China Mengniu Dairy Jumped Despite of Issuing a Profit Warning

China Mengniu Dairy (2319.HK) Jumped Despite of Issuing a Profit Warning

China Mengniu Dairy (2319), a dairy products manufacturer, issued a profit warning, saying 1H net income is expected to drop 45% to 60% on year due to an increase in the costs associated to COVID-19. The Co said: "The Group’s revenue in April and May 2020 had recovered and recorded a double-digit growth compared to the same period in 2019 (....) The recovery of the overall operations of the Group has been continuously improving."

After that, the stock prices jumped around 7% after the announcement. Although the company issue a profit warning, the announcement also mentioned the resumption of operation and recorded growth in April and May.

From a technical point of view, the stock accelerated to the upside and broke above the resistance level around HK$30.00 (the high of February and May) on the daily chart.

Both 20-day and 50-moving averages are pointing up, indicating a bullish outlook. The RSI also records a recent high, suggesting an upward momentum for the prices.

Bullish readers could consider to set the support level at HK$29.00 (the low of June 8), while resistance levels would be located at HK$33.05 (the high of January) and HK$34.60 (record high) respectively.

Source: GAIN Capital, TradingView

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