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.

Equity Bottom-Up

China Mengniu Dairy Co / Equity Bottom-Up

<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

Thematic (Sector/Industry)

<ul><li>We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.</li><li>Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.</li><li>In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. </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.

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. 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.

China Consumer Staples – Divergence continues

<ul><li>2023 outlook. Management guided for mid-to-high single digit revenue growth ex Milkground (Mengniu holds 35% of the latter and has started consolidation from Dec 2022).</li><li>This came in slightly below our expectation, as the expected recovery now looks lack of steam.</li><li>Alternatively, we argue that the milk powder business remains a drag to Mengniu, despite small, and we still look for a HSD revenue decline.</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.

2023 outlook. Management guided for mid-to-high single digit revenue growth ex Milkground (Mengniu holds 35% of the latter and has started consolidation from Dec 2022).This came in slightly below our expectation, as the expected recovery now looks lack of steam.Alternatively, we argue that the milk powder business remains a drag to Mengniu, despite small, and we still look for a HSD revenue decline.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) – Subpar Growth Target

<ul><li>Our view to dairy segment’s outlook remains mediocre, as we believe players should in general share less sensitivity to the reopening theme relative to their peers in the beer and cosmetics segment, respectively.</li><li>That said, we see trading opportunity on Mengniu into results season. This would mainly be underpinned by 1) an easy and stabilizing earnings expectation (for both 2H22 and 2023E), when we see subdued downside risk to current consensus estimates, and 2) a moderately lagging valuation to peers who have already been re-rated on reopening sentiment.</li><li>Our call does not indicate any preference changes in our structural picks. Instead, we argue the stock could play near term catch-up catalyzed by this expectation mismatch, when a likely in line 2H could refresh market expectation, despite any earnings miss last year (which looks to be not uncommon as we observed). </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.

Our view to dairy segment’s outlook remains mediocre, as we believe players should in general share less sensitivity to the reopening theme relative to their peers in the beer and cosmetics segment, respectively.That said, we see trading opportunity on Mengniu into results season. This would mainly be underpinned by 1) an easy and stabilizing earnings expectation (for both 2H22 and 2023E), when we see subdued downside risk to current consensus estimates, and 2) a moderately lagging valuation to peers who have already been re-rated on reopening sentiment.Our call does not indicate any preference changes in our structural picks. Instead, we argue the stock could play near term catch-up catalyzed by this expectation mismatch, when a likely in line 2H could refresh market expectation, despite any earnings miss last year (which looks to be not uncommon as we observed). 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) – A laggard play to this early-staged consumption-led recovery

<ul><li>We had positive takeaways on F&amp;B demand over the New Year holiday break from our chancel check with distributors.</li><li>In view of the strong foot traffic and hence gifting demand, Baijiu and Beer exceeded expectation, followed by soft drinks and RTD.</li><li>Dairies (including IMF) had a good recovery despite a relatively high inventory level. Both packaged snacks and instant noodle had good momentum.</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.

We had positive takeaways on F&amp;B demand over the New Year holiday break from our chancel check with distributors.In view of the strong foot traffic and hence gifting demand, Baijiu and Beer exceeded expectation, followed by soft drinks and RTD.Dairies (including IMF) had a good recovery despite a relatively high inventory level. Both packaged snacks and instant noodle had good momentum.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.

China Consumer – Positive Takeaway from F&B Distributors

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.

China Mengniu Dairy Co (2319 HK)

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

China Consumer Staples – Divergence continues

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with...

CMB International

Mengniu Dairy (2319 HK) – Subpar Growth Target

2023 outlook. Management guided for mid-to-high single digit revenue growth ex Milkground (Mengniu holds 35% of the latter and has started...

CMB International

Mengniu Dairy (2319 HK) – A laggard play to this early-staged consumption-led recovery

Our view to dairy segment’s outlook remains mediocre, as we believe players should in general share less sensitivity to the reopening theme...

CMB International

China Consumer – Positive Takeaway from F&B Distributors

In view of the strong foot traffic and hence gifting demand, Baijiu and Beer exceeded expectation, followed by soft drinks and RTD

CMB International