\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event overview
The company announced that through preliminary accounting, the company achieved a total operating revenue of about 21.5 billion yuan from January to February 2022, 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. Among them, from January to February, the sales revenue of jinlingguan increased by more than 30% year-on-year, ranking the first in the industry.
Analysis and judgment:
1. The income from January to February was stronger than we expected. Considering the dislocation of the Spring Festival (the early spring festival in 2022) and the high base of last year (1q21 revenue + 32.5% year-on-year, during the Spring Festival last year, the channel merchants worried about the supply chain risk under the epidemic and increased the inventory reserve), Yili’s revenue from January to February 2022 was 15% year-on-year, which was better than our expectation (year-on-year + 10 ~ 15%). We analyzed the reasons: 1) under the epidemic situation, consumers’ consumption of dairy products, a health product, showed an increasing trend; 2) The Winter Olympics, which attracted much attention, was held in Beijing in February. As an official dairy partner, Yili’s brand gained good exposure. The company said that the third-party research data showed that consumers’ willingness to buy Yili products reached a record high during this period; 3) Yili’s continuous efforts in sales channel sinking and product structure upgrading.
2. Improve the profit margin during the marketing window period. From January to February 2022, Yili’s total profit was more than + 20% year-on-year, and the profit margin was about + 0.65pct year-on-year. According to the data of the Ministry of agriculture, the price of raw milk from January to February 2022 was basically flat year-on-year. We judged that Yili’s cost side was stable. We believe that Yili invested moderately in marketing expenses from January to February around the Winter Olympics and the spring promotion meeting. In this case, the profit margin still increased year-on-year. We judge that it is due to the optimization of product structure and strict cost budget control, which also makes us more confident in the medium-term profit margin improvement trend of Yili.
The milk powder business performed quite well from January to March. From January to February, the revenue of jinlingguan was more than + 30% year-on-year, and the growth rate ranked first in the industry. Yili infant formula has made continuous efforts in product formula optimization and upgrading and sales channel adjustment since 2019. Since 1h21, the adjustment effect has appeared and entered the stage of rapid growth. On March 4, the company announced that the shareholding ratio of Aoyou tender offer has reached 52.7%, realizing the successful acquisition. In the future, the two companies will work together to further consolidate Yili’s market competitiveness in the field of milk powder. The milk powder business has become the “second growth curve” of Yili Group, while driving the overall profit margin.
Investment advice
Yili’s revenue grew strongly from January to February, among which the growth of milk powder revenue was quite bright. At the same time, it still achieved the net interest rate during the marketing window, which raised our expectation for the whole year of 2022. The consolidated statement of Aoyou will not be considered for the time being, and the revenue forecast of the company from 2021 to 2023 will be raised from 110.2/123.8/137.4 billion yuan to 110.2/125139.2 billion yuan; Adjusted the forecast of net profit attributable to the parent company from RMB 9.4/11/13.1 billion to RMB 9.0/11.2/13.2 billion, and EPS was 1.4/1.76/2.06 yuan respectively. The closing price of 2022 / 3 / 10 is 36.75 yuan, and the share price corresponds to 26 / 21 / 18 times of P / E from 2021 to 23 respectively. The buy rating is reiterated.
Risk tips
Risk of sharp fluctuations in raw material prices, food safety risk
