研究报告全文：31Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyupdateMengniuDairy2319HKSubpargrowthtargetbutgoodcorporategovernanceBUYmaintainpracticecouldstabilizeshareholdersreturnTargetPriceHK400PreviousTPHK5202023outlookManagementguidedformid-to-highsingledigitrevenueUpDownside227growthexMilkgroundMengniuholds35ofthelatterandhasstartedCurrentPriceHK326consolidationfromDec2022ThiscameinslightlybelowourexpectationChinaConsumerastheexpectedrecoverynowlookslackofsteamAlternativelyweargueFoodandBeveragethatthemilkpowderbusinessremainsadragtoMengniudespitesmallandwestilllookforaHSDrevenuedeclineAccordinglythiswillimply7JosephWong25revenuegrowthfortheremainingliquidmilkicecreambusinesses85239000838SeparatelywhentheaggregateofinputpricesunlikelytosignificantlycomejosephwongcmbicomhkdownandwhenproductmixupgradedeceleratesweseelittlegroundforGPMtomeaningfullyexpandTheonlycatalysttosustaina03-05ppnetStockDatamarginsexpansioninourviewfallsonoperationcostsavingswhenweMktCapHKmn128850Avg3mthstoHKmn32496forecastadministrativecostratiotonormalizetothatinthepre-COVIDera52wHighLowHK439247NeverthelessthemeritwillbepartiallyoffsetbyahighersellingexpenseTotalIssuedSharesmn3952whichmanagementexpectsittocomeinat24-26of2023ErevenueSourceWindSharebuybackManagementreinstatesitsintentiontobuybacksharesShareholdingStructureCOFCODairyInvestmentCo1392whenevertheyfeelappropriateWhencurrentproductioncapacityisGendarLtd749sufficienttosustainavolumeexpansionforthenext3-5yearsinourviewBrownBrothersHarriCo729Mengniuscapexcyclelookstohavepeaked-outConsideringalsoa10SourceWindincreaseinOCFtoRMB83bnin2022weseegroundsformanagementtoSharePerformancetakeonfurtherinitiativestoimproveshareholdersreturnAbsoluteRelative1-mth-55-102EarningschangeToreflecttheactual2Hresultswecutour202324E3-mth-79-108revenueby227respectivelyalongwitha11pptriminGPMand6-mth47-106theseleadtoan11cutinournetprofitsestimatesforbothyearsOurSourceWindcurrentforecastsfallwithintherangeofmanagementguidanceandare912-mPricePerformancebelowconsensusHKD5002319HKHSCEIrebasedValuationUponourearningschangesournewTPisbasedon220xfrom400260xend-23EPEwhichnowrepresents-1sdbelowlong-termaverage300fromlong-termaverageToMengniuwebelieveitsdeceleratinggrowth200trajectoryshouldcommandalowervaluationrangerelativetoitsFBpeers10000whichsharehighersensitivitytoChinasreopeningComparablyweMar-22Jun-22Sep-22Dec-22appliedthesamemethodologytoFeiheDespitethiswhensharesaretradingathistoricallowwethinkthenegativesarepartiallypriced-inandaSourceBBGgoodcorporategovernancepracticecouldhopefullystabilizeshareholdersAuditorKPMGreturnMaintainBUYEarningsSummaryRelatedReports1NongfuSpring9633HKMid-YE31DecFY20AFY21AFY22EFY23EFY24Eteentop-linegrowthanda90RevenueRMBmn760358814192593100354111018dividendpayoutsustaintheYoYgrowth381595184106valuationpremiumoverpeers30Mar2023NetincomeRMBmn35255026530360227108EPSRMB09131315182ShenzhenPagoda2411HKYoYgrowth7642055136180Anensuring2022andweConsensusEPSRMBnana151821remainpositivefor202330PExnana203179152Mar2023PBxnana272422Divyieldnana151720ROE95120106111120Netgearing194282448374253SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk31Mar2023Figure1EarningsrevisionNewOldDiffRMBmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue9259310035411101892802102393114048-02-20-27GrossProfit326903572640078331303706641856-13-36-42RecurringEBIT63787141845562057460888028-43-48Netprofit530360227108589867717938-101-111-105GrossMargin353356361357362367-04ppt-06ppt-06pptEBITMargin69717667737802ppt-02ppt-02pptNetMargin576064646670-06ppt-06ppt-06pptSourceCompanydataCMBIGMestimatesFigure2CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue9259310035411101893531106576116048-10-58-43GrossProfit326903572640078341353925842906-42-90-66RecurringEBIT637871418455639076549105-02-67-71Netprofit530360227108582666127815-90-89-91GrossMargin353356361365368370-12ppt-12ppt-09pptEBITMargin69717668727801ppt-01ppt-02pptNetMargin576064626267-05ppt-02ppt-03pptSourceCompanydataCMBIGMestimateFigure312MforwardPEbandFigure412MtrailingPBbandx1-yrfwdPELTaverage-2SDx1-yrtrailingPBLTaverage43-1SD1SD2SD-1SD1SD38802SD-2SD3360282340181320Jun18Jun19Jun20Jun21Jun22JunMar21MarMar18Mar19Mar20Mar22Mar23MarDec18Dec22SepSep18Sep19Sep19Dec20Sep20Dec21Sep21Dec22DecJun20JunJun18Jun19Jun21Jun22JunMar18Mar19Mar20Mar21Mar22Mar23MarDec18Dec19Sep19Dec20Sep20Dec21Sep21Dec22Sep22Dec18SepSourceCompanydataBloombergCMBIGMestimatesSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE31Mar2023FinancialSummaryIncomestatementCashflowsummaryYE31DecRMBmnFY20AFY21AFY22EFY23EFY24EYE31DecRMBmnFY20AFY21AFY22EFY23EFY24ERevenue7603588141925931003511101Netincome35255026530360227108LiquidMilk677517651478269839104916248DA20422396265227522852Others828411627143241644519394Changeinworkingcapital967145936444024577Others11871336189621642260Grossprofits2862932390326903572640078Netcashfroperatingact53487545241525867123DA20422396265227522852Capexinvestments611565640640640Sellingexpense2154123488223472508927755Acquisition26830---Administrationexpenses29153524444240144441Others545914045657779779Otheroperatingexpenses178316291802--Netcashfrinvestingact48221544017139139Others30293780473029523052EBIT33775132617768238082Equityraised-----ChangeofDebts39268013---EBITDA541975298829957610935Dividendpaid8851282154816981968Others2414281--Financecostsnet572743112511251125Netcashfrfinancingact45716773162916981968Non-operating13501479145116861758Preincomeexpense-taxprofit41555868650273848715Netchangeincash5599112380310285294Cashatthebeginningofthe597012351119631389414922Incometax653905131814961766Exchangeyeardifference17211---LessMinorityinterests2362118134158Cashattheendoftheyear1139711217127661492220216Netprofit35255026530360227108Lesspledgedcash-----BalancesheetKeyratiosYE31DecRMBmnFY20AFY21AFY22EFY23EFY24EYE31DecFY20AFY21AFY22EFY23EFY24ENon-currentassets4864067081810368035379463SalesmixPPEFixedassets1254717335196531871617099LiquidMilk891868845836825Goodwill48834858888888888888Others109132155164175Deferredtaxassets12771561160116011601Othernon-currentassets2993343327508955114851875PLratiosGrossmargin377367353356361Currentassets3150731020367773987646443Operatingmargin4458676873Cash1139711217127661492220216Pre-taxmargin5567707479Accountreceivable29274160366039674389Netmargin4657576064Inventory55126485807387109561Effectivetaxrate157154203203203Othercurrentassets116709158122781227812278BalancesheetanalysisCurrentliabilities2614429072331533007230768Currentratiox0404030404Borrowings49244265909590959095Netreceivabledays141172144144144Accountpayables796988041020171207815Inventoryturnoverdays424425492492492Otherpayables832611737476347634763Netpayabledays383365402402402Leaseliabilities49244265909590959095Netdebttoequity194282448374253Non-currentliabilities1675427030346083591435914ReturnsBorrowings1369618786261062610626106ROE95120106111120Deferredtaxliabilities22802456392639263926Dividendyieldnana151720Othernon-currentliabilities7795787457558825882PershareMinorityInterest42655174995398199661EPSRMB0913131518DPSRMB0304040505Totalnetassets3724841999500525424259223BVPSRMB8393101112125Shareholdersequity3298336826400994442349562SourceCompanydataCMBISestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE331Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBIGMGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBIGMGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBIGMGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBIGMGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE4