\u3000\u3000 Inner Mongolia Yili Industrial Group Co.Ltd(600887) (600887)
Key investment points:
Inner Mongolia Yili Industrial Group Co.Ltd(600887) the dynamic sales of Spring Festival are in good condition, and the growth rate of normal temperature white milk is considerable. In the context of the epidemic, consumers’ health awareness has improved, and the property of white milk just needs to be highlighted. According to the research feedback, the normal temperature white milk industry has achieved double-digit growth in 2021. While Yili Jindian series has maintained high-speed growth, the structure has also continued to upgrade. The growth rate of Jindian in the first three quarters of 2021 was more than 20%, of which the growth rate of Jindian high-end series was more than 50%, During the Spring Festival in 2022, Yili achieved good dynamic sales, and the normal temperature white milk (including Jindian and basic white milk Series) still maintained a high growth trend. After the launch of new products of normal temperature yogurt, the market feedback is good. In view of the slowdown in the growth of normal temperature yogurt industry, the company will continue to extend the product life cycle of amuxi by means of taste innovation and broadening consumption scenarios. In terms of cost investment, the marketing investment during the Beijing Winter Olympics will cause short-term cost disturbance, but the rhythm of annual cost investment is within the overall planning framework of the company.
Yili jinlingguan’s market performance is rising. The acquisition of Aoyou sheep milk powder will help the company’s net profit rise steadily. In 2021, Yili focused more on channels in the milk powder sector, focusing on breaking through the mother infant chain and sinking market, and combed the price system of products. In the first three quarters of 2021, Yili milk powder business achieved a year-on-year growth of more than 30%, and the growth rate of all channels was the first in the industry. Among them, Jinling Guanzhen care had a growth rate of more than 40%, which was the fastest growing brand in this segment. On January 28, 2022, the company announced that the wholly-owned subsidiary Jingang holdings had completed the delivery of Aoyou dairy shares. After the completion of the delivery, Yili held 34.33% equity of Aoyou and became its single largest shareholder. Jiabeiaite, the sheep milk powder brand of Aoyou dairy, has been a benchmark product in the field of infant formula. According to Nielsen data, the sales of Aoyou sheep formula milk powder has accounted for more than 60% of China’s total import of infant formula sheep milk powder for three consecutive years since 2018, ranking first in the world. Yili and Aoyou plan to operate separately in the future, strive to become the integrator of domestic and foreign brands in China’s milk powder industry in the future, and seek coordination in the direction of supply chain and R & D. The gross profit margin and net profit margin of milk powder business are higher than those of liquid milk. The increase of the proportion of milk powder business will help Yili achieve the goal of increasing the annual net profit margin by 50bp.
Lay out cheese and low-temperature fresh milk business to contribute to the strategic map of “top three in the global dairy industry in 2025 and first in the global dairy industry in 2030”. In June 2021, Yili set up a cheese subsidiary “Yijia good cheese” and introduced employee stock ownership. In the fourth quarter of 2021, normal temperature cheese sticks were listed and distributed in Yili’s traditional advantage of normal temperature liquid milk channel. In the field of low-temperature fresh milk, Yili has basically completed the national production capacity layout and is currently piloting in key cities. Yili is still exploring a more efficient profit model in the field of cheese and low-temperature fresh milk. It is expected that it will be difficult to contribute to the performance increment of the company in the short term. It belongs to the strategic layout for Yili to achieve the goal of “the top three in the global dairy industry in 2025 and the first in the global dairy industry in 2030”.
Profit forecast and investment rating: at present, under the background of repeated epidemic, the overall demand for mass products is still weak. Due to its non cyclical and mandatory consumption attributes, the demand of dairy products sector is still growing due to the improvement of people’s health awareness. Inner Mongolia Yili Industrial Group Co.Ltd(600887) as the leader of China’s dairy products, the business of normal temperature white milk and milk powder continues to increase, which supports the steady improvement of the company’s profitability. It is expected that the company’s EPS will reach 1.44 yuan, 1.70 yuan and 1.92 yuan respectively from 2021 to 2023, and the corresponding EPS will be 28x, 24x and 21x respectively, giving a “buy” rating.
Risk tips: 1) the price of raw milk continues to rise; 2) Industry competition intensifies; 3) The demand is less than expected.
