Inner Mongolia Yili Industrial Group Co.Ltd(600887) (600887)
The leading competition pattern of dairy products has improved and will continue in the future. The category has developed in a balanced way, the overall growth of high-end products has been maintained, the focus is on milk powder and cheese business, and the layout of low-temperature fresh milk. The company can maintain a rapid growth rate as a whole, and the profit margin will continue to improve in the future.
Key points supporting rating
The leading competition pattern of dairy products has improved and will continue in the future. 1) Industry data and channel tracking show that dairy competition has improved. Over the past two years, Yili's single quarter sales expense ratio has shown a downward trend, and the profit margin has been continuously improved during the rise of raw milk prices. 2) From the subjective factors of Yili Mengniu, the high-intensity cost investment has not changed the competition pattern between the two, the marginal benefit of the cost investment is decreasing, the two companies are willing to improve the profit margin, and the improvement of the industry competition pattern will continue.
The senior management team is stable, the incentive is in place, and the company's ability is obviously stronger than the industry level. 1) The stability of the senior management team and the continuous promotion of equity incentive and employee stock ownership plan ensure the stable and efficient development of the company. In order to enhance the enthusiasm of employees, the company's management mechanism has been continuously innovated. The company has introduced the employee stock ownership platform into yijiahao cheese company. The platform holds 40% shares and actively develops innovative products such as cheese and functional food. 2) The company's ability is obviously stronger than the industry level, the channel sinking is arranged in advance, the number of directly controlled village outlets has reached 1096000, the product cultivation and updating ability is strong, and the company has forward-looking layout and accurate grasp of business. Actively embrace digital transformation and continue to create consumer value.
Yili has clear long-term growth logic and high certainty of performance growth. 1) There is no need to worry about the slowdown of amhersh, and the overall growth of high-end products can be maintained. The overall scale of normal temperature acid decreased slightly, but according to the continuous increase of Nielsen amuch's share, it is difficult to shake other products in the gift market. The company extends the life cycle of amushi through product innovation and developing consumption scenarios. We believe that high-end products are more important to look at the whole than single products. Jindian continued to upgrade. In the first three quarters, Jindian maintained a growth rate of more than 20%, and the organic growth rate of Jindian exceeded 50%. The company's forward-looking layout and accurate grasp of business will help the continuous growth of high-end overall products. 2) In the field of dairy products, Yili has built a diversified product matrix, focusing on the milk powder and cheese business, low temperature layout, and double-line development of the main brand and Jindian. 3) The concentration of China's dairy industry has reached a high level. Compared with global leaders, Yili's profit margin will continue to improve and the target net interest rate will increase to 9% - 10% in the case of slowing competition.
Valuation
Yili has strong growth certainty, with a pe23 times in 22 years. Compared with other food leaders in a shares, Yili is only higher than Shuanghui and lower than leaders in Maotai, Haitian and other subdivided industries. The valuation has a safety margin. We adjusted the forecast according to the operating conditions. It is estimated that the EPS in 21-23 years will be 1.49, 1.78 and 2.00 yuan, with a year-on-year increase of + 28%, + 19% and + 13%, maintaining the buy rating.
Main risks of rating
The competitive pattern of Yili and Mengniu did not improve as scheduled, and the sales expense rate remained high. Raw milk prices rose more than expected, which may lead to a significant decline in gross profit margin. Macroeconomic growth was less than expected. The integration process of M & a Aoyou was less than expected. The expansion of products and channels was less than expected.
