\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Matters:
The company released the 2021 annual report and the first quarterly report of 2022. In 2021, the annual operating revenue reached 110144 billion yuan, a year-on-year increase of + 14.11%; The net profit attributable to the parent company was 8.705 billion yuan, a year-on-year increase of + 22.98%. It is proposed to distribute a cash dividend of 9.60 yuan (including tax) to all shareholders for every 10 shares. 2021q4 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 increase of – 27.82%. In 2022q1, the company realized an operating revenue of 30.913 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%.
Ping An View:
The annual revenue exceeded 100 billion, and the Q1 performance exceeded expectations. With the disclosure of the company’s annual report, Yili became the first dairy enterprise in Asia with a revenue of more than 100 billion. At the same time, it also announced the formal formation of the pattern of “one super and many strong” in China’s dairy industry. The company’s first quarterly profit growth exceeded market expectations, showing the strong profitability of leading enterprises under the dual challenges of external environment shock and epidemic control. According to the company’s annual report, the company plans to achieve a total operating revenue of 129.6 billion yuan and a total profit of 12.2 billion yuan in 2022. At present, the revenue has exceeded “100 billion”, the net profit is expected to exceed “10 billion” in 2022, the profit improvement continues to exceed expectations, and the leading “post 100 billion era” can be expected.
The performance of basic liquid milk was stable, and the layout of high gross profit milk powder business was accelerated. In terms of products, the annual revenue of liquid milk reached 84.911 billion yuan, a year-on-year increase of + 11.54%, mainly due to the increase of market share and the sinking of channels. The market penetration rate of the company’s normal temperature liquid dairy products increased by 0.7pcts year-on-year, of which the company’s market penetration rate in prefecture level cities and county-level cities increased by 0.6pcts and 1.2pcts year-on-year respectively. Among them, “Yili pure milk”, “Jindian pure milk” and “amuxi normal temperature yogurt” series have an annual sales scale of more than 20 billion, while “organic series”, “children’s series”, “Zhennong series” and “Shuhua series” continue to promote the upgrading of product structure. The milk powder and dairy products business achieved a revenue of 16.209 billion yuan, a year-on-year increase of + 25.80%. The annual sales revenue of “jinlingguan” series exceeded 10 billion, driving the accelerated growth of milk powder business. The cold drink business achieved a revenue of 7.161 billion yuan, a year-on-year increase of + 16.28%. The business scale ranked first in China for 27 consecutive years, and the profitability increased significantly year-on-year.
Deepen the strategic layout of all channels and explore a new model of “consumer operation”. From the perspective of channels, on the one hand, the company exploits the local and county-level market potential on the basis of the advantages of traditional channels, and excavates new growth space in the sinking of channels; On the other hand, try and explore to build a new retail model, integrate Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channel resources through the support of digital system, and develop new retail models such as e-commerce, community marketing and o2o home to further accurately serve consumers. The company’s normal temperature liquid milk accounts for 28.4% of the retail market share of e-commerce platform, and continues to rank first in the normal temperature liquid milk segment of e-commerce platform. According to the sales mode, the sales revenue of distribution / direct sales in 2021 was 105.02/3.46 billion yuan respectively, with a year-on-year increase of + 13.81% / + 12.18%. In terms of subregions, North China still accounts for the highest proportion, with a revenue of 31.409 billion yuan, a year-on-year increase of + 11.84%; The faster growth was in central / South China, with revenue of 19.666/27.032 billion yuan respectively, a year-on-year increase of + 18.03% / + 14.25%.
The profitability has been steadily improved and the net interest rate has reached a new high. The company achieved a gross profit margin of 30.90% in 2021, with a year-on-year increase of + 0.52pcts. The increase in gross profit margin was mainly due to the upgrading of product structure and the slowdown of terminal promotion. In 2021, the company adjusted its accounting policies and included some sales expenses and management expenses into operating costs. The annual sales / management expense ratio was 17.46% / 3.82% respectively, compared with + 0.04pcts / – 0.19pcts in the same period. In 2021, the company achieved a net interest rate of 7.93%, a year-on-year increase of + 0.58%. In 2022q1, the gross profit margin was 34.72%, with a year-on-year increase of + 2.13pcts; The net interest rate reached 11.35%, a year-on-year increase of + 0.98%, a record high. Looking forward to the future, we are optimistic about the profit improvement brought by the optimization of the industry competition pattern.
Maintain the “profit recommendation” and continuously improve the rating. In the short term, we believe that the price of raw milk has been adjusted to the year-on-year decline range, the industry competition is slowing down, and the profitability of the company is expected to continue to improve; In the medium and long term, we are optimistic about the high-end process of the company’s normal temperature milk, with improved superimposed profit margin and broad growth space. According to the first quarterly report of the company in 2021, we adjusted the performance forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 10.523 billion yuan (the former value is 10.165 billion yuan), 12.507 billion yuan (the former value is 11.811 billion yuan) and 14.681 billion yuan (New). Considering the dilution of share capital, EPS will be 1.64 yuan, 1.95 yuan and 2.29 yuan respectively, and the PE corresponding to the closing price on April 27 will be 23.7, 20.0 and 17.0 times respectively. Maintain a “recommended” rating.
Risk tips: 1. Risk of macroeconomic weakness: economic growth declines and consumption upgrading does not meet expectations, resulting in the slowdown of consumption growth; 2. Risk of major food safety incidents: consumers are particularly sensitive to food safety issues. In case of major food safety accidents, consumers’ confidence in the brand will drop to the freezing point in the short term and it will take a long time to rebuild their confidence; 3. Risk of rising raw material price: the cost of raw milk, the main raw material of the product, accounts for a relatively high proportion, and the price rises sharply, which may lead to lower performance than expected.
