China Mengniu Dairy Co. Ltd.

Overview Key strengths Key risks One of the two largest dairy producers in China. High capital expenditure (capex) driven by upstream subsidiary China Modern Dairy Holdings Ltd. (CMD). Extensive distribution network and good branding. Less diverse product offering and geographic spread relative to global peers. Sizable internal sources of raw milk. Exposure to potential food safety issues. We project organic growth rate of 3%-4% in 2023 and 5%-6% in 2024 as Mengniu rolls out new and premium products and gains share from smaller regional players. Mengniu outperformed its peers in the core liquid milk business in the first half of 2023. Its liquid milk product sales grew 5% even as sales of key competitor Inner Mongolia Yili Industrial Group Co.

...China Mengniu Dairy Co. Ltd. (Mengniu) will grow organically at mid-single digit over the next one to two years. We project organic growth rate of 3%-4% in 2023 and 5%-6% in 2024 as Mengniu rolls out new and premium products and gains share from smaller regional players. Mengniu outperformed its peers in the core liquid milk business in the first half of 2023. Its liquid milk product sales grew 5% even as sales of key competitor Inner Mongolia Yili Industrial Group Co. Ltd. (Yili) declined by 1%. Mengniu maintained stable pricing despite a weak...

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