China Mengniu Diary: Increasing Uncertainty Rating to High

We are increasing the Morningstar Uncertainty Rating for narrow-moat-rated China Mengniu Dairy to High from Medium. We believe that the updated Uncertainty Rating better reflects its risk profile and competitive positioning within the industry, which is currently plagued by excess supply of raw milk and competition from small brands. We also think demand pressure persists for premium ultra-high-temperature liquid milk and yogurt due to the squeezed pockets of consumers.