Yamato: Lowering Mengniu Dairy's target price to HK$22 while maintaining a "buy" rating.

Yamato published a research report stating that Inner Mongolia Yili Industrial Group's first half-year revenue decreased by 6.9% year-on-year, 3% lower than market expectations, while operating profit reached 3.5 billion yuan, an increase of 13% year-on-year, 9% higher than market expectations. Management indicated that full-year revenue is expected to decline by a high single-digit percentage, and full-year operating profit margin will remain flat year-on-year. The bank estimates that this means revenue will decline by 6 to 7% year-on-year in the second half of the year, and the operating profit margin will narrow to around 8%, resulting in a drop of approximately 20% in operating profit in the second half of the year. Due to weak channel capabilities, Mengniu is losing market share to Yili. The bank maintains a "buy" rating on Mengniu with a target price lowered from 26.5 Hong Kong dollars to 22 Hong Kong dollars.