SEHK:2319

Stock Analysis Report

Executive Summary

China Mengniu Dairy Company Limited, an investment holding company, manufactures and distributes dairy products in the People’s Republic of China.

Rewards

Trading at 20% below its fair value

Earnings are forecast to grow 5.7% per year

Earnings grew by 43.4% over the past year

Risk Analysis

Has a high level of debt



Snowflake Analysis

Solid track record with excellent balance sheet.


Similar Companies

Share Price & News

How has China Mengniu Dairy's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 2319 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.8%

2319

2.3%

HK Food

1.0%

HK Market


1 Year Return

26.3%

2319

22.1%

HK Food

6.5%

HK Market

Return vs Industry: 2319 exceeded the Hong Kong Food industry which returned 22% over the past year.

Return vs Market: 2319 exceeded the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

2319IndustryMarket
7 Day-0.8%2.3%1.0%
30 Day1.1%7.8%3.7%
90 Day3.4%9.7%8.0%
1 Year27.2%26.3%25.4%22.1%10.4%6.5%
3 Year134.1%129.6%59.4%47.6%25.9%13.1%
5 Year93.5%85.8%29.5%16.4%22.2%1.8%

Price Volatility Vs. Market

How volatile is China Mengniu Dairy's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is China Mengniu Dairy undervalued compared to its fair value and its price relative to the market?

20.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 2319 (HK$32.4) is trading below our estimate of fair value (HK$40.49)

Significantly Below Fair Value: 2319 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 2319 is poor value based on its PE Ratio (31.5x) compared to the Food industry average (16.5x).

PE vs Market: 2319 is poor value based on its PE Ratio (31.5x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 2319 is poor value based on its PEG Ratio (5.5x)


Price to Book Ratio

PB vs Industry: 2319 is overvalued based on its PB Ratio (4.2x) compared to the HK Food industry average (0.8x).


Next Steps

Future Growth

How is China Mengniu Dairy forecast to perform in the next 1 to 3 years based on estimates from 25 analysts?

5.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2319's forecast earnings growth (5.7% per year) is above the savings rate (1.6%).

Earnings vs Market: 2319's earnings (5.7% per year) are forecast to grow slower than the Hong Kong market (11.3% per year).

High Growth Earnings: 2319's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2319's revenue (8.4% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 2319's revenue (8.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2319's Return on Equity is forecast to be low in 3 years time (15.3%).


Next Steps

Past Performance

How has China Mengniu Dairy performed over the past 5 years?

4.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2319 has high quality earnings.

Growing Profit Margin: 2319's current net profit margins (4.8%) are higher than last year (3.8%).


Past Earnings Growth Analysis

Earnings Trend: 2319's earnings have grown by 4.8% per year over the past 5 years.

Accelerating Growth: 2319's earnings growth over the past year (43.4%) exceeds its 5-year average (4.8% per year).

Earnings vs Industry: 2319 earnings growth over the past year (43.4%) exceeded the Food industry 2%.


Return on Equity

High ROE: 2319's Return on Equity (11.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is China Mengniu Dairy's financial position?


Financial Position Analysis

Short Term Liabilities: 2319's short term assets (CN¥41.4B) exceed its short term liabilities (CN¥35.0B).

Long Term Liabilities: 2319's short term assets (CN¥41.4B) exceed its long term liabilities (CN¥7.1B).


Debt to Equity History and Analysis

Debt Level: 2319's debt to equity ratio (43.3%) is considered high.

Reducing Debt: 2319's debt to equity ratio has reduced from 44% to 43.3% over the past 5 years.

Debt Coverage: 2319's debt is well covered by operating cash flow (40.8%).

Interest Coverage: 2319 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 2319 has a high level of physical assets or inventory.

Debt Coverage by Assets: 2319's debt is covered by short term assets (assets are 3x debt).


Next Steps

Dividend

What is China Mengniu Dairy's current dividend yield, its reliability and sustainability?

0.64%

Current Dividend Yield


Dividend Yield vs Market

company0.6%marketbottom25%2.2%markettop25%6.1%industryaverage2.2%forecastin3Years1.1%

Current dividend yield vs market & industry

Notable Dividend: 2319's dividend (0.63%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 2319's dividend (0.63%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 2319 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 2319 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: 2319 is not paying a notable dividend for the Hong Kong market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 2319's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

What is the CEO of China Mengniu Dairy's salary, the management and board of directors tenure and is there insider trading?

5.6yrs

Average management tenure


CEO

Jeffrey Lu (50yo)

3.3yrs

Tenure

CN¥12,621,000

Compensation

Mr. Lu Minfang, also known as Jeffrey, has been the Chief Executive Officer and Executive Director of China Mengniu Dairy Company Limited since September 15, 2016. Mr. Lu serves as the Non Executive Chairm ...


CEO Compensation Analysis

Compensation vs Market: Jeffrey's total compensation ($USD1.83M) is above average for companies of similar size in the Hong Kong market ($USD1.00M).

Compensation vs Earnings: Jeffrey's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.6yrs

Average Tenure

51.5yo

Average Age

Experienced Management: 2319's management team is seasoned and experienced (5.6 years average tenure).


Board Age and Tenure

3.3yrs

Average Tenure

55yo

Average Age

Experienced Board: 2319's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellHK$61,406,67611 Nov 19
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Schroder Investment Management Limited
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BuyHK$54,635,59104 Sep 19
First Sentier Investors (Australia) IM Ltd
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Max PriceHK$31.06
SellHK$12,046,04020 Aug 19
First Sentier Investors (Australia) IM Ltd
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Max PriceHK$30.04
BuyHK$93,523,79802 Aug 19
First Sentier Investors (Australia) IM Ltd
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Shares2,941,000
Max PriceHK$31.80
SellHK$2,125,76029 May 19
First Sentier Investors (Australia) IM Ltd
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Shares73,000
Max PriceHK$29.12
SellHK$30,392,54227 Mar 19
Schroder Investment Management Limited
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Shares1,150,000
Max PriceHK$26.43
BuyHK$6,408,36115 Feb 19
Schroder Investment Management Limited
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Shares265,000
Max PriceHK$24.18

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Chris Kwok (46yo)

    Financial Controller & Company Secretary

    • Liu Shengli (53yo)

      Vice President of Inner Mongolia Mengniu

      • Tenure: 7.3yrs
    • Ping Zhang (55yo)

      Chief Financial Officer

      • Tenure: 5.6yrs
    • Jeffrey Lu (50yo)

      CEO & Executive Director

      • Tenure: 3.3yrs
      • Compensation: CN¥12.62m
    • Zhaoxu Zhang (45yo)

      Vice President of Human Resources

      • Fanjie Meng (55yo)

        Executive Director

        • Tenure: 0.6yrs

      Board Members

      • Lang Chen (53yo)

        Chairman

        • Tenure: 0.8yrs
      • Zhen Jiao (53yo)

        Independent Vice Chairman

        • Julian Juul Wolhardt (45yo)

          Independent Non-Executive Director

          • Tenure: 14yrs
        • Xiaoya Zhang (56yo)

          Independent Non-Executive Director

          • Tenure: 10.7yrs
          • Compensation: CN¥263.00k
        • Tim Jørgensen (55yo)

          Non-Executive Director

          • Tenure: 3.8yrs
          • Compensation: CN¥150.00k
        • Pascal de Petrini (59yo)

          Non-Executive Director

          • Tenure: 2.1yrs
          • Compensation: CN¥150.00k
        • Jeffrey Lu (50yo)

          CEO & Executive Director

          • Tenure: 3.3yrs
          • Compensation: CN¥12.62m
        • Ka Chi Yau (61yo)

          Independent Non-Executive Director

          • Tenure: 3.3yrs
          • Compensation: CN¥263.00k
        • Fanjie Meng (55yo)

          Executive Director

          • Tenure: 0.6yrs

        Company Information

        China Mengniu Dairy Company Limited's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: China Mengniu Dairy Company Limited
        • Ticker: 2319
        • Exchange: SEHK
        • Founded: 1999
        • Industry: Packaged Foods and Meats
        • Sector: Food, Beverage & Tobacco
        • Market Cap: HK$128.675b
        • Shares outstanding: 3.94b
        • Website: https://www.mengniuir.com

        Number of Employees


        Location

        • China Mengniu Dairy Company Limited
        • COFCO Tower
        • 32nd Floor
        • Causeway Bay
        • Hong Kong

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        CIAD.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJun 2004
        2319SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJun 2004
        EZQDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 2004
        2319SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJun 2004
        2319SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJun 2004
        CIAD.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2008

        Biography

        China Mengniu Dairy Company Limited, an investment holding company, manufactures and distributes dairy products in the People’s Republic of China. The company operates through four segments: Liquid Milk Products, Ice Cream Products, Milk Powder Products, and Others. The Liquid Milk Products segment manufactures and distributes ultra-high temperature milk, milk beverages, and yogurt. The Ice Cream Products segment manufactures and distributes ice cream. The Milk Powder Products segment manufactures and distributes milk powder. The Others segment offers cheese and plant-based nutrition products, as well as engages in trading business. The company also manufactures, distributes, and sells plant-based beverages. It offers its dairy products under the MENGNIU brand. China Mengniu Dairy Company Limited was founded in 1999 and is based in Causeway Bay, Hong Kong. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/17 12:30
        End of Day Share Price2020/01/17 00:00
        Earnings2019/06/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.