\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: the company announced the operation from January to February. After preliminary accounting, the total operating revenue from January to February was about 21.5 billion yuan, an increase of more than 15%, and the total profit was about 3.3 billion yuan, an increase of more than 20% over the same period last year. It is estimated that the year-on-year growth rate of net profit attributable to the parent company is similar to the growth rate of total profit. After the Spring Festival sales achieved a good start, the profit performance also exceeded expectations.
I. The Spring Festival sales clearly achieved a good start, the dynamic sales were good, and the profit exceeded the expectation. According to the grass-roots feedback, the sales volume of normal temperature liquid milk broke 10 billion in January this year, hitting a record high in single month sales and achieving double-digit growth. From the statements from January to February, the festival also continued a good sales momentum and achieved a high-quality start.
Structural upgrading continued, and liquid milk, milk powder, dairy products and cold drinks maintained a good growth trend from January to February. The proportion of sales revenue of key products such as Jindian, amuxi and jinlingguan increased by 3 points year-on-year, and the market share maintained a leading position. Jinlingguan infant milk powder took the lead in completing the formula upgrading and became the first batch of infant powder matching in China in line with the new national standard. From January to February, jinlingguan’s income increased by more than 30%, ranking the first in the industry.
Since the beginning of the year, the market price of raw and fresh milk has been relatively stable, slightly decreased in February, and the cost pressure has been relieved. The overall offline promotion in the peak season of the Spring Festival is rational. In addition to the average amortization of Winter Olympic sponsorship, the investment of additional expenses related to events from January to February is also better offset by the improvement of structure and scale effect. Excluding the impact of equity incentive expenses, the year-on-year growth rate of total profits is also more than 18%. Accordingly, it is estimated that the net interest rate will further increase from January to February this year. Considering the high proportion of sales from January to February in the first quarter and the normal operation in March, It is preliminarily predicted that the net interest rate will rise steadily in the first quarter of this year, and the profit performance will exceed expectations on the high net interest rate base of 10.35% in the first quarter of last year.
II. Looking back on 2021, the products continued to grow and the market position was further consolidated
In 2021, the overall revenue exceeded the plan at the beginning of the year, the Q4 trend of liquid milk was better than Q3, and it was easy to achieve the goal of + 0.5pct profit margin in the whole year. Through the innovation cycle of Muxi acid, it is estimated that Muxi acid will continue to achieve a market share of more than 60% in normal temperature products. White milk is estimated to increase by more than 20%, and Jindian is estimated to increase by 20% year-on-year. In the future, there is still growth in terms of per capita consumption. Considering the low consumption in offline cities, the company’s basic white milk and Zhennong also have large growth space.
The share of milk powder continued to increase. From January to November 2021, the industry increased by 3% and the company increased by more than 20%. At present, the market share is 7% +. In terms of products, after the upgrading of products such as jinlingguan Zhenhu, organic and A2 in the past 21 years, more SKUs are expected to grow this year and continue to enrich the product line of jinlingguan. In terms of channels, we will basically cover large mother and baby stores in 21 years, and do a pilot of single point improvement. In the future, we are expected to copy last year’s accumulation to more single points and improve single point efforts. This year is the 20th year of the company’s research on breast milk. The company will continue to do consumer education activities around breast milk research to improve brand strength. In the future, the company will strive to achieve an endogenous growth rate of 25%.
III. new products are expected to boost growth
The company has launched a number of new products, such as “Jindian ultrafiltration milk”, “amushidandong strawberry”, “Chang light protein time”, “jinlingguansenamu organic milk powder” and “xujihuan thick milk ice cream”, which promote the rapid growth of new business. After Jindian launched ultra-high-end products (6G, selling price of 15 yuan / bottle), the product matrix is further enriched, with organic and A2 positioning at the middle end and Jindian pure positioning foundation, forming a richer product matrix. The normal temperature cheese stick that the market is more concerned about began to be distributed at the end of the 21st century, and launched new products such as suction cheese and adult cheese. At present, consumer feedback is good, and the company is increasing production capacity construction.
Profit forecast and rating:
2022 is a key year for the implementation of the company’s strategy. We expect double-digit growth in revenue and continuous improvement of profit margin by 0.5 points per year. In the current external environment with frequent outbreaks, the company has shown strong resilience on the demand side. Under the background of slowing down the fluctuation of raw milk, the industry competition remains restrained and rational. After the tender offer of Aoyou dairy is reached, the company will be more competitive in the subdivided fields of sheep milk powder and infant nutritional food, and achieve greater synergy in the whole industrial chain. If the delivery is expected to progress smoothly, it is expected to consolidate and thicken the statements in the second quarter.
This year, combined with the Winter Olympic Games, as the only “double Olympic milk enterprise” to help improve the company’s brand, the Winter Olympic Games combined with spring to promote brand marketing and help consumers’ purchase intention to reach a record high. From January to February this year, the market penetration continued to remain the first in the industry, among which the market penetration in prefecture level cities and county-level cities increased by 0.6 percentage points and 1.2 percentage points respectively year-on-year, The scale of consumer reach continues to rise, and the efficiency of brand cost investment remains at the usual high level. This year, it is also proposed to sink the village level. At present, it has achieved a certain position at the town level and is ahead of the attempt to the village level, which is similar to the start of the town level layout 10 years ago.
Regardless of the consolidation of Aoyou for the time being, we expect the revenue growth rate to be 13.74%, 12.5% and 11.03% from 2021 to 2023, the growth rate of net profit attributable to the parent company to be 28.46%, 19.32% and 17.37% respectively, and the EPS to be 1.42, 1.70 and 1.99 (the latest share capital after the issuance). The target price of one-year dimension is 54.17 yuan, maintaining the “buy” rating.
Risk warning: the price of raw milk fluctuates; Deterioration of sales environment; Food safety issues.
