\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: Yili released the operating data from January to February. The total operating income of Yili company increased by more than 21.5 billion yuan in the same period of last year to February 2021 after the announcement of the company’s initial accounting, which was released on February 2021; The total profit was about 3.3 billion yuan, an increase of more than 20% over the same period last year.
Comments:
The demand for white milk continues to be strong, and the upgrading trend of product structure is good. The epidemic continued to promote consumers’ demand for healthy white milk. In January, the company’s normal temperature white milk increased by 12.6% year-on-year. In terms of product structure, the growth rate and proportion of the company’s high gross profit products continued to increase. Within each category, in January, Jindian ranked first in normal temperature white milk with a growth rate of 15.1%, and the growth rate of many high-end and ultra-high-end brands of qiaolez exceeded 70%. Among categories, compared with normal temperature white milk, milk powder and cheese businesses with higher gross profit margin have achieved breakthrough growth. From January to February, the revenue of jinlingguan increased by more than 30% year-on-year, ranking the first in the industry. Cheese doubled its revenue year-on-year from January to February, with a growth rate much higher than that of the same industry.
Milk prices fell slightly, and the gross profit margin is expected to expand further. Since the beginning of the year, the overall milk price has shown a slight downward trend, from 4.29 yuan / kg on December 29, 2021 to 4.21 yuan / kg on March 2, 2022. Considering that the upcoming fed interest rate hike is expected to curb the spread of inflation, the milk price anchored by the bottom feed price is expected to continue the downward trend, further opening up space for the expansion of gross profit margin.
Sales expenses remained stable, and the Winter Olympics expenses were not enough. Channel research shows that since this year, the company’s offline sales expenses have remained stable compared with 2020 and 2021. In terms of Winter Olympics expenses, since the expenses are treated as long-term deferred and included in the current period, and the long-term deferred part is less than 690 million, we speculate that the overall Winter Olympics expenses will not be very high compared with the company’s sales expenses of 21.5 billion in 2020, and will be included in Q4 of 21 and Q1 of 22, Therefore, the cost of the Winter Olympics is not expected to have a material impact on the cost side of the company.
Profit forecast and investment rating: the valuation is relatively low, and the bottom is firmly recommended. Assuming the consolidation of Aoyou at the end of March and referring to the 52.70% equity holding in the previous week (although we expect the shareholding to rise before the delivery), the company’s share price corresponds to only 20.68 times of 22-year PE, which is at the bottom of the historical valuation range. Under the epidemic situation, the demand for white milk continues to be strong. The company presses the warehouse with liquid milk business, takes the improvement of gross sales difference and the growth of milk powder business as the medium and short-term focus, and looks forward to a clear and unexpected possibility. We expect that the EPS from 2021 to 2023 will be 1.45/1.78/2.14 yuan, giving 32xpe in 2022 with a target price of 57 yuan, maintaining the “buy” rating of the company.
Risk factors: food safety problems and intensified industry competition.
