Morning Star: Maintaining Mengniu Dairy's (02319) target price of HK$20.5, net profit is expected to rebound this year

The Zhitong Finance App learned that Morningstar released a research report stating that it maintains the fair value of HK$20.5 per share of Mengniu Dairy (02319) and believes that the stock is currently undervalued, with a price-earnings ratio of 10 times in 2026. Net profit is expected to rebound in 2026, thanks to limited room for a decline in raw milk prices and a recovery in liquid milk sales.

Looking ahead, the Group's demand for liquid milk is expected to recover moderately in 2026, and sales will increase 4% year over year. As product diversification gradually shows results, improvements will become more obvious in the second half of the year. In the long run, the bank expects Mengniu to increase investment in deep-processed dairy products such as cheese, butter, and food channel products. The bank believes that these measures are expected to capture increasingly diversified consumer demand in the long term.