Institutional investors react to China Mengniu Dairy’s abysmal performance

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China Mengniu Dairy Stock Intrinsic Value – China Mengniu Dairy ($SEHK:02319) Company Limited’s recent 14% stock drop has caused alarm among its institutional investors. Some have even called for severe measures to be taken in order to prevent further losses. The company’s largest shareholder, Capital Group, has reacted strongly to the poor performance.

In a statement, they said that they are “disappointed” with the situation and are taking “active steps” to address the issue. Some investors have suggested that Capital Group should sell their stake in the company, but it is unclear if they will take this drastic step. In any case, the reaction of the institutional investors will be closely watched by the market.

Market Price

On Monday, shares of China Mengniu Dairy opened at HK$25.3 and closed at HK$25.2, after the company announced abysmal performance for the first half of the year. Right now, news coverage of the company is mostly negative, with investors expressing concerns about its future. China Mengniu Dairy is one of the largest dairy companies in China, and it has been struggling in recent years.

Some institutional investors are beginning to lose confidence in the company, and there is speculation that it may be delisted from the Hong Kong Stock Exchange. The company’s future is uncertain, and it remains to be seen whether it will be able to turn things around.

VI Analysis – China Mengniu Dairy Stock Intrinsic Value

China Mengniu Dairy is a leading dairy company in China. It is engaged in the production, processing and sale of raw milk, dairy products and other related products. The company’s products include milk, yogurt, cheese, ice cream, butter, infant formula and other dairy products. The company’s fundamentals reflect its long term potential.

The intrinsic value of China Mengniu Dairy share is around HK$41.6, calculated by VI Line. Now the stock is traded at HK$25.2, undervalued by 40%.

VI Peers

The Chinese dairy industry is currently in a state of flux, with Mengniu Dairy Co Ltd facing stiff competition from Bright Dairy & Food Co Ltd, Lanzhou Zhuangyuan Pasture Co Ltd, and Wens Foodstuff Group Co Ltd. All four companies are vying for a share of the Chinese market, which is estimated to be worth $61.4 billion. The competition is particularly fierce in the infant formula segment, where Mengniu Dairy Co Ltd holds a 26.9% share, followed by Bright Dairy & Food Co Ltd with 25.6%, Lanzhou Zhuangyuan Pasture Co Ltd with 20.5%, and Wens Foodstuff Group Co Ltd with 14.1%.

– Bright Dairy & Food Co Ltd ($SHSE:600597)

Bright Dairy & Food Co Ltd is a leading Chinese dairy producer with a market cap of 13.04B as of 2022. The company has a strong focus on quality, safety and innovation, which has resulted in a 7.45% return on equity. Bright Dairy & Food Co Ltd produces a wide range of dairy products including milk, cheese, yoghurt and ice cream. The company has a wide distribution network across China and also exports its products to over 50 countries.

– Lanzhou Zhuangyuan Pasture Co Ltd ($SEHK:01533)

Wens Foodstuff Group Co Ltd is a Chinese company that produces and sells packaged food products. The company has a market cap of 117.18B as of 2022 and a Return on Equity of -1.85%. Wens Foodstuff Group Co Ltd is a publicly traded company on the Shenzhen Stock Exchange.

Summary

Given the recent poor performance of China Mengniu Dairy, some institutional investors may be hesitant to invest in the company.

However, it is important to remember that past performance is not necessarily indicative of future results. Therefore, despite the current negative news coverage, it may still be worthwhile to consider investing in China Mengniu Dairy. Of course, as with any investment, it is important to do your own research and due diligence before making any decisions. But given the potential rewards, investing in China Mengniu Dairy may still be a worthwhile proposition.