\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Inner Mongolia Yili Industrial Group Co.Ltd(600887) issued the announcement on the operation from January to February of 22. According to the preliminary accounting of the company, from January to February 2022, the company achieved a total operating revenue of about 21.5 billion yuan, an increase of more than 15% over the same period of last year; The total profit was about 3.3 billion yuan, an increase of more than 20% over the same period last year.
Key points supporting rating
The Winter Olympics and spring promote the continuous brand marketing and the continuous improvement of brand strength; Product optimization and upgrading, leading the market share. From January to February, the revenue and total profit increased by more than 15% and 20% respectively. (1) Benefiting from the brand publicity of the Winter Olympic Games and the stable demand for the nutritional health of dairy products, the company made a successful start. From January to February of 22 years, the revenue increased by more than 15%, the overall performance hit a new record, and the total profit increased by more than 20%. (2) The company continued to optimize the product structure. The proportion of sales revenue of key products such as Jindian, amuxi, jinlingguan, qiaolez, Zhenxi, Changqing, meiyitian and Yili children’s cheese stick increased by 3PCT year-on-year, and the market share maintained a leading position. (3) Milk powder business, endogenous and extensional mergers and acquisitions, common development. On March 4, 2022, the company announced the successful acquisition of Aoyou by tender offer. At present, it holds 52.70% shares of Aoyou, and the performance of Aoyou will be consolidated in 2q22. In addition, 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. (4) In terms of product innovation, the company focuses on creating new products that meet the needs of consumers, and continues to optimize and upgrade. 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”. At the same time, combined with a number of innovative marketing measures, the company has promoted the rapid growth of new products and new businesses. (5) In terms of brand strength improvement, the company has achieved the improvement of the overall brand strength through the brand marketing integration of Winter Olympics and spring promotion. During this period, consumers’ willingness to buy Yili products reached a record high. The market penetration rate of Yili products continued to rank first in the industry, among which the market penetration rate in prefecture level cities and county-level cities increased by 0.6pct and 1.2pct respectively year-on-year, and the reach scale of consumers continued to rise.
The company has strong long-term growth certainty, balanced development of categories and safety margin of valuation. (1) The company’s performance has grown steadily, and the certainty comes from the balanced development of categories: the demand for normal temperature milk has been steadily and continuously upgraded, the momentum of milk powder has been good and rapid growth, and the businesses such as cheese and low-temperature milk have been laid out ahead of schedule. (2) The profit release power is sufficient. The company continues to improve the gross profit margin and reduce the cost rate through structural optimization. (3) It is estimated that the performance growth in 22 years is close to 20%, corresponding to only 21 times of PE, and the valuation has a margin of safety.
Valuation
We keep the profit forecast unchanged. We expect the EPS of 21-23 years to 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 competition pattern of Yili and Mengniu did not improve as scheduled; Raw milk prices rose more than expected; The expansion of products and channels was less than expected.
