Thirsting for China raw milk
■ We like Japfa’s (JAP) acquisition of Falcon Dairy Holdings Limited (Falcon)
which could see expansion of its cattle capacity by 19%.
■ We expect its dairy business’ EBIT to increase by 8-23% in FY22-23F from
acquisition alongside elevated raw milk prices.
■ Reiterate Add with an unchanged TP of S$1.22 at target FY22F P/E of 11.5x.
The stock remains cheap at 7.8x FY22F P/E (compared to peers’ 13.3x).