Bank of America Securities: Raises MENGNIU DAIRY (02319) target price to 21 Hong Kong dollars, reiterates "buy" rating.

Bank of America Securities released a research report stating that MENGNIU DAIRY (02319) has high earnings visibility in 2026, making it the top choice among Chinese consumer stocks, with expected net profit reaching 48.61 billion RMB in 2026 and further increasing to 54.3 billion RMB in 2027, returning to historical highs. The bank raised its earnings forecasts by 3% for 2026 and 2027, raising the target price from 20 HKD to 21 HKD and maintaining a "buy" rating. The bank stated that Mengniu's management expects revenue to increase in the mid-single digits this year in a baseline scenario. Group and liquid milk business saw growth in high single digits in the first quarter, with premium products recording over 10% growth. Although management currently prioritizes revenue and cautiously sets operating profit margin targets as flat, there is potential for upward revision in the future as raw milk prices bottom out and skimmed milk powder expenses decrease (4.69 billion RMB in 2025), which could drive earnings increase by over 10 billion RMB this year.