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Citi lifts Mengniu Dairy (02319) to HK$28.84
 Citi Research lifted its target price for China 
Mengniu Dairy (02319) to HK$28.84 from HK$27.03 reflecting better earnings visibility in 
2018, and maintained its "buy" rating. 
  China Modern Dairy (CMD)(01117), in which Mengniu owns 49.57% of voting rights and 60.8%
equity stake, issued a profit warning for full-year 2017. Stripping out its non-cash and 
one-off provision for account receivables related to downstream business (i.e. Rmb344m in
2H 2017 and Rmb156m in 1H 2017), the research house estimated that CMD's underlying
operation attained breakeven in 2H 2017 and significantly improved HoH.
  On back of a favorable industry backdrop and its continuous efforts in sales mix 
trade-up, Citi expects Mengniu's top line to grow 9% in 2018 and 7% in 2019. It also 
anticipated Mengniu's more efficient supply chain (in both raw milk & milk powder
procurement) and positive operating leverage to also help its gross profit margin
expansion.

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