\u3000\u3000 Inner Mongolia Yili Industrial Group Co.Ltd(600887) (600887)
The industry grows structurally, and the giants enjoy the dividend of the competitive pattern. With the slow growth of consumption in the dairy industry, the upgrading of product structure and the rise of new categories such as cheese began to become the leading force in the growth of the industry. Yili Mengniu, as a duopoly in the industry, grabs market share and reaps excess returns in various segments of the dairy industry by controlling the modern and traditional channels where the main consumer groups are located.
A number of simultaneous efforts have made Yili the overlord of dairy industry in Asia. From active equity incentive system to stable management; From extensive and unique milk sources to timely and appropriate expansion of production capacity; From constantly subverting the products of the industry to the unparalleled channel of the industry; Yili has built a solid moat in the three aspects of people, dairy upstream and dairy downstream, and stepped onto the throne of Asian dairy overlord step by step.
Looking forward to the future, we have expectations in the short, medium and long term. In the short term, the upgrading of product structure and the decline of milk price will further improve Yili’s gross sales difference; In the medium term, its own reform and policy Dongfeng will promote Yili to break through in the milk powder track; In the long run, the rise of cheese industry and the expansion of healthy food will further open the imagination space for Yili’s development.
Resume the stock price, and the context of performance and valuation is clear. From the perspective of business performance, Yili’s impressive performance determines its long-term continuous rolling of major indexes. Behind it is the double improvement of revenue and net profit margin brought by the long-term hard work of Yili at all levels. From the valuation side, the bottom of Yili valuation is clear and the center is stable. The expectations given to investors by different events determine the valuation level at different time points.
Investment advice: the valuation is low, and it is surprising to be upright. The company presses the warehouse with liquid milk business, takes the improvement of gross sales difference and the growth of milk powder business as the medium and short-term focus, and looks forward to a clear and unexpected possibility. Compared with other industry leaders in the current food and beverage market and their own historical valuations, Yili’s valuation is low and the profit growth rate is high. We expect that the EPS from 2021 to 2023 will be 1.45/1.74/2.08 yuan, giving 31xpe in 2022, a target price of 54 yuan, and a “buy” rating for the first time.
Stock price catalyst: the decline of milk price exceeded expectations, the growth of milk powder business exceeded expectations, and the upgrading of liquid milk product structure exceeded expectations
Risk factors: food safety problems and intensified industry competition.
