Goldman Sachs on China Mengniu Dairy (2319.HK): 1H26 Initial Review — Broad-Based Revenue Recovery, Net Profit Hit by Tax Adjustment; Strong Ice Cream EBIT Margin

Goldman Sachs maintained Buy on China Mengniu Dairy (2319.HK) with a 12-month target of HK$24.0, implying 28.3% upside from HK$18.70, after reviewing 1H26 results. Revenue rose 7.8% year over year to RMB44.8 billion—volume-driven, broad-based across categories, and slightly above GS estimates of RMB43.6 billion. Net profit increased 15.9% to RMB2.37 billion; adding back a RMB320 million prior-year tax adjustment yields RMB2.69 billion, broadly in line with GS estimates of RMB2.79 billion. Company-defined core operating profit grew 4% with OPM down 0.3pp to 8.2%, tracking full-year guidance of roughly 8% flat. Gross margin fell 1pp to 40.8% on base-product repricing and higher packaging, coconut oil, and protein powder costs, partly offset by selling and administrative expense savings. Recovery extended beyond liquid milk (+5.2% to RMB33.9 billion): ice cream, milk powder, and cheese grew 8.5%, 23%, and 33%. Infant formula was notably strong—Bellamy's grew over 60% and IMF EBIT rose 117% with a 10.5% margin—supporting Goldman's view of Mengniu as a prime beneficiary of premiumization. Recurring net profit was RMB2.9 billion, up 9%. The August 27 call focuses on liquid milk demand, 2H26 outlook, and shareholder returns.