Goldman Sachs released a research report stating that it reaffirmed Mengniu Dairy's (02319) “buy” rating, with a target price of HK$19.9.
According to the report, the management of Mengniu Dairy recently reaffirmed its commitment to achieve high-quality future growth. Management said that the focus for the next three years is to achieve diversification of categories and increase profitability through improved gross margin and operational efficiency, that is, to expand core gross margin by 30-50 pips per year from 2025 to 2027.
The bank said that the group has made some progress in streamlining upstream supply capacity, but is still awaiting more support policies to stimulate dairy consumption. Management continues to expect raw milk prices to bottom up in the 3rd quarter of 2025. At the same time, the Group reiterated its goal of increasing shareholder returns by increasing the dividend payout ratio, with a target ratio of 50% by 2025. The bank still expects Mengniu's dividend payment per share this year to be no lower than 2023.
