\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event:
The company issues business data announcement. From January to February 2022, the operating revenue was about 21.5 billion yuan, 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:
In 2022, the company made a good start, maintained the leading market share of key products and continuously upgraded the structure, laying the foundation for the high growth of annual performance. From January to February 2022, the company’s revenue performance exceeded expectations. The main reasons are as follows: 1) the market share of key products remained ahead: the proportion of sales revenue of key products such as Jindian, anmushi, jinlingguan, qiaolez, Zhen Xi, Changqing, meiyitian and Yili children’s cheese stick increased by 3 percentage points year-on-year; 2) Continuous product innovation and structural upgrading: launched a number of new products such as “Jindian ultrafiltration milk”, “amushidandong strawberry”, “Changqing protein time”, “jinlingguansenamu organic milk powder” and “xujihuan thick milk ice cream”. The increase of the proportion of high-end products will promote the rise of the company’s gross profit rate and net profit rate; 3) The growth of milk powder business is gratifying: from January to February 2022, Yili jinlingguan’s sales revenue increased by more than 30% year-on-year, ranking the first in the industry. The growth rate of milk powder business is higher than that of liquid milk, and the increase of the proportion of higher profitability business is conducive to promoting the profitability of the company; 4) With the help of the Winter Olympics, the scale of consumer reach continued to rise: from January to February 2022, the company realized the improvement of brand strength through the brand marketing integration of the Winter Olympics and spring promotion. According to the company’s announcement, the market penetration of Yili products in prefecture level cities / county-level cities increased by 0.6% PCT / 1.2pct year-on-year, and the scale of consumer reach continued to rise.
The acquisition of Aoyou by invitation was successful, and the second growth curve rose rapidly. On March 3, 2022, Yili announced that as of that date, the company held or controlled 953 million shares of Aoyou dairy, accounting for 52.7% of the total issued share capital of Aoyou. According to Nielsen data, since 2018, the sales of Aoyou formula sheep milk powder has accounted for more than 60% of China’s total import of infant formula sheep milk powder for three consecutive years, ranking the first in the world. The successful acquisition of Aoyou will significantly improve Yili’s comprehensive strength in the field of milk powder. It is expected that Aoyou will be consolidated after the equity delivery at the end of March 2022, which is calculated in nine months of the whole year, It is expected to contribute about 8.3 billion to Yili’s revenue in 2022, with a corresponding increase of about 6.8%. Affected by minority shareholders’ equity, the net profit attributable to the parent company will contribute about 600 million, with a corresponding increase of about 5.5%.
The expenses and costs are well controlled, and the profit margin is improved in the marketing window period. During the Olympic marketing investment window, thanks to the optimization of the company’s product structure and strict cost control, from January to February 2022, the company’s total profit increased by more than 20% year-on-year, and the profit margin increased by about 0.65 PTC year-on-year. According to the data of the Ministry of agriculture, the price of raw milk from January to February in 2022 was basically the same year-on-year, and the price of raw milk decreased slightly year-on-year from the end of February. After the Spring Festival, the off-season of the raw milk industry is expected to decline, and the cost pressure of the company is expected to be relieved.
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, supporting the steady improvement of the company’s profitability. If considering the consolidation of Aoyou, the company’s EPS is expected to reach 1.37 yuan, 1.72 yuan and 2.05 yuan from 2021 to 2023, and the corresponding PE is 29x, 23x and 20x respectively; Based on the consideration of prudence, without considering the consolidation of Aoyou, it is expected that the company’s EPS will reach 1.37 yuan, 1.59 yuan and 1.75 yuan respectively from 2021 to 2023, and the corresponding PE will be 29x, 25X and 23x respectively, giving a “buy” rating.
Risk tips: 1) the price of raw milk continues to rise; 2) Industry competition intensifies; 3) The demand situation is less than expected; 4) The consolidation progress of Aoyou dairy is less than expected; 5) Risk of epidemic spread, etc.
