\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: the company issued an announcement on the operation from January to February 2022. After preliminary accounting, the company achieved a total operating revenue of about 21.5 billion yuan from January to February, an increase of more than 15% year-on-year; The total profit was about 3.3 billion yuan, a year-on-year increase of more than 20%.
Key investment points
22 years to achieve a good start, white milk and milk powder business growth is bright. From January to February 2022, the company’s liquid milk, milk powder, dairy products, cold drinks and other businesses maintained a good growth trend. The proportion of sales revenue of key products such as Jindian, amuxi, jinlingguan, qiaolez, Zhen Xi, Changqing, meiyitian and Yili children’s cheese stick increased by 3PCT year-on-year, and the market share maintained a leading position. Specifically, the company’s white milk business continued to maintain high growth. According to Nielsen data, in January, normal temperature white milk increased by 12.6% year-on-year, of which Jindian increased by 15.1%, ranking first in the same category; Cheese and infant formula businesses are also growing rapidly. According to Nielsen data, Yili cheese market share increased by 3% year-on-year in January this year; Jinlingguan infant milk powder took the lead in completing the formula upgrading, becoming the first batch of infant formula milk powder in China that meets the new national standard of milk powder, further improving the product competitiveness. From January to February, jinlingguan’s sales revenue increased by more than 30% year-on-year, ranking the first in the industry.
Optimization of product structure & the pressure on milk prices is slowing down, and the profitability is expected to gradually improve. The company’s profit level improved from January to February in the past 22 years, which we believe is mainly due to the company’s continuous product structure optimization and strict cost budget management. The proportion of high margin products such as Jindian anmushi and other high-end products of the company continues to increase. At the same time, after the tender acquisition of Aoyou, the company and Aoyou will play a synergistic effect in supply chain, brand promotion and channel construction, cooperate with each other and complement each other’s advantages. The market share of the company in infant formula milk powder will also increase greatly in the future, and the proportion of high margin milk powder business income is expected to increase, So as to optimize the gross profit margin of the company as a whole. In terms of raw milk, the milk price from January to February was flat year-on-year, and the cost side pressure was gradually released. In the context of the company’s strict cost budget management, the company’s profitability is expected to gradually improve.
Investment suggestions: the advantages of medium and long-term company’s product platform (compare with international dairy enterprises, actively expand new fields such as milk powder, cheese and health drinks), international platform (realize the internationalization of resources, market and Research), channel influence (continue to adhere to the company’s flat and refined channel construction), and brand influence (target the world’s leading dairy enterprises) remain. In this context, we are optimistic about Yili’s strategic measures to seek new development in the new development stage, and its competitive advantage and integration strength will be further improved, so as to steadily achieve the medium and long-term strategic goal of “the top three in the global dairy industry in 2025 and the first in the global dairy industry in 2030”. The company’s operating income is temporarily adjusted to RMB 134687% in December 2023 / November 2023, and the operating income is temporarily adjusted to RMB 121887% in December 2023 / November 2023, respectively. The net profit attributable to the parent company was RMB 9.081109.27/12.729 billion, with a year-on-year increase of 28.3% / 20.3% / 16.5%. Corresponding to eps1 42 / 1.71/1.99 yuan, maintaining the “Buy-A” investment rating.
Risk tips: food safety issues; The risk of intensified industry competition; Repeated epidemic and market fluctuation risk; The cost is higher than expected; Industry demand fell faster than expected; The progress of overseas and M & a business is less than expected.
