Robust growth despite raw milk price pressure

■ Mengniu reported a revenue increase of 22.3% yoy to Rmb46bn, and net profit growth of 143% yoy to Rmb2.9bn in 1H21, slightly above our expectations, because sales growth of all segments was above our expectations.
■ Management is confident in achieving full-year top-line growth of over 12% yoy and expects the 2H21F operating margin to improve compared to the level in 2H19.
■ In 1H21, the raw milk price increase was about 15%, but because of the high base in 2H20, the yoy raw milk price increase in 2H21F is expected to be milder.
■ Reiterate Add with new DCF-based TP of HK$53.9.