Equity Analysis /
Hong Kong

HK : China Modern Dairy Holdings - Zhongyuan Muye acquisition

    Lei Yang
    Lei Yang

    Research Analyst

    9 April 2021
    Published byCGS-CIMB

    The total consideration for the acquisition will be no more than Rmb815m, equal to FY20 P/E of 6.35x, lower than CMD’s FY20 P/E of 18.05x. Zhongyuan will be consolidated as early as Jun 2021. We expect 10–15% EPS upside after consolidation. In FY25F, CMD aims to produce 10k tons of raw milk per day, which will be about one third of Mengniu’s daily raw milk requirements, according to Mengniu’s five-year plan. In 1Q21, CMD saw the raw milk price rise about 10% yoy, with a price correction in Feb, but a 16% yoy increase in Mar.