After Mengniu released its interim report for 2025 on August 27, foreign investment institutions such as Citigroup and Goldman Sachs, as well as Chinese research institutions like Huatai Securities and Huachuang Securities, issued reports stating that Mengniu's current valuation has become attractive after short-term adjustments. They are optimistic about Mengniu's future performance prospects and have given positive ratings such as "Buy."
Institutions generally believe that the dairy industry has entered a cyclical bottoming phase. As a leading enterprise, Mengniu is accelerating strategic upgrades and operational efficiency improvements. The current valuation fully reflects short-term performance pressure, highlighting its medium- to long-term allocation value. Currently, Mengniu's valuation is about 13-15 times PE, while the average valuation of the Hang Seng Consumer Staples industry sector is 22 times PE. Due to weak short-term fundamentals and the impact of foreign liquidity in Hong Kong stocks, the valuation premium for leading enterprises in the dairy industry is currently limited.
Citigroup's research report shows that Mengniu's profit in the first half of 2025 increased by 13% year-on-year, but revenue decreased by 7% year-on-year. The core difference stems from the decline in raw milk prices—which both suppressed revenue performance and pushed the gross profit margin up by 1.4 percentage points year-on-year to 41.7%. Coupled with a decline in the sales expense ratio, this jointly increased profits. Based on an expected 2025 PE of 17 times, in line with the global dairy industry's average valuation level, Citigroup gave Mengniu a "Buy" rating with a target price of HK$23.29, expecting a total return of 47.7% (including a 4.0% dividend yield).
Goldman Sachs' research report analysis shows that Mengniu's core operating profit increased by 13% year-on-year, and the core operating profit margin rose to 8.5%, exceeding Goldman Sachs' expectation of 7.6%. This was mainly due to the decline in raw milk costs driving gross profit margin improvement and strict control over year-on-year declines in sales expenses. Goldman Sachs maintained a "Buy" rating for Mengniu with a 12-month target price of HK$23.3.
Huachuang Securities analysis believes that current external demand bottoming has put some pressure on the company's revenue side, but the company's inventory is relatively healthy, and lean investment has shown significant results, with a series of impairment disturbances converging. Profit recovery in the second half of the year is expected. The current dividend yield of about 3.4% provides certain returns. Huachuang Securities gave a target PE of 17 times for 2025, corresponding to a target price of HK$21, and maintained a "Strong Recommend" rating.
By category, Shenwan Hongyuan's research report shows that Mengniu's fresh milk business achieved over 20% growth in the first half of the year, with Daily Fresh's market share continuing to expand. The infant formula business, after last year's adjustments, achieved revenue growth, with Bellamy's growing by over 20%. The cheese business is driven by both B2B and B2C channels, with consumption scenarios continuously expanding. Looking ahead to the second half of the year, the low-temperature business is expected to continue the growth momentum of the first half.
Huatai Securities believes that Mengniu's diversified business is steadily advancing, with strong performance during the peak season, especially outstanding growth in overseas business. From a profit perspective, the decline in raw milk prices and continuous improvement in cost efficiency drove the gross-to-sales difference in H1 2025 to increase year-on-year to 13.8%, and the operating profit margin rose to 8.5%. Looking forward, demand for liquid milk is expected to recover, and the Mid-Autumn Festival and National Day period may serve as an important observation window. The ice cream business has returned to positive growth, and the profitability of the奶粉 (milk powder) and cheese businesses is expected to improve, accumulating potential for long-term profit flexibility. Referring to the comparable companies' average PE of 20 times for 2025, Huatai Securities gave Mengniu a target price of HK$23.74 and maintained a "Buy" rating.
Huachuang Securities believes that Mengniu's product innovation and dual-driven B2B and B2C channel reforms have shown initial results. On the profit side, on the one hand, the company will continue to focus on operational quality, with expected controllable expense allocation and remaining cost benefits. On the other hand, it will continue to focus on upstream capacity clearance. Against the backdrop of continued pressure on牧场 (ranch) cash flow and rising beef prices, the dairy herd in the Q3 silage season is expected to accelerate reduction, and raw milk prices are expected to gradually stabilize. Therefore, the drag from joint ventures related to excess milk sources and large package powder impairment losses are expected to significantly improve, and performance in the second half of the year is expected to significantly recover under a low base.
Market participants believe that in the first half of 2025, Mengniu focused on innovation to accumulate potential. Through over a hundred product innovations, it expanded its consumer base; through channel innovation, it accelerated the improvement of the "global channel ecosystem," strategic cooperation with leading brands in the B2B market, and provided professional dairy products and solutions; through R&D innovation, it expanded high-value-added product matrices such as milk fat, cheese, lactoferrin, and whey protein, which are expected to further drive revenue growth.
Regarding future expectations, institutions stated that Mengniu's structural innovation across product categories will further optimize the revenue structure while driving revenue growth. Full-process digital and intelligent management of the supply chain will significantly improve operational efficiency. Continuous lean management has already brought significant results, and the operating profit margin will steadily increase. Management's active buybacks clearly indicate a positive attitude toward its own development. These factors together constitute Mengniu's long-term investment value.
Shenwan Hongyuan believes that as a leading enterprise in the domestic dairy industry, the company has core competitiveness in dimensions such as milk sources, products, and channels. Under the guidance of the new "One Body, Two Wings" development strategy, it continues to improve its category layout and is expected to achieve sustainable growth in the medium to long term.
