by winston » Mon Nov 02, 2015 3:34 pm
<Research Report>UBS Expects Oversupply in China's Dairy Sector Unlikely To Be Reversed by Two-Child Policy
UBS, in its report, stated that China announced the complete removal of one-child policy on 29 October. However, such decision was not rolled out for the first time.
Since 2014, couples with one parent as the only child have been allowed to have two children. It is estimated that the new policy will bring roughly 3 million to 5 million incremental increase in births per year but the results far missed expectations eventually.
According to the on-site study, China's dairy firms still faced harsh competitions in the third quarter, resulting in more aggressive promotion activities.
Due to the oversupply, the domestic raw milk prices are estimated to further fall to RMB2.5 per litre.
Given the weak results announced by major dairy companies, the broker saw further downside risk in the industry, which could hardly be offset by the two-child policy.
The broker maintained MENGNIU DAIRY (02319.HK) and YASHILI INT'L (01230.HK) at Neutral.
HUISHAN DAIRY (06863.HK), CH MODERN D (01117.HK) and WANT WANT CHINA (00151.HK) were all rated at Sell.
Source: AAStocks Financial News
It's all about "how much you made when you were right" & "how little you lost when you were wrong"