Bank of China International published a research report, which gave China Shengmu (01432-HK) a “buy” rating for the first time, and gave it a target price of HK$4.20. According to the Bank of China International Report, China Shengmu has expanded the consumption channels for high-end organic dairy products in China and has the potential to reshape the Chinese dairy market, yet the company has not received enough attention. In particular, it is worth pointing out that China Shengmu has the ability to gradually implement its pricing power for organic dairy products (which have scarce value) over the next few years, because the company directly controls organic raw milk resources, and the degree of consumer recognition of the Shengmu brand and the advantages of organic milk is also increasing. Bank International expects China Shengmu's revenue and core net profit to increase by 66% and 79%, respectively, during 2013-16, mainly due to the expansion of organic farms, the increase in raw milk processing capacity, and simultaneous penetration of online and offline distribution networks, and the explosive growth in demand for organic milk across the country. Among the dairy companies listed in Hong Kong, China Shengmu has become the preferred company of BOC International. The stock was covered for the first time and given a “buy” rating. The target price is HK$4.20, which is the highest target price in the market. In our opinion, high vertical integration and organic characteristics are Shengmu's two biggest selling points, yet investors have yet to give it due valuation premiums.