GTHT Securities has released a research report maintaining an "Overweight" rating on MENGNIU DAIRY (02319). The firm forecasts the company's revenue for 2025-2027 to be RMB 82.212 billion, RMB 85.006 billion, and RMB 88.628 billion, respectively, with net profit attributable to shareholders of RMB 1.531 billion, RMB 4.507 billion, and RMB 5.390 billion. Earnings per share are projected at RMB 0.39, RMB 1.16, and RMB 1.39 per share. As a leading enterprise in the dairy industry, MENGNIU DAIRY is seeing its raw milk cycle stabilize and bottom out. Based on a 2026 P/E ratio of 20x, the target price is set at HKD 25.82 per share. The main points from GTHT Securities are as follows:

Liquid milk sales have shown a sequential recovery, while other product categories maintain strong growth momentum. The company expects total revenue for 2025 to be between RMB 81.6 billion and RMB 82.5 billion, with operating cash flow remaining stable year-on-year. By product category, liquid milk revenue has stabilized and begun to recover sequentially since the second half of 2025. Fresh milk, milk powder, and cheese categories all achieved double-digit growth in 2025, continuing their positive growth trend. The company continues to focus on product iteration and innovation, promoting diversified business development.

With impairment provisions finalized, profitability has stabilized. In 2025, the company plans to recognize impairment provisions totaling RMB 2.2 billion to RMB 2.4 billion for certain idle production facilities, accounts receivable, and entrusted loans. Full-year net profit attributable to shareholders is projected to be between RMB 1.4 billion and RMB 1.6 billion, compared to RMB 100 million in the previous year. The company is持续推进 management optimization and cost control, increasing investment in R&D and digitalization, and improving operational efficiency. The operating profit margin is expected to be between 7.9% and 8.1%.

The raw milk cycle is stabilizing at the bottom, with profit elasticity continuing to be released. Raw milk prices are continuing to bottom out. On the supply side, benefits are seen from gaps in replenishing replacement heifers and reduced impact from imports. On the demand side, primary and deep processing capacities are steadily being released, making a rise in milk prices in 2026 highly probable. It is anticipated that as milk prices enter an upward cycle, and benefiting from an optimized competitive landscape and improved profitability of affiliated enterprises, the company's profit elasticity is expected to further increase.

Risk factors include fluctuations in raw material costs, intensified industry competition, and food safety issues.