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

<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>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

Hong Kong

Mengniu Dairy is a leading Chinese dairy enterprise focused on manufacturing and distributing a wide range of nutritious, healthy, and delicious dairy products. Its product portfolio includes liquid milk, ice cream, milk powder, and cheese. The company is headquartered in Hohhot, Inner Mongolia, China, and was founded in 1999.

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Mengniu Dairy (2319 HK)