Recently, China International Capital Corporation released the September 2024 A-share and Hong Kong stock industry top choice report. It is suggested to allocate China Feihe (06186), which is expected to surpass the mid-term performance in 2024 and has attractive dividend yield, as the top pick in the food and beverage sector.

It is understood that China International Capital Corporation's top industry selections are based on a bottom-up stock selection strategy, where industry analysts select the most bullish stocks in the industries they cover to form two lists for A-shares and overseas Chinese capital stocks, with individual stocks in the lists expected to achieve higher industry-relative returns.

Recently, stimulated by positive news such as the domestic central bank's reserve requirement ratio cut, interest rate reduction, and reduction in existing home loan interest rates, Hong Kong stocks have risen strongly, with the Hang Seng Index returning to 19,000 points and all three major indexes hitting new highs. Since September (as of the close on September 26th), Feihe's stock price has risen by over 23%.

Feihe's financial performance data for the first half of 2024 shows revenue of 10.09 billion yuan in the first half of the year, an increase of 3.7% year-on-year, and a net income of 1.91 billion yuan, an increase of 18.1% year-on-year. According to the mid-term dividend plan, Feihe plans to distribute a mid-term dividend of 0.1632 Hong Kong dollars per share, an increase of 21.0% year-on-year, continuously enhancing shareholder returns.

China International Capital Corporation previously had a bullish view on Feihe's competitive advantages, giving it an 'outperform industry' investment rating in March this year. The report points out that with the gradual recovery in demand, Feihe as an industry leader is expected to perform well.

According to industry data, from 2019 to 2023, Feihe infant formula milk powder has been the top-selling product in the Chinese infant formula milk powder market (excluding Hong Kong, Macao, and Taiwan) for five consecutive years, and the top-selling product in the global infant formula milk powder market for three consecutive years. At the same time, its Xingfeifan series has long been the top-selling single product in the category of baby milk powder globally. According to analysts at China International Capital Corporation, Feihe's overall market share is expected to continue to increase in 2024.