Mengniu Dairy: CNY 3.5 Bn Investment in New Large-Scale Pastures

Source: Guangzhou Daily, ChinaScope Financial (Data)

+       Mengniu Dairy Co., Ltd. (2319.HK) recently formed a wholly-owned subsidiary named Inner Mongolia Mengniu Fuyuan Farming Co., Ltd., which plans to invest approximately CNY 3.5 billion in the construction of large-scale pastures in Northeast China, Hebei province, and Inner Mongolia autonomous region.

+       In Mengniu Dairy’s original pasture expansion plan, their pasture target would be met in 2016 or 2017. This deadline has now been moved to 2015.

+       The import of cows for dairy production has increased rapidly recently. Given quality problems of domestic dairy products, the Chinese government has enhanced its support to the sector. Preferential treatment in terms of taxation, loan and project approval will be offered to dairy companies which import cows.

China’s milk production has increased from 3.7 kg/capita in 1990 to 26.7 kg/capita in 2010

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Mar 28 - Mengniu Dairy: Net Profit Increases 28.4% to CNY 1.59 Billion in 2011

Source: Hong Kong Stock Exchange, ChinaScope Financial (Data)  

+       On March 27, Mengniu Dairy Co., Ltd. (2319. HK) released its annual report, showing that the company’s operating revenue increased 23.5% year-on-year to CNY 37.39 billion in 2011, and net profit increased 28.4% year-on-year to CNY 1.59 billion. Earnings per share (EPS) increased 27.5% to CNY 0.908.

+       In 2011, 90% of Mengniu’s revenues came from liquid milk sales, from which it made CNY 33.7 billion. WU Jingshui, Mengniu’s Executive Director and CFO, said that in the next three to five years, the company plans to invest CNY 3-3.5 billion in pasture construction, and expand its cattle stock by 150,000.

Mengniu Dairy’s (2319.HK) gross margins remained stable in 2011, supported by growing sales revenue from liquid milk.

Inventory turnover slowed down, possibly caused by an increase in prices – below estimated as revenue/production capacity.

Mengniu Dairy’s production capacity accounts for a significant proportion of the national aggregate.

Other News Headlines:

n Profit of Industrial Enterprises Fell 5.2% YoY in Jan-Feb 2012

n Mengniu Dairy: Net Profit Increases 28.4% to CNY 1.59 Billion in 2011

n GOME: Net Profit Drops 6.2% YoY to CNY 1.84 Billion in 2011

n Western Securities’ IPO Review Completed

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