China Mengniu Dairy Company Limited (China Mengniu Dairy Company Limited) (02319)

Equity Research Report | Industry: Diversified Dairy Products | Report Date: September 13, 2026 | As of the Hong Kong stock market close on September 11, 2026; valuation currency: Hong Kong dollars (HKD). Some market-data pages show different closing prices; this report uses HKD18.36 after cross-checking multiple sources.

This report was automatically compiled by AI based on publicly available information. It is for reference only and does not constitute investment advice.

1. Executive Summary

China Mengniu Dairy Company Limited (02319.HK) reported revenue of RMB 44.7949 billion in the first half of 2026, up 7.8% year on year, and profit attributable to equity holders of the Company of RMB 2.3715 billion, up 15.9% year on year, indicating a recovery in both revenue and earnings from 2025. However, full-year 2025 revenue still declined 7.3% year on year to RMB 82.2449 billion. Gross margin in the first half of 2026 was approximately 40.8%, down approximately 0.9 percentage points from approximately 41.7% in the first half of 2025, indicating that the earnings recovery continues to face cost and pricing pressure.

The Company’s core liquid milk business generated revenue of RMB 64.9393 billion in 2025, accounting for approximately 79.0% of total revenue, although the business remained under pressure. Fresh milk, milk powder, cheese and ice cream businesses grew, with some businesses recording comparable year-on-year growth of more than 30% in the first half of 2026. Fresh milk, milk powder, cheese, functional nutrition, deep processing and overseas markets form the main second growth curve aimed at reducing dependence on ambient liquid milk. However, liquid milk remains the principal foundation of revenue, profit and cash flow.

In terms of earnings quality, operating profit was RMB 6.5644 billion in 2025, representing an operating margin of approximately 8.0%. Net cash inflow from operating activities was RMB 8.7505 billion, up 5.0% year on year. Trade and bills payables of RMB 7.9200 billion were significantly higher than trade and bills receivables of RMB 2.4292 billion, indicating relatively favorable working-capital conditions. However, the Company recognized total impairment provisions of approximately RMB 2.3199 billion in 2025 and recorded a share of losses of associates of RMB 804.0 million. In the first half of 2026, there was also a one-off impact of approximately RMB 319.9 million related to enterprise income tax. Therefore, the year-on-year improvement in attributable profit should not simply be viewed as a complete normalization.

At the close of trading on September 11, 2026, the share price was HKD18.36, approximately 6.7% below the 52-week high of HKD19.67. The price-to-earnings ratio was approximately 31.6x to 32.6x, significantly affected by the low earnings base. Technically, the share price was slightly above the MA5 of approximately HKD18.28 and the Bollinger-band middle line of approximately HKD18.34. However, MACD remained below the signal line and the histogram was negative. Daily trading volume was approximately 16.66 million shares, only 68% of the three-month average of approximately 24.63 million shares, meaning that the short-term rebound has not yet received clear volume confirmation. The Company has continued to repurchase shares. Between August 31 and September 3, it repurchased 990,000 shares for an aggregate consideration of approximately HKD17.73 million. The shares are intended for cancellation, but cancellation had not been completed as of September 3.

2. Company Overview

2.1 Basic Information

2.2 Core Businesses and Product Portfolio

• Liquid milk: Revenue of RMB 64.9393 billion in 2025, accounting for approximately 79.0% of total revenue. Products include UHT ambient milk, milk beverages, yogurt and fresh milk, making this the Company’s core business. Key brands include Telunsu, Junlebao? Pure Milk? Pure Joy, Guanyi, Youyi C and Daily Fresh.
• Ice cream: Revenue of RMB 5.3933 billion in 2025, accounting for approximately 6.6%. Key brands include Sui Bian, Green Mood, Ice+, Deluxe and Aice overseas.
• Milk powder: Revenue of RMB 3.6434 billion in 2025, accounting for approximately 4.4%. Products include infant formula, adult milk powder, and nutritional and functional milk powder. Key brands include Rivo, Yourui and Bellamy’s.
• Cheese: Revenue of RMB 5.2655 billion in 2025, accounting for approximately 6.4%. The business primarily relies on Miao Ke Lan Duo and covers household consumption, children’s cheese, snack cheese, and food-service and industrial customers.
• Other businesses: Revenue of RMB 3.0034 billion in 2025, accounting for approximately 3.7%. These businesses mainly include dairy-product raw materials, auxiliary materials and trading.
• Structural upgrade direction: The Company regards fresh milk, milk powder, cheese and innovative nutrition businesses as its second growth curve, while reducing its reliance on ambient liquid milk through overseas markets, deep processing, and nutrition and health businesses.

2.3 Position in the Upstream and Downstream Value Chain and Cost-Profit Structure

Mengniu is positioned in the middle-to-downstream portion of the dairy value chain. It procures raw milk, feed and forage, dairy-product auxiliaries and packaging materials upstream; relies on large-scale processing, brands, research and development, and production networks in the middle stream; and sells dairy products downstream through nationwide channels, brand premiums and terminal coverage. The Company lacks absolute pricing power over raw milk, feed, packaging and other inputs. Profitability improvement therefore depends more on stabilization of raw-milk costs, restoration of the liquid-milk pricing system, product-mix upgrades and improved channel-expense efficiency.

• Core inputs include fresh and raw milk, feed, forage and farm services, as well as sugar, cocoa, fruit juice, probiotics, whey powder, vegetable oils, vitamins and minerals. Packaging materials include cartons, plastic bottles, composite films and cold-chain packaging.
• Raw-milk prices are affected by the number of dairy cows, feed costs, farm yields, industry supply and demand, and imported dairy-product prices. Mengniu does not have complete pricing power over raw milk and remains, overall, a price taker.
• The Company strengthens milk-source security through industrial investments in and cooperation with Modern Dairy, China Shengmu and other farm networks, and provides farms with forage, production materials, precision nutrition guidance and standardized training. The Company disclosed that during the 14th Five-Year Plan period through 2025, average daily milk yield per cow at cooperative farms increased from 16 kg to 35 kg, while average farm milk costs declined by nearly RMB 0.2 per kilogram. This is an average figure for cooperative farms and does not represent the cost changes of all raw-milk suppliers.
• Upstream advantages primarily derive from procurement scale, milk-source organization capabilities, farm cooperation and production networks, rather than absolute bargaining power over any single bulk commodity. In 2025, the Company stated that it was working with upstream and downstream partners to improve supply-demand imbalances and obtain competitive milk prices.
• Publicly available 2025 annual-report materials did not disclose the procurement share attributable to the five largest raw-milk suppliers, nor the concentration of the five largest suppliers. Accordingly, it is not possible to conclude on this basis that the Company has strong bargaining power over upstream suppliers.
• Downstream customers and channels include traditional supermarkets, distributors, convenience stores, e-commerce, instant retail, membership stores, discount snack stores, as well as food-service, bakery, tea-drink and dairy-product industrial customers.
• Liquid milk relies primarily on nationwide channel networks and terminal distribution capabilities. In 2025, the Company developed online platforms, content-based e-commerce, livestream e-commerce and instant retail, and strengthened customized-product cooperation with membership channels such as Sam’s Club and Hema. The fresh-milk business has established B2B cooperation with leading food-service and tea-drink brands such as Starbucks and Chagee.
• In ambient liquid milk, leading players such as Yili and Mengniu have strong brand and channel influence. However, supermarkets, e-commerce platforms and large chain retailers may compress margins through listing fees, promotions, rebates, shelf placement and price competition.
• Low-temperature milk and fresh-milk businesses have barriers related to cold-chain delivery, shelf life and regional warehousing and distribution, but also incur higher cold-chain, spoilage and inventory-management costs.
• Cheese, food-service industrial and tea-drink B2B customers have high requirements for product specifications, pricing, supply stability and customized services. Their bargaining power may be stronger than that of ordinary retail consumers.
• The 2025 annual report disclosed that no single customer contributed 10% or more of Group revenue. Trade receivables came from a large number of dispersed customers, and the annual report stated that there was no significant concentration of customer credit risk. However, the revenue share of the five largest customers was not disclosed in the materials available for this report, so overall customer concentration cannot be quantified further. This customer-concentration data mainly reflects the single-customer standard and cannot substitute for the aggregate share of the five largest customers. The latest annual report should be consulted for definitive information.
• As of December 31, 2025, trade and bills receivables were RMB 2.4292 billion, approximately 3.0% of full-year revenue, while trade and bills payables were RMB 7.9200 billion, approximately 9.6% of full-year revenue. Payables were significantly higher than receivables, and were mainly unsecured, interest-free and payable within agreed terms. Net cash inflow from operating activities was RMB 8.7505 billion in 2025, up 5.0% year on year. The Company stated that inventory-turnover days and receivables-turnover days had further improved, but the public earnings announcement did not provide complete specific turnover-day figures. Therefore, only a directional assessment is possible. Payables exceeding receivables indicate a certain working-capital advantage, but do not prove strong bargaining power with all upstream and downstream parties.
• No single customer contributed 10% or more of Group revenue in 2025. The aggregate revenue share of the five largest customers, and the concentration of the five largest suppliers and five largest raw-milk suppliers, were not disclosed in the materials available for this report. Accordingly, upstream and downstream concentration and bargaining relationships cannot be quantified further. The customer information above is based on 2025 figures and primarily comes from the Company’s annual report. The aggregate share of the five largest customers could not be cross-checked and should be confirmed against the latest annual report.

Mengniu is positioned in the middle-to-downstream portion of the dairy value chain. It is a large-scale processor and branded-channel company dependent on bulk inputs such as raw milk, rather than an upstream resource company or a pure downstream brand with high margins. The key to further profit improvement lies in stabilizing raw-milk costs, restoring the liquid-milk pricing system, increasing the mix of higher-value-added categories such as fresh milk and cheese, improving channel-expense efficiency, and upgrading nutrition, health and overseas businesses. Capacity expansion alone is not the primary profit driver.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

All amounts are denominated in RMB. Attributable net margin in the first half of 2026 was approximately 5.29%. Operating profit was RMB 3.6763 billion, up approximately 3.9% year on year, representing an operating margin of approximately 8.2%. Gross margin was approximately 40.8%, down approximately 0.9 percentage points from approximately 41.7% in the first half of 2025. Operating profit in 2025 was RMB 6.5644 billion, down approximately 9.5% year on year, representing an operating margin of approximately 8.0%.

Revenue and attributable profit both returned to growth in the first half of 2026, although gross margin declined. Publicly available research reports attributed the decline to price adjustments for certain products and increases in packaging, raw-material and auxiliary-material costs. During the reporting period, the Company paid approximately RMB 320 million in additional tax related to enterprise income tax matters, creating a one-off drag on profit attributable to shareholders. The sharp year-on-year increase in attributable profit in 2025 was mainly due to the low base in 2024. In addition, the Company recognized total impairment provisions of approximately RMB 2.3199 billion in 2025 and recorded a share of losses of associates of RMB 804.0 million. Therefore, 2025 attributable profit should not be directly regarded as normalized earnings. Net cash inflow from operating activities was RMB 8.7505 billion in 2025. As of December 31, 2025, interest-bearing bank and other borrowings totaled RMB 25.3887 billion, and net borrowings were approximately RMB 12.1342 billion.

3.2 Earnings Forecasts

The figures above are institutional forecasts, not Company guidance or official financial data. For revenue forecasts, the research notes clearly disclosed only data from Haitong Securities. The ranges for attributable net profit and earnings per share combine forecasts from Haitong Securities, Everbright Securities, Orient Securities, KGI Securities and Shenwan Hongyuan. Differences among institutional forecasts mainly reflect differing views regarding the unusually low 2025 earnings base, the approximately RMB 320 million additional enterprise income tax paid in the first half of 2026, raw-milk prices, the liquid-milk pricing system, and growth in cheese and milk powder businesses.

3.3 Valuation and Institutional Ratings

The valuation reference date is September 10, 2026, with a reference share price of HKD18.10 and reference market capitalization of approximately HKD70.0 billion to HKD70.1 billion. Public market-data platforms show a TTM P/E of approximately 32x, but this metric is affected by the low attributable profit in 2025 and does not fully represent normalized valuation. Based on institutional forecasts of 2026 EPS of RMB 1.23 to RMB 1.31 and an assumed RMB/HKD exchange rate of approximately 0.86, HKD EPS would be approximately HKD1.06 to HKD1.13, implying a forecast P/E of approximately 16.0x to 17.1x. Using Haitong Securities’ EPS forecast of RMB 1.29, the implied P/E is approximately 16.3x. Based on 2027 EPS of RMB 1.38 to RMB 1.45, HKD EPS would be approximately HKD1.19 to HKD1.25, implying a forecast P/E of approximately 14.5x to 15.2x. Net asset value per share was approximately RMB 10.49 in the first half of 2026, equivalent to approximately HKD9.02 at an exchange rate of approximately 0.86, implying a P/B ratio of approximately 2.0x. The proposed 2025 final dividend was RMB 0.520 per share, equivalent to approximately HKD0.45. Based on a share price of HKD18.10, the dividend yield would be approximately 2.5%. This dividend yield is based only on the final dividend and should be assessed together with the actual payment arrangements, exchange rates and future dividend policy. Public institutional target prices are mainly concentrated between HKD23 and HKD26. Based on the reference price of HKD18.10, target prices of HKD23.30, HKD23.90, HKD25.96 and HKD26.58 imply potential upside of approximately 28.7%, 32.0%, 43.4% and 46.9%, respectively. Overall, the current valuation is primarily based on earnings recovery in 2026 and 2027. However, gross-margin trends, dairy-industry competition, raw-milk prices, tax effects and associate losses remain the principal uncertainties.

4. Recent News and Announcements

4.1 Continued Share Repurchase: 90,000 Shares Repurchased on September 3

China Mengniu Dairy Company Limited repurchased 90,000 ordinary shares on the Hong Kong Stock Exchange on September 3, 2026. The highest price was HKD17.70 per share, the lowest price was HKD17.64 per share, the weighted average price was approximately HKD17.6913 per share, and the aggregate consideration was HKD1,592,217. The repurchased shares are intended for cancellation, but cancellation had not been completed as of the announcement. Following the repurchase, the number of issued shares was 3,871,192,513 and the number of treasury shares was zero.

4.2 Aggregate Repurchases of 990,000 Shares from August 31 to September 3

The Company disclosed that it repurchased 500,000 shares on August 31, 2026, at a weighted average price of HKD17.9769 per share; 400,000 shares on September 2, 2026, at a weighted average price of HKD17.8759 per share; and 90,000 shares on September 3, 2026, at a weighted average price of HKD17.6913 per share. The three transactions totaled 990,000 shares. Based on the disclosed trading ranges and aggregate consideration, the total consideration was approximately HKD17.73 million. All the repurchased shares are intended for cancellation.

4.3 Cumulative Execution of the Repurchase Mandate

At the annual general meeting held on June 5, 2026, shareholders approved a share-repurchase mandate authorizing the Company to repurchase up to 387,890,251 shares. As of September 3, 2026, the Company had repurchased 3,931,000 shares, representing approximately 0.101% of issued shares on the date the repurchase mandate was approved. The Company confirmed that the relevant repurchases complied with the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange and applicable laws and regulations. The repurchased shares are intended for cancellation, but cancellation had not been completed as of September 3, 2026. The moratorium on issuing new shares or selling/transferring treasury shares runs until October 3, 2026.

4.4 August Monthly Return of Securities Movements: Repurchased Shares Not Yet Cancelled

The Company submitted its monthly return of securities movements for the period ended August 31, 2026, on September 3, 2026. The return showed that issued shares totaled 3,871,192,513 and treasury shares totaled zero as of August 31, 2026. The number of issued shares had not actually decreased during August. At month-end, 500,000 shares had been repurchased but not yet cancelled, while the public-float requirement continued to be satisfied. Accordingly, the repurchase was reflected primarily as completed but pending cancellation, and had not yet resulted in a formal reduction in issued share capital.

4.5 First-Half 2026 Interim Results: Revenue and Profit Attributable to Owners Increased

The Company announced its interim results for the six months ended June 30, 2026, on August 26, 2026. Revenue was RMB 44,794.932 million, or approximately RMB 44.7949 billion, up 7.8% year on year. Operating profit was RMB 3,676.3 million, representing an operating margin of 8.2%. Profit attributable to owners of the Company was RMB 2,371.5 million, up 15.9% year on year. The Company stated that it had paid a tax adjustment related to the PRC Enterprise Income Tax Law during the reporting period, which had an impact of approximately RMB 319.9 million on profit attributable to owners of the Company. Certain businesses, including fresh milk, cheese and milk powder, achieved comparable year-on-year growth of more than 30%. The above performance figures are denominated in RMB and cannot be directly compared with the HKD amounts used for share repurchases.

4.6 No New Major Shareholder Buy or Sell Announcements Identified in September

As of September 11, 2026, the Hong Kong Stock Exchange company announcements and interests-disclosure materials retrieved for this report did not identify any new market-transaction announcement in September 2026 clearly involving a major shareholder increasing or reducing its holdings in Mengniu Dairy. Schroders PLC increased its holdings by approximately 17,850,000 shares on July 7, 2026, at an average price of approximately HKD17.0847, raising its stake to approximately 5.43%. It further acquired approximately 18,137,000 shares on July 10, 2026, at an average price of approximately HKD17.384, raising its stake to approximately 6.30%. These transactions took place in July 2026 and represent recent institutional ownership background rather than new September developments.

4.7 Hong Kong Stock Exchange Interests Investigation Report: Interests Held by Multiple Financial Institutions

The Hong Kong Stock Exchange’s interests-disclosure system published an investigation-results report related to 02319 in September 2026, with August 31, 2026 as the specified date. The report listed the following interests: BOCI Securities Limited held 399,305,266 shares; DBS Bank (Hong Kong) Limited held 4,646,278 shares; HSBC Broking Securities (Asia) Limited held 2,076,200 shares; United Overseas Bank Nominees Pte Ltd held 866,790 shares; Landesbank Baden-Württemberg held 1,771,000 shares; Societe Generale Bank & Trust held 1,352,000 shares; and CMB Wing Lung Bank Limited held 2,067,821 shares. The report did not list short positions and did not indicate that the report itself constituted new market buying or selling. The relevant interests were mainly stated to be held on behalf of clients or investors and cannot be directly equated with active proprietary investment positions of the financial institutions.

4.8 No New Profit Warning, Major M&A or Major Regulatory Penalty Identified in September

As of September 11, 2026, no new profit warning, positive or negative earnings alert, or earnings preannouncement issued by Mengniu Dairy in September 2026 had been identified. The most recent formal results disclosure was the interim-results announcement dated August 26, 2026. During the same period, no new major acquisition, asset disposal, joint-venture arrangement or overseas project transaction announced by the Company was identified. Nor was any announcement identified concerning a major administrative penalty, listing-qualification risk, trading suspension, investigation penalty or industry-regulatory action against the Company. The Hong Kong Stock Exchange interests-investigation report was an interests-verification disclosure and should not be interpreted directly as a regulatory penalty against the Company.

4.9 Overall News Assessment and Data Limitations

As of September 11, 2026, the key news items concerning 02319 included continued share repurchases and first-half 2026 earnings growth, while no new profit warning, major M&A transaction, major regulatory penalty or September transaction involving a major shareholder had been identified. Although the repurchased shares were disclosed as intended for cancellation, cancellation had not been completed as of September 3, 2026. Therefore, they should not be deducted from issued shares in advance. The HKEXnews company-announcement list showed that, at the time of this search, the latest company announcements had mainly been updated through September 3, 2026. Subsequent announcements may have existed after September 11, 2026 but not yet been indexed by search engines or published.

5. Share Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

At the close of trading on September 11, 2026, Mengniu Dairy was priced at HKD18.36, slightly above the MA5 of approximately HKD18.28 and the Bollinger-band middle line of approximately HKD18.34. The share price was near the midpoint of its short-term trading range. RSI was approximately 51.51, showing no clear overbought or oversold condition. However, MACD was approximately -0.0191, below the signal line of approximately 0.0052, and the histogram was negative, indicating weak short-term momentum. The share price rose 1.44% on September 11, but trading volume of approximately 16.66 million shares was only 68% of the three-month average of approximately 24.63 million shares. The rebound therefore lacked clear volume confirmation. Technically, HKD18.90–19.10 is the principal resistance zone, while HKD17.70–17.95 is the strong-support zone.

5.3 Short-Term Outlook (Next Week, Scenario Analysis for Reference Only)

⚠️ Risk warning: The following is a subjective scenario analysis based on closing data as of September 11, 2026, historical prices and technical indicators. It does not constitute investment advice or a definitive forecast of future prices.

1. Key Technical Levels

2. Scenarios for the Coming Week (Subjective Weights, Not Statistical Probabilities)

• Range-bound consolidation (relatively high subjective heuristic weighting, approximately 50%; not a statistical probability): Reference range of HKD18.10–18.90. If the share price holds HKD18.25–18.40 but fails to decisively break HKD18.90–19.10, while volume remains within the recent normal range of approximately 15 million to 25 million shares, the technical pattern may continue to fluctuate within a range.
• Downside bias (medium subjective heuristic weighting, approximately 30%; not a statistical probability): Reference range of HKD17.70–18.10. If the Hang Seng Index continues to weaken, the dairy sector lacks catalysts, or the share price closes decisively below HKD18.10 with trading volume clearly above the recent average on the decline, the price may retreat toward the Bollinger-band lower line near HKD17.76. A further break below HKD17.70 could open room toward HKD17.30–17.50.
• Stronger rebound (relatively low subjective heuristic weighting, approximately 20%; not a statistical probability): Reference range of HKD18.90–19.30. The bullish engulfing pattern on September 8 and the September 11 rebound provide some short-term sentiment support, but RSI of approximately 51.5 and negative MACD remain constraints. Only if the share price breaks HKD18.90–19.10 on increased volume, with daily volume remaining above 30 million shares and the Hang Seng Index or consumer sector strengthening in tandem, would it be appropriate to observe the possibility of a further test of HKD19.50–19.67.

3. Funding and Liquidity Background

As of September 11, 2026, daily trading volume was approximately 16.66 million shares. Based on approximately 3.871 billion shares outstanding, the implied turnover rate was approximately 0.43%. Certain market-data pages showed approximately 0.30%; a more prudent description is therefore a daily turnover rate of approximately 0.3%–0.4%, representing relatively moderate trading activity. Recent daily trading volume was approximately 11.46 million to 20.71 million shares, corresponding to trading value of approximately HKD200 million to HKD400 million. In terms of shareholder structure, publicly disclosed information showed that COFCO Dairy Investments Limited held approximately 938.8 million shares, or approximately 24.00%, as of July 3, 2025. Schroders Plc held approximately 243.8 million shares, or approximately 6.30%, as of July 10, 2026. Other materials listed holdings of approximately 8.04% for FIL Limited, 6.33% for BlackRock, 6.00% for Brown Brothers Harriman and 5.34% for UBS. Because the disclosure dates differ and some holdings may represent custodial, fund or attributable-interest positions, they cannot simply be added together to derive a final non-duplicative shareholder concentration figure. These holdings may also be subject to quarterly or event-driven reporting lags, and the actual structure may have changed as of September 11, 2026. Public disclosures indicate that the Company has both a core COFCO shareholder and institutional holdings by Schroders, FIL and BlackRock, rather than being mainly concentrated among a controlling family or private-equity investors. According to Lixinger, southbound holdings represented approximately 9.96% of H shares as of September 7, 2026, while cumulative short positions represented approximately 3.33% of H shares as of August 28, 2026. Both figures are subject to time lags and cannot represent the immediate fund-flow direction on September 11. Hong Kong stocks lack a unified official statistical definition fully equivalent to the “net inflow/net outflow of major funds” used in the A-share market. This report was unable to cross-check an all-day figure for major-fund net inflows as of September 11 and therefore makes no definitive assessment. If daily trading volume remains above approximately 30 million shares or trading value reaches approximately HKD550 million, this could serve as a verifiable volume-confirmation signal relative to recent normal levels.

Volume-confirmation signal: If daily trading volume remains above approximately 30 million shares or trading value reaches approximately HKD550 million, this may be regarded as effective volume expansion relative to recent normal levels. If the rebound remains near approximately 16.66 million shares or below the three-month average, price-volume confirmation remains limited.

4. Points to Monitor (Observational Framework Only, Not Trading Instructions)

• Observe whether HKD18.25–18.40 can hold near the Bollinger-band middle line and MA5.
• Observe whether the HKD18.90–19.10 resistance zone can be decisively broken while volume remains above approximately 30 million shares.
• Observe whether the HKD17.70–17.95 strong-support zone holds. If HKD17.70 is broken, further attention may be paid to HKD17.30–17.50.
• The above is a technical-observation framework and is not an instruction to buy, sell or hold.

The above scenario analysis is based on closing data as of September 11, 2026, together with historical prices and technical indicators. Short-term share prices may also be affected by news flow, fund flows, broader-market conditions, sector performance and exchange rates. Technical indicators are inherently lagging and limited, and do not guarantee actual future performance or constitute a buy or sell recommendation. Investors should independently assess the latest market information and bear their own investment risks.

6. Industry Structure and Competitor Analysis

6.1 Industry Overview

China’s dairy industry is characterized by a “two giants plus multiple strong players” structure. Yili and Mengniu have nationwide brands, large-scale production bases, broad distribution networks and significant advertising and R&D capabilities, making them the core competitors in ambient liquid milk. Bright Dairy, New Hope Dairy, Sanyuan Foods and Tianrun Dairy are competitive in low-temperature fresh milk, low-temperature yogurt or specific regions. In milk powder, cheese and ice cream, competition comes from Feihe, Yili, Ausnutria, international brands, Miao Ke Lan Duo, Wall’s, Nestlé and regional brands, respectively.

6.2 Competitive Landscape

• Key areas of competition include raw-milk supply and demand and farm costs, the ambient liquid-milk pricing system, cold-chain capabilities for low-temperature milk and fresh milk, product-mix upgrades, channel transformation, food safety and quality control.
• Excess raw-milk supply may lower milk prices and improve processor gross margins, but may also lead to farm losses, asset impairment and value-chain volatility.
• Yili and Mengniu are similar in scale and have broad channel coverage. Competition in ambient liquid milk can easily manifest as competition over promotions, pricing and inventory management.
• Low-temperature milk and fresh-milk businesses require substantial cold-chain investment. Regional dairy companies are competitive in local fresh milk and low-temperature yogurt, while nationwide expansion faces high warehousing, distribution and operating costs.
• Premium white milk, functional milk, fresh milk, cheese, infant formula and adult nutrition products generally have higher unit values, but also require greater R&D and marketing investment.
• E-commerce, instant retail, membership stores, discount snack stores and B2B food-service channels are changing traditional supermarket and distributor systems. Dairy companies must rebalance channel expenses and terminal reach.
• Public industry data use inconsistent methodologies for 2024 market shares. One set of data estimates the shares of Yili, Mengniu and Bright at approximately 30.2%, 25.9% and 10.1% based on dairy retail sales. Another set, based on market size data from CIC and listed-company revenue, estimates shares of approximately 22.1%, 17.0% and 4.7%, respectively. The denominators, channel coverage and revenue definitions differ, so the figures cannot be mixed directly. However, both sets support the conclusion that Yili and Mengniu lead by a significant margin and that industry concentration is relatively high.

6.3 Major Competitors

Mengniu is a nationwide comprehensive dairy company. Its core profit and cash flow remain determined by the liquid-milk business, but it is reducing dependence on ambient liquid milk through fresh milk, milk powder, cheese, functional nutrition, deep processing and overseas markets. Compared with Yili, Mengniu is at a relative disadvantage in overall scale, but is competitive in low-temperature yogurt, premium fresh milk, cheese and certain overseas ice-cream markets. Compared with Bright and New Hope Dairy, Mengniu has stronger nationwide channels, an ambient-milk network and comprehensive product scale. Compared with Feihe, Mengniu is a multi-category comprehensive dairy company, with milk powder representing a relatively smaller proportion of Group revenue. Industry comparisons should take into account differences in market-share methodologies and the fact that some comparable-company data come from A-share or unlisted companies, preventing a fully like-for-like comparison.

7. Risk Factors

• High concentration in the liquid-milk business: Liquid-milk revenue was RMB 64.9393 billion in 2025, accounting for approximately 79.0% of Group revenue, while revenue from the business continued to decline. Further pressure on ambient liquid-milk demand, pricing or channel inventories could directly weigh on Group revenue and operating profit.
• Industry competition may compress Mengniu’s channel and product margins. Yili and Mengniu are similar in scale and have broad channel coverage in ambient liquid milk. Listing fees, promotions, rebates, shelf placement and price competition from supermarkets, e-commerce platforms and large chains may offset gross-margin benefits from lower raw-milk costs.
• Raw-milk cost improvements are cyclical and uncertain. The Company does not have complete pricing power over raw milk. Raw-milk prices are affected by the number of dairy cows, feed costs, farm yields, industry supply and demand, and imported dairy-product prices. If a reversal in supply and demand causes raw-milk prices to rise, processor margins may be squeezed.
• The second growth curve still requires sustained investment and entails operating risks. Fresh-milk and low-temperature businesses involve cold-chain, shelf-life, spoilage and inventory-management costs. Cheese, milk powder and food-service industrial businesses also face requirements relating to customer customization, pricing and supply stability. Rapid revenue growth may not translate into stable profits at the same pace.
• 2025 impairment and associate losses significantly affected earnings. The Company recognized total impairment provisions of approximately RMB 2.3199 billion and a share of losses of associates of RMB 804.0 million. If Bellamy or related assets or associate businesses continue to deteriorate, further impairment or investment-income pressure may arise.
• The enterprise-income-tax-related adjustment of approximately RMB 319.9 million in the first half of 2026 had a one-off impact on profit attributable to equity holders of the Company. If similar tax adjustments or other non-recurring items arise in the future, attributable profit may continue to diverge from operating profit.
• As of December 31, 2025, the Company had interest-bearing bank and other borrowings of RMB 25.3887 billion and net borrowings of approximately RMB 12.1342 billion. Although net cash inflow from operating activities was RMB 8.7505 billion in 2025, if earnings recovery falls short of expectations or capital expenditure and working-capital requirements increase, debt and financing costs may constrain cash-flow flexibility.
• The current share price of approximately HKD18.36 and TTM valuation of approximately 31.6x to 32.6x are affected by low attributable profit in 2025, creating significant uncertainty over normalized valuation. If institutional forecasts for earnings recovery in 2026 and 2027 are not realized, the valuation may be repriced. At the same time, the share price still requires volume support near the HKD18.90–19.10 resistance zone, while rebound volume remained below the three-month average as of September 11.
• Although the share repurchases are intended for cancellation, cancellation had not been completed as of September 3, 2026. Cumulative repurchases of 3,931,000 shares represented only approximately 0.101% of issued shares on the date the repurchase mandate was approved. Accordingly, the actual impact of the repurchase on issued share capital and per-share metrics cannot yet be included in advance.

8. Conclusion and Outlook

Mengniu’s growth thesis is based on earnings recovery and business-mix improvement proceeding in parallel. Lower raw-milk costs, product-mix upgrades and improved channel efficiency lifted gross margin to 39.9% in 2025, while revenue and attributable profit returned to growth in the first half of 2026. Faster-growing categories such as fresh milk, cheese and milk powder, together with food-service, tea-drink, membership-channel and overseas businesses, can reduce dependence on ambient liquid milk. Institutional forecasts indicate revenue of approximately RMB 86.329 billion, RMB 89.191 billion and RMB 91.459 billion in 2026, 2027 and 2028, respectively, with attributable net profit ranges of RMB 4.266 billion to RMB 5.070 billion, RMB 5.074 billion to RMB 5.631 billion, and RMB 5.478 billion to RMB 6.141 billion. These are institutional forecasts, not Company guidance.

Key areas to monitor include whether the liquid-milk pricing system can recover, whether the second growth curve represented by fresh milk and cheese can sustain rapid growth, and whether gross margin can remain stable amid increases in packaging, raw-material and auxiliary-material costs. Based on a reference share price of HKD18.36 and institutional forecasts, the 2026 forecast P/E is approximately 16.0x to 17.1x and the 2027 forecast P/E approximately 14.5x to 15.2x. Whether the current valuation can be supported therefore depends on the realization of earnings recovery, rather than merely a rebound from the low 2025 base.

The short-term technical outlook remains range-bound. HKD18.25–18.40 is the first support zone, HKD17.70–17.95 is the strong-support zone, and HKD18.90–19.10 is the principal resistance zone. If the resistance zone is broken and volume remains above approximately 30 million shares, the technical trend may receive more convincing confirmation. If HKD17.70 is broken, the share price may revisit HKD17.30–17.50. Fundamentally, investors should continue to monitor industry price competition, raw-milk supply and demand fluctuations, associate performance, impairment risk and tax effects.

Data Sources

• Group Profile_Mengniu Official Website
• China Mengniu Dairy Company Limited - Earnings Release 2025 | FinancialFilings
• Mengniu Releases 2025 Financial Results: Building Resilience and Preparing for Growth_Mengniu Official Website
• ET Net IQ Streaming - China Mengniu Dairy Co. - Financial Ratios Annual Report
• In-Depth Research and Investment Outlook Analysis Report on China’s Dairy Industry (2025–2032)_Guanyan Report Network
• Yili Industrial Group (600887)_Company Announcements_Yili Industrial Group: 2024 Annual Report_Sina Finance
• Bright Dairy & Food Co., Ltd. 2024 Annual Report
• [China Feihe Limited

China Feihe Limited

Stock Code: 6186

2024](https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0428/2025042804110_c.pdf?utm_source=openai)

• New Hope Dairy (002946)_Company Announcements_New Hope Dairy: 2024 Annual Report Summary_Sina Finance
• Listed Company Information Title Search
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0903/2026090301490.pdf
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0903/2026090300632.pdf
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0826/2026082601829.pdf
• 02319 Mengniu Dairy - Real-Time Stock Quote - Changes in Interests Disclosure - ET Net
• Hong Kong Exchanges and Clearing Limited
• 02319.HK K-Line Chart & Technical Analysis | KlineVision | Kline Vision
• China Mengniu Dairy Co (2319) Historical Prices - Investing.com
• 2319 | China Mengniu Dairy Co Stock - Investing.com
• China Mengniu Dairy Co (2319) Historical Data - Investing.com
• HK stocks end lower amid rate jitters - RTHK
• 02319.HK Mengniu Dairy | MENGNIU DAIRY | Company Information - Company Background - ET Net
• Mengniu Dairy (02319) P/E Ratio | Valuation | Fundamentals - Lixinger

This report was automatically researched, compiled and generated by AI based on publicly available information. Information is current as of the Hong Kong stock market close on September 11, 2026; the valuation currency is Hong Kong dollars (HKD). Some market-data pages show different closing prices; this report uses HKD18.36 after cross-checking multiple sources. Information may differ in timeliness. Specific data should be verified against the Company’s formal announcements and authoritative data terminals. This report is for information and research reference only and does not constitute investment advice. Investors should make independent judgments and bear their own investment risks.