Lyon: Upgraded MENGNIU DAIRY (02319) to "highly confident outperforming the market" rating, raising target price to HKD 23.7.

Lyon released a research report stating that the rating of MENGNIU DAIRY (02319) H-shares has been upgraded from "outperform market" to "highly confident outperform market", with a target price raised from HK$20.1 to HK$23.7. They are optimistic about its high beta value and low valuation, believing that the stock has a higher potential for further upside. Lyon pointed out that they expect the Chinese dairy industry to gradually improve this year. In terms of the upstream, they estimate that the gap between supply and demand of fresh milk is narrowing, which reinforces expectations of a recovery in raw milk prices in the coming quarters. In terms of the downstream, although demand has been weak so far this year, the market expects to see a low base effect in the second quarter of this year.