\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: the company announced that from January to February 2022, the company achieved a total operating revenue of about 21.5 billion yuan, an increase of more than 15% year-on-year; The total profit was about 3.3 billion yuan, a year-on-year increase of more than 20%.
The revenue side is in full bloom, the business growth is strong, and the penetration rate continues to improve. From January to February 2022, the company’s liquid milk, milk powder, dairy products and cold drinks businesses maintained a good growth trend, and the revenue side fully blossomed. Specifically, the company’s white milk business continued to maintain a high growth trend. In January, the company’s normal temperature white milk increased by 12.6% year-on-year; The sales volume of cold drink business has increased significantly; The cheese business doubled. According to Nielsen data, the market share of Yili cheese increased by 3 percentage points year-on-year in January 2022, and the total growth from January to February doubled year-on-year, much higher than that of the same industry. In terms of milk powder, Nielsen data showed that from January to February, the sales revenue of jinlingguan increased by more than 30% year-on-year, ranking the first in the industry; In February 2022, jinlingguan infant milk powder passed the most stringent “new national standard” in history, and Yili was the only milk powder head enterprise that passed. In addition, Yili parent brand achieved 22% sales growth, creating the best in history. Behind the strong business growth is the continuous improvement of the market penetration of Yili products and maintaining the industry leading level; The company’s 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, and the reach scale of consumers continued to rise. The rapid development of various businesses is in line with the company’s long-term goal of putting each line first, and the expansion logic of dairy industry leaders is constantly verified.
Structural upgrading and continuous promotion of innovation create a good profit side. The proportion of high-end products of the company has been continuously increased, and the upgrading of product structure has continued, driving the profit growth rate of the company higher than the revenue growth rate. According to the company’s announcement, key products such as Jindian, amuxi, jinlingguan and qiaolezi accounted for + 3pcts year-on-year, further expanding the scale of high-end market segments and maintaining the leading share of high-end products. Specifically, for example, in January, the company’s normal temperature white milk increased by 12.6% year-on-year, of which Jindian increased by 15.1%, ranking first in the same category; Qixuan, a high-end brand of qiaolez, has a growth rate of more than 74%, Zhen Xi, a high-end brand, a growth rate of more than 82%, and xuquanhuan, a super high-end brand, has a growth rate of more than 748%. Innovation drives the healthy and sustainable development of the company’s business and promotes the continuous upgrading of product structure. Since this year, the company has successively launched a number of new products such as “Jindian ultrafiltration milk”, “amushidandong strawberry”, “jinlingguansenamu organic milk powder” and “xujihuan thick milk ice cream”. The rapid growth of high-end new products and new businesses has become a strong driving force for revenue and profit. In addition, Yili has just made an offer to acquire the successful Aoyou, which has the world’s first brand of goat milk, jiabeiaite, super high-end milk powder brand haipunuokai 1897 and other well-known brands. After the combination of strong and strong forces, Yili milk powder is expected to usher in high-speed growth.
The logic of profitability release continues to be fulfilled, and the cost of raw milk may meet the inflection point. Since 2022, the cost of raw milk has decreased steadily. According to the data of the Ministry of agriculture and rural areas, the latest price of fresh milk in China’s main producing areas was 4.19 yuan / kg on March 16, a year-on-year decrease of – 2.1%, and a decrease of 1.4% this year. Compared with the continuous rise in the price of raw milk last year, the normal decline in the price after the peak season of the Spring Festival this year means that the supply and demand of raw milk tends to be flat, and we are expected to see the inflection point of the cost of raw milk. Superposition of the apparent characteristics of the slowing down of the industrial competition pattern and the reduction of fees and charges of the leading enterprises since last year; We believe that in the long run, under the background of increased concentration and more stable pattern, the decline of milk price is expected to further optimize the gross sales difference of the company, so as to lay a solid foundation for achieving the goal of increasing the net interest rate by 0.5pct per year; However, the specific performance of the profit side of dairy enterprises also needs to observe the investment intensity and rhythm of the current sales expenses. Generally speaking, we believe that there is no danger of industry demand in the future, and the trend of product innovation and structure improvement of the company will not change; The competition pattern is expected to continue to ease. The company will continue to benefit from the slowdown of industry competition, pattern optimization and concentration improvement, so as to achieve business and performance objectives.
Profit forecast and investment rating of the company: we expect the net profit of the company from 2021 to 2023 to be 8.92 billion yuan, 10.64 billion yuan and 12.09 billion yuan respectively, corresponding to EPS of 1.47, 1.75 and 1.99 yuan respectively. The current share price corresponds to PE values of 24.57, 20.59 and 18.12 times from 2021 to 2023 respectively. Maintain a “strongly recommended” rating.
Risk tip: the price of raw milk has risen sharply, and the epidemic has repeatedly affected terminal consumption.
