not vested
Trouble brews at dairy giants
by Carrie Chen
Shares of China Mengniu Dairy Company (2319) dived 2.78 percent to HK$15.4 yesterday after it issued a profit warning saying it expected "a substantial loss" for 2016.
The firm recorded a net profit of 2.37 billion yuan last year.
Mengniu blamed the situation mainly on the potential losses at its subsidiary, Yashili International Holdings (1230). Mengniu has also been striving to optimize its raw milk powder inventory level by selling excessive quantity at market price, which resulted in a loss. Whats more, an associated company of Mengniu is also expected to record a loss.
Yashili also issued a profit warning yesterday saying it is expected to record a significant loss for this year. The firm said an increase in imported international brand infant milk formula products and imported products through cross-border e-commerce channels had a huge impact on revenue and net profit.
Also, the internal consolidation and channel transformation of the firm is more time and cost consuming. But Yashili still remains positive on the market condition of the milk powder industry as the infant formula recipe registration regime is to implement in the mainland.
Shares of Yashili slid 3.23 percent to HK$1.5 yesterday.
Source: The Standard