• Reiterate Buy Entry – 1.8 Target –2.15 Stop Loss – 1.65
  • China Modern Dairy Holdings Ltd. is an industrialized agricultural company. The Company operates dairy farms and produces raw milk in China.  China Modern Dairy Holdings Ltd focuses on large-scale industrialized free-stall dairy farming.
  • Fresh milk prices rebounded from RMB4.22/kg to RMB4.26/kg. The YTD high was RMB4.29/kg. 
  • The shares have been consolidating since late March with a range bound between HK$1.8 and HK$2.0.
  • The near-term catalyst is peer company Youran Dairy’s IPO which could raise interest in the sector as positive sentiment of Youran could lift the valuation, and China Modern Dairy could be a catch-up play.  
  • Updated market consensus of the estimated growth of net profit in FY21 and FY22 are 6.17% and 38.8% respectively, which translates to 12.3x and 8.8x forward PE. The current PE is 13.1x. Bloomberg consensus average 12-month target price is HK$2.96.
1117 HK (Source: Bloomberg)