 from HK$28.2 and upgraded its rating to outperform" from
"neutral".
The research house said the upgrade reflects better-than-expected demand recovery and
margin outlook, year-to-date underperformance among consumer staples, and undemanding
valuation at 23x 2021 P/E against 15% EPS CAGR over 2019-22.
Credit Suisse said Mengniu's organic growth (excluding Junlebao and Bellamy) resumed
double-digit growth in April-May from a flattish growth in 1Q and the momentum further
accelerated in June driven by robust growth of Deluxe.
Credit Suisse now forecast Mengniu's full-year organic growth at 9% (versus the previous
mid-single-digit), implying mid-teens growth in 2H. It lifted its 2020/21 EPS forecasts by
8%/12% to reflect better-than-expected demand recovery and margin outlook. (KL)