DBS Group Research cut its target price for China Mengniu Dairy (02319) to HK$54.1 from HK$57.4 and maintained its "buy" rating.
The research house expects China Mengniu's product upgrades (Milk Deluxe 3.0 DreamCap) and organic milk to support its premiumisation strategy and enable it to maintain market share and expand margins.
DBS forecasted liquid milk sales (core) to deliver a CAGR of 11% in FY2020-22. The research house expects Bellamy's to be the key driver in the infant formula portfolio. DBS projected infant formula sales to deliver a CAGR of 26% in FY2020-22.
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