Stable raw milk price and cost control
? CMD announced FY21 revenue growth of 17.6% yoy, driven by an increase in the milk yield and raw milk price, and net profit growth of 32.3% yoy, above our expectations, due to stronger top-line growth.
? CMD is confident in maintaining a stable raw milk price in FY22F and milk yield growth of 2–3% a year in the next 2–3 years.
? Management expects unit feed costs to increase by Rmb0.1 per kg of raw milk output in FY22F, but CMD will take various measures to mitigate this negative impact.
? Reiterate Add with a new DCF-based TP of HK$2.68.