HK Stock Market Move | Mengniu Dairy (02319) surged more than 3% as demand for dairy products has improved on a month-on-month basis. Institutions are optimistic about the company's ability to maintain profit expansion.

MENGNIU DAIRY (02319) rose more than 3%, at the time of writing, it rose 3.55%, closing at 15.74 Hong Kong dollars, with a trading volume of 2.45 billion Hong Kong dollars. On the news front, Kaiyuan Securities stated that dairy products have started stocking up for the Spring Festival, with ordering meetings at the end of December and other activities effectively boosting the confidence of distributors. More stocking up is concentrated in January 2025. Although the demand for dairy products is not as hot as in previous years during the Spring Festival, there has been a noticeable improvement compared to before. The 2025 Spring Festival can be seen as a transitional period for the entire industry's demand from weak to strong. Channel inventory has now dropped to a reasonable level, with no excessive investment in promotions, and promotional policies concentrated in the month before the Spring Festival, but overall rates have not changed significantly. CICC International previously pointed out that the decline in raw milk costs and strict cost control should sustain the group's profit expansion, with gross profit margin and operating profit margin improving by 0.9 and 0.4 percentage points year-on-year in the second half of the year. The bank stated that MENGNIU's primary task at the moment is to improve operational efficiency. It believes that healthier inventory, a more rational competitive environment, stable raw milk prices, and prudent cost control will enhance the group's profitability. The bank expects the operating profit margin to expand by an average of 0.3 percentage points year-on-year in the 2025-26 fiscal year and maintain moderate earnings growth.