Xingzheng International: Maintaining Mengniu Dairy (02319) “Buy” Rating and Continuously Optimizing the Expected Revenue Structure
The Zhitong Finance App learned that Xingzheng International released a research report stating that it maintains the “buy” rating of Mengniu Dairy (02319). The bank expects the company's revenue from 2026 to 2028 to be $88.785 billion, $94.08 billion and $99.581 billion, respectively, and net profit to mother of $4.808 billion, $5.565 billion and $6.190 billion respectively. The bank believes that the company's revenue structure is expected to continue to be optimized in 2027, and sales and distribution expenses may decline further, strengthening profit elasticity. In the medium to long term, relying on integrated composite production capacity and the advantages of leading enterprises, Mengniu is expected to fully benefit from the accelerated development of the dairy product deep processing circuit.
Xingzheng International's main views are as follows:
Review of the company's mid-term results: the boom in all categories is accelerating, and profit indicators are improving
In the first half of 2026, the company achieved revenue of 44.795 billion yuan (same below), an increase of 7.8% over the previous year. Among them, the growth rate of liquid milk remained leading, and the fresh milk, cheese, and milk powder (comparable caliber) businesses all achieved year-on-year growth of more than 30%. At the same time, various profit indicators performed well. The company's gross profit increased 5.2% year-on-year to 18.258 billion yuan in the first half of 2026. Expense investment efficiency improved, and sales and distribution expenses decreased 0.3 percentage points year-on-year to 27.6%. The company achieved operating profit of 3,676 billion yuan, and the operating profit margin reached 8.2%. Net profit to mother increased 15.9% year-on-year to 2,372 billion yuan, and net profit margin to mother increased 0.4 percentage points to 5.3% year over year.
The income structure continues to improve, and the growth performance of solid milk is particularly prominent
In the liquid milk sector, the company further deepened omni-channel capacity building in 2026, and fresh milk continued its strong growth trend. Offline, the number of fresh milk sales outlets continues to grow, and single-store sales have steadily increased; online, JD's share remains at the top, and instant retail sales are growing rapidly. B-side has achieved in-depth cooperation with many leading tea and coffee brands. The gradual improvement of omnichannel capabilities and the continuous development of B-side customers have laid a solid foundation for the continued strong growth of fresh milk in 2027.
In the solid milk sector, ice cream held the highest market share in Indonesia, the Philippines, and Vietnam, and achieved double-digit growth in domestic market revenue in the first half of 2026; in terms of milk powder, overseas brand Bellamy's revenue growth rate in the first half of 2026 was over 60%, and the domestic brand Ruibun maintained relatively rapid growth; the cheese consumption scene extended to all age groups, and the penetration of large clients accelerated. The bank expects high-end products to continue to lead the ice cream business growth in 2027, the B-side of cheese will accelerate, and overseas milk powder is also expected to maintain strong market demand.
Improving the efficiency of cost investment
In the first half of 2026, the company's product and brand promotion expenses remained stable year on year, and marketing expenses focused on emerging channels such as content e-commerce and instant retail. The bank expects domestic raw milk prices to continue to rise moderately in 2027. Competition in the downstream dairy industry is slowing down, compounding the increase in corporate investment efficiency, and the company's sales and distribution expenses are expected to drop further.
Risk Alerts
Increased industry competition, rising raw material prices, and food safety issues.