China Feihe: Channel Management Initiatives to Drive Profit Growth in 2024; Retain Valuation

We maintain our 2024 revenue and net income projections for narrow-moat China Feihe after reviewing our assumptions ahead of the release of its interim results. We retain our fair value estimate at HKD 5.40 per share, which implies 12 times 2024 price/earnings, 7 times EV/EBITDA, and a 5.5% dividend yield. We continue to see shares as undervalued as earnings headwinds from the industry downturn and pricing disorder should have been largely priced in, while the dividend yield remains attractive.