Summary of Q123 sales A strong start to the year for Danone with +10.5% LFL sales growth coming materially ahead of co. consensus expectations (+7.3% LFL). Furthermore, the beat was widespread with both pricing and vol/mix coming ahead of VA consensus expectations in all three divisions. From a geographical perspective, China, Oceania and North Asia was the standout with +16.0% LFL growth (11.3% ahead of VA cons.). Finally, it is worth noting that Danone made reference to the net benefit of some unquantified one-off impacts (Chinese infant restock, Ramadan phasing, European waters phasing). News Danone commented that if you look at the average performance of SN in Q123 and Q422 (+9.6% LFL) then it gives a good idea of underlying trends to expect in SN going forward; Earnings We revise our FY23e/FY24e/FY25e EPS by +0%-1%. Investment thesis While Danone is relatively inexpensive, we have concerns on the sustainability of Chinese infant formula profits which we estimate account for c.1/4th of group profits. Rating and target price We maintain our Underperform rating. Out target price moves from EUR47.50 to EUR54. The increment primarily driven by an increase in target multiple (recent sector/market re-rating). 15 questions for management Given +10.5% LFL sales growth in Q1, why only guide to +4-6% LFL sales growth for the FY?