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GTJA: The turning point of this round of Dairy Product cycle mainly depends on inventory reduction, and demand policies are expected to act as a catalyst.
The Dairy Product Industry is currently in a triple bottom of supply, demand, and inventory. The turning point of this cycle mainly depends on the destocking of inventory, and demand policies are expected to catalyze this. It is anticipated that by Q3 2025, supply and demand will reach a balance, driving profit recovery and market share growth for leading companies.
Major Bank Rating | Morgan Stanley: Retail sales in the mainland continue to improve, favoring Mengniu, POP MART, YUM CHINA, and Anta.
Morgan Stanley published a research report stating that in the first two months of this year, retail sales in mainland China grew by 4% year-on-year, compared to a growth of 3.7% in December last year, slightly higher than the market expectation of 3.8%, indicating that the Industry is beginning to recover, and demand is continuing to stabilize. However, Morgan Stanley mentioned that a full recovery still takes time and prefers companies with a Consumer recovery theme, including Mengniu, Yili, and CHOW TAI FOOK; also bullish on high-growth stocks, such as POP MART and Jubao Biological; and prefers companies with resilient profitability and good Shareholder returns, including YUM CHINA and Anta.
Jianyin International: The baby subsidy in Hohhot boosts market confidence, giving CHINA FEIHE (06186), MENGNIU DAIRY (02319), and Inner Mongolia Yili Industrial Group (600887.SH) a "outperform market" rating.
Jianyin International expects that leading Dairy Product companies in China will benefit from the new policy directions.
Market Update | Dairy Product stocks opened high, MENGNIU DAIRY rose over 3%, CHINA FEIHE rose over 5%, and subsidies for fertility policies are expected to be gradually implemented, which is Bullish for the demand in the infant formula Industry.
On the news front, the General Office and State Council issued the "Special Action Plan to Boost Consumer Spending." The plan proposes to increase support for fertility and child-rearing.
With EPS Growth And More, Inner Mongolia Yili Industrial Group (SHSE:600887) Makes An Interesting Case
Lyon: The amount and coverage period of the childcare subsidy in Hohhot exceed expectations. CHINA FEIHE (06168) is expected to benefit the most.
The bank has set the Target Price for CHINA FEIHE at HKD 7.27; the Target Price for H&H INTL HLDG (01112) is set at HKD 10; and the Target Price for Inner Mongolia Yili Industrial Group (600887.SH) is set at RMB 31. All three stocks are rated as "outperform the market."
Be Wary Of Inner Mongolia Yili Industrial Group (SHSE:600887) And Its Returns On Capital
