\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event: Inner Mongolia Yili Industrial Group Co.Ltd(600887) released the annual report of 2021. In the 21 years, the company achieved an operating revenue of 110144 billion yuan, an increase of 14.11% year-on-year; The net profit attributable to the parent company was 8.705 billion yuan, a year-on-year increase of 22.98%. Among them, 21q4 achieved an operating revenue of 25.47 billion yuan, a year-on-year increase of 10.65%; The net profit attributable to the parent company was 761 million yuan, a year-on-year decrease of 27.82%. At the same time, the company released the first quarterly report of 22 years. 22q1 company achieved an operating revenue of 30.912 billion yuan, a year-on-year increase of 13.41%; The net profit attributable to the parent company was 3.519 billion yuan, a year-on-year increase of 24.32%.
Key investment points
The goal of 21 years has been successfully achieved and a good start has been achieved in 22 years. The company’s revenue target for the 21st year was successfully achieved. Generally speaking, the company benefited from the increased demand for white milk after the epidemic. At the same time, the company adjusted the prices of basic white milk and some low-temperature products at the end of the 20th and the beginning of the 21st year respectively, helping to achieve the growth of liquid milk revenue in the 21st year. On the specific revenue side, the company’s liquid milk revenue in 21 years / 21q4 was 84.911/20.195 billion yuan, a year-on-year increase of + 11.5 / + 7.2%, the revenue of milk powder and dairy products was 16.209/4.540 billion yuan, a year-on-year increase of + 25.8 / + 29.1%, and the revenue of cold drink products was 7.161213 billion yuan, a year-on-year increase of + 16.3 / + 71.6%. In the whole year of 21, the income of liquid milk, milk powder, dairy products and cold drinks accounted for 77.1% / 14.7% / 6.5% respectively, with a year-on-year increase of – 1.8 / + 1.4 / + 0.1pcts. The high growth trend of milk powder continued, and the proportion increased.
According to Nielsen data, the market share of the company’s liquid milk retail sales was + 0.4ptcs year-on-year; Infant formula retail sales accounted for + 1.4 PTCs, ranking second in the market; The market share of retail sales of cheese business was + 6.3 PTCs, and the market share increased rapidly.
The company achieved a revenue of 30.912 billion yuan in 22q1, a year-on-year increase of 13.41%. Among them, liquid milk / milk powder and dairy products / cold drinks achieved revenue of 22.318/53.95/2.795 billion yuan respectively, a year-on-year increase of + 7.0 / + 35.3 / + 35.5%. All businesses of the company maintained a good growth trend, among which the white milk business continued to maintain a good growth rate. In January this year, the normal temperature white milk increased by + 12.6% year-on-year; In terms of milk powder, the company accelerated the upgrading of high-end products in 22 years, and it is expected that the growth of Q1 infant formula will reach about 40%.
Product price increase & accurate cost delivery, and the gross profit margin of 21 years / 22q1 has been gradually improved. The gross profit margin of the company in 21 years (adjusted to the same caliber in 20 years, the same below) was 30.90%, with a year-on-year increase of + 0.53pcts. The sales expense ratio / management expense ratio was 17.46/3.82% respectively, with a year-on-year increase of + 0.04 / – 0.19pcts respectively. The net profit of the company in 21 years was 7.87%, with a year-on-year increase of + 0.57pcts. In the past 21 years, under the pressure of rising costs, the company has continuously optimized its product structure, and its profitability has been stable and improved through the accurate delivery of some products and continuous costs at the beginning of 21.
The year-on-year gross profit rate of the company was 22.3% and 18.3% respectively, with a year-on-year gross profit rate of 22.3% and 12.2% respectively. The net interest rate of the company was + 0.99ptcs year-on-year. The price of 22q1 raw milk slowed down. Under the background of optimizing the company’s product structure and accurate cost delivery, the company’s gross / net profit margin gradually improved, helping the company achieve a high increase in net profit in the first quarter.
Optimization of product structure & the pressure on milk prices has slowed down and the profitability has continued to improve. The improvement of the company’s profitability in the first quarter of 22 years is mainly due to the company’s continuous product structure optimization and strict cost budget management. The proportion of high gross profit products such as Jindian anmushi and other high-end products of the company continues to increase. At the same time, after the tender acquisition of Aoyou, the company and Aoyou will play a synergistic effect in supply chain, brand promotion and channel construction, cooperate with each other and complement each other’s advantages. In the future, the market share of the company in infant formula milk powder will also increase greatly, and the proportion of high gross profit milk powder business income is expected to increase, so as to optimize the gross profit level of the company as a whole. In terms of raw milk, according to the data of the Ministry of agriculture, the latest price of fresh milk in China’s main producing areas was 4.18 yuan / kg on April 20. Since the beginning of the year, the milk price has been stable and slightly reduced, the cost side pressure has been gradually released, and the profitability of the company is expected to continue to improve.
Investment suggestions: the advantages of medium and long-term company’s product platform (compare with international dairy enterprises, actively expand new fields such as milk powder, cheese and health drinks), international platform (realize the internationalization of resources, market and Research), channel influence (continue to adhere to the company’s flat and refined channel construction), and brand influence (target the world’s leading dairy enterprises) remain. In this context, we are optimistic about Yili’s strategic measures to seek new development in the new development stage, and its competitive advantage and integration strength will be further improved, so as to steadily achieve the medium and long-term strategic goal of “the top three in the global dairy industry in 2025 and the first in the global dairy industry in 2030”. We predict that the operating revenue of the company from 2022 to 2024 will be 129769147920/166921 billion yuan respectively, with a year-on-year increase of 17.3% / 14.0% / 12.8%. The net profit attributable to the parent company was 10.799/12.669/14.826 billion yuan, with a year-on-year increase of 24.1% / 17.3% / 17.0%, EPS of 1.69/1.98/2.32 yuan and corresponding PE of 23x / 20x / 17x respectively. Considering that the company is a leader in the industry, it is given a valuation premium to maintain the company’s “Buy-A” investment rating.
Risk tips: food safety issues; The risk of intensified industry competition; Market fluctuation risk under the influence of epidemic situation; The cost is higher than expected; Industry demand fell faster than expected; Overseas business is not progressing as expected.
