\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Key points
Event: Inner Mongolia Yili Industrial Group Co.Ltd(600887) released the main operating data from January to February 2022. According to the preliminary calculation, the total operating revenue from January to February was about 21.5 billion yuan, with a year-on-year increase of more than 15%, and the total profit was about 3.3 billion yuan, with a year-on-year increase of more than 20%. Performance slightly exceeded market expectations.
The dynamic pin is good and the penetration rate continues to increase. From January to February 2022, the company’s overall dynamic sales were good, the channel inventory was benign, and all segments maintained good performance. Among them: 1) the income of normal temperature liquid milk increased by about 15% year-on-year, the income of large single product amuxi increased by + 10% and Jindian increased by + 20%; 2) Milk powder, dairy products and cold drinks business showed a growth trend, of which jinlingguan’s revenue increased by more than 30% year-on-year, and the growth rate was at the leading level in the industry; 3) The proportion of revenue from key products such as Jindian, anmushi, jinlingguan, Changqing and children’s cheese stick increased by 3pcts year-on-year. The Winter Olympics and spring promotion strengthened the company’s brand pull, and the market penetration of prefecture level cities / county-level cities increased by 0.6pcts / 1.2pcts year-on-year respectively.
The pressure of product structure upgrading and superimposed cost is eased, and the annual profit can be improved. The company continued to optimize the product structure and launched a number of new products, such as Jindian ultrafiltration milk, amuxi Dandong strawberry and Changqing protein time, with good market feedback. In 2022, the company will upgrade more in the healthy direction of high protein, fat and sugar reduction. In terms of cost, the price of raw milk has risen since 2021, with an annual increase of 16.6%. The cost side of the company is under pressure. In January 2022, the milk price was flat year-on-year and decreased slightly in February. It is expected that the raw milk price will continue to remain high this year, but the increase has narrowed. The optimization trend of the competition pattern remains unchanged, the promotion investment in spring is reduced, and the cost investment has become more rational. Overall, the company’s profit margin from January to February was 15.35%, an increase of about 2.9 PCTs compared with 21q1 (12.43%), and the improvement of annual profit can be expected.
The tender offer for Aoyou is successful, and the Industrial Synergy is expected to deepen. Recently, the company announced the successful tender offer of Aoyou, holding 953 million shares of Aoyou, accounting for 52.7% of the total issued share capital of Aoyou. Aoyou has the world’s first brand of goat milk. This acquisition is expected to enhance Yili’s competitive advantage in infant powder products and enhance the company’s profitability after consolidation (Aoyou unanimously expects an operating revenue of 11.1 billion yuan / net profit of 1.5 billion yuan in 2022). In the future, on the basis of maintaining the operation of independent teams, the two sides can give full play to the synergy of categories, milk sources, supply chain and channels to realize complementary advantages. According to Euromonitor data, the market share of Yili and Aoyou infant powder in 2021 is 6.2% / 6.3% respectively, and the total market share can be increased to the second in the industry. The increased layout of high gross profit milk powder business is expected to enhance the profitability of the company, and also help the company achieve the medium and long-term development goal of “becoming the first in all categories in the industry in 2025 and the first in the global dairy industry in 2030”.
Profit forecast, valuation and rating: maintain the net profit forecast of RMB 9.06/103.2/11.81 billion from 2021 to 2023, the corresponding EPS is RMB 1.42/1.61/1.85, and the corresponding P / E of the current stock price is 27 / 24 / 21 times, maintaining the “buy” rating.
Risk tip: the impact of the epidemic exceeded expectations, the cost of raw materials fluctuated, and the growth of core products did not meet expectations.
