Analyst

Steve Zhou, CFA

Equity Bottom-Up

China Mengniu Dairy Co / Equity Bottom-Up

<ul>
<li>The read-across for <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>'s 3Q23 results and briefing to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> was overall positive. </li>
<li>For 3Q23, Yili's sales grew 3% yoy and net profit increased 59% yoy, mainly due to lower raw milk prices, better product mix, cost savings and low base.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> continues to be a good value play, with reasonable valuation (15x 2024E PE), stable growth (above 10% net profit growth), and proactive shareholder returns.</li>
</ul>


The read-across for Inner Mongolia Yili Industrial Group (A) (600887 CH)'s 3Q23 results and briefing to China Mengniu Dairy Co (2319 HK) was overall positive. 
For 3Q23, Yili's sales grew 3% yoy and net profit increased 59% yoy, mainly due to lower raw milk prices, better product mix, cost savings and low base.

China Mengniu Dairy Co (2319 HK) continues to be a good value play, with reasonable valuation (15x 2024E PE), stable growth (above 10% net profit growth), and proactive shareholder returns.


Mengniu Dairy (2319 HK):  Positive Read-Across From Yili 3Q23 Results And Briefing

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>1H reported revenue/net profits came in at +7%/-19% YoY to RMB51bn/3bn.</li><li>Stripping off Milkground consolidation impact and RMB1bn non-recurring items (mainly FV/disposal gains last year), 1H core revenue/net profits grew 3%/10% YoY.</li><li>The former was line with that of Yili, considering flattish IMF (vs Yili +12%) and +5% liquid milk (vs Yili -1%) revenue growth, while the latter was a surprise to us. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1H reported revenue/net profits came in at +7%/-19% YoY to RMB51bn/3bn.Stripping off Milkground consolidation impact and RMB1bn non-recurring items (mainly FV/disposal gains last year), 1H core revenue/net profits grew 3%/10% YoY.The former was line with that of Yili, considering flattish IMF (vs Yili +12%) and +5% liquid milk (vs Yili -1%) revenue growth, while the latter was a surprise to us. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Mengniu Dairy (2319 HK) – 1H Core Rev/Np +3%/10%; a Surprising Beat

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> is a good pick for those seeking value in the China consumer sector. </li>
<li>The company currently trades at 15x 2024E PE, compared to over 20x forward PE in the last 5 years, as the industry growth stagnated. </li>
<li>We can still expect above 10% net profit growth over the next three years, with the company looking to return more cash to shareholders.  </li>
</ul>



China Mengniu Dairy Co (2319 HK) is a good pick for those seeking value in the China consumer sector. 
The company currently trades at 15x 2024E PE, compared to over 20x forward PE in the last 5 years, as the industry growth stagnated. 
We can still expect above 10% net profit growth over the next three years, with the company looking to return more cash to shareholders.  


Mengniu Dairy (2319 HK):  Solid Value Play

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Greatview Aseptic Packaging / Event-Driven

<ul>
<li>Back on the 27 January 2023, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson (JM SP)</a> entered an agreement with <a href="https://www.smartkarma.com/entities/shandong-xinjufeng-technology-packaging-co-ltd" target="_blank" data-smartkarma-citation="entities:36744:1" rel="noopener">Shandong Xinjufeng (301296 CH)</a> (XJF) to sell its 28.22% stake in <a href="https://www.smartkarma.com/entities/greatview-aseptic-packaging" target="_blank" data-smartkarma-citation="entities:10802:1" rel="noopener">GAPack (468 HK)</a>. </li>
<li>That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (&amp; friendly) directors, all-but taking control of the board. </li>
<li>CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?</li>
</ul>


Back on the 27 January 2023, Jardine Matheson (JM SP) entered an agreement with Shandong Xinjufeng (301296 CH) (XJF) to sell its 28.22% stake in GAPack (468 HK). 
That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (&amp; friendly) directors, all-but taking control of the board. 
CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?


GAPack (468 HK): Unpacking XJF's Move To Send The Board Packing

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on May 26th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Ck Asset (1113 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Tencent (700 HK), Yihai International (1579 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on May 26th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Ck Asset (1113 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Tencent (700 HK), Yihai International (1579 HK).


Hong Kong Buybacks Weekly (May 26th): Tencent, AIA, CK Asset

China

China Mengniu Dairy Company Limited, through its subsidiaries, manufactures and distributes quality dairy products in China. The principal products are liquid milk products, ice cream, and other dairy products, such as milk powder. The Company markets its products under its primary MENGNIU core brand.

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China Mengniu Dairy Co (2319 HK)

Mengniu Dairy (2319 HK): Positive Read-Across From Yili 3Q23 Results And Briefing

Good read-across from Yili's 3Q23 results and briefing. Mengniu continues to be a good value play with reasonable valuation, growth, and proactive...

Steve Zhou, CFA

Mengniu Dairy (2319 HK) – 1H Core Rev/Np +3%/10%; a Surprising Beat

Stripping off Milkground consolidation impact and RMB1bn non-recurring items (mainly FV/disposal gains last year), 1H core revenue/net profits grew...

CMB International

Mengniu Dairy (2319 HK): Solid Value Play

Mengniu Dairy (2319 HK) is a good pick for those seeking value in the China consumer sector. Higher payout to shareholders expected.

Steve Zhou, CFA

GAPack (468 HK): Unpacking XJF's Move To Send The Board Packing

Nothing like bringing one of your customers - China Mengniu - on board (so to speak), both as a substantial shareholder (5.01%) and board member...

David Blennerhassett

Hong Kong Buybacks Weekly (May 26th): Tencent, AIA, CK Asset

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Tencent (700 HK),...

Ke Yan, CFA, FRM

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