\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: the company issued an announcement on the operation from January to February 2022. From January to February 2022, the company achieved a 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.
The product structure continues to be optimized, and the profit improvement is on the way. According to the company’s announcement, from January to February 2022, the company’s liquid milk, milk powder and dairy products, cold drinks and other businesses maintained a good growth trend. The proportion of sales revenue of key products such as Jindian, amuxi, jinlingguan, qiaolez, Zhen Xi, Changqing, meiyitian and Yili children’s cheese stick increased by 3pcts year-on-year. In terms of product innovation, the company launched new products such as “Jindian ultrafiltration milk”, “amuxi Dandong strawberry”, “Changqing protein time” and “xujihuan thick milk ice cream”. High-end and innovative development are carried out at the same time. The main brand and new products are driven together. The multi-dimensional and dynamic brand matrix lays a foundation for the continuous improvement of the company’s profitability.
The development of milk powder business has accelerated and joined hands with Aoyou sword to point to the first place in the industry. According to the company’s announcement, jinlingguan infant milk powder took the lead in completing the formula upgrading and became the first batch of infant formula milk powder in China that meets the new national standard of milk powder. From January to February 2022, the sales revenue increased by more than 30% year-on-year, ranking the first in the industry. In terms of new products, “jinlingguansenamu organic milk powder” was launched. Combined with a number of innovative marketing measures, the milk powder business grew rapidly. On March 3, Yili successfully acquired Aoyou by tender offer. Considering the synergy between the two in categories, supply chain, channels and other aspects, working together with Aoyou is expected to accelerate the medium-term goal of becoming the first in the industry and contribute core strength to the long-term strategic goal of “becoming the top three in the global dairy industry in 2025 and the first in the global dairy industry in 2030”.
Brand building accelerated, and “double Austrian milk enterprises” consolidated leading barriers. From January to February 2022, the company achieved the improvement of the overall brand strength through the brand marketing integration of Winter Olympics and spring promotion. The market penetration in prefecture level cities and county-level cities increased by 0.6pcts/1.2pcts respectively year-on-year, maintaining the first level of industry penetration. In terms of expenses, Q1 was originally a peak sales season, superimposed with the resonance of return tide and channel sinking. The overall impact of spring promotion and Winter Olympic expenses was limited, and the profit performance from January to February exceeded expectations.
Profit forecast and investment suggestions: regardless of the consolidated statement of Aoyou, the net profit attributable to the parent company from 2021 to 2023 is expected to be 9.140/10.802/12.733 billion yuan, an increase of 29.1% / 18.2% / 17.9%, corresponding to EPS of 1.43/1.69/1.99 yuan and pe26 / 22 / 19 times respectively. Assuming the consolidation of Aoyou by the end of March 2022, it is expected to contribute more than 8 / 13 billion revenue to 2022 / 2023, and the growth rate of epitaxial endogenous revenue is 19.5% / 13.9%. Excluding the influence of minority shareholders’ equity, the profit side is expected to contribute single digit profits and is in a steady upward channel. Under multiple driving factors such as the gradual easing of cost side pressure, the improvement of competition pattern and product optimization and upgrading, the current stock price corresponds to 22 times PE in 2022, which has a high cost performance ratio and maintains the “buy” rating.
Risk tip: the cost of raw milk has increased significantly, and the dynamic sales are expected to be low due to the impact of the epidemic in the peak season.
