\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Key investment points:
The company’s performance slightly exceeded expectations
The company recently released the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company achieved a total operating revenue of 110595 billion yuan, a year-on-year increase of 14.15%; The net profit attributable to the parent company was 8.705 billion yuan, a year-on-year increase of 22.98%, which was in line with market expectations. Among them, the total operating revenue of 2021q4 was 25.588 billion yuan, a year-on-year increase of 10.70%; The net profit attributable to the parent company was 761 million yuan, a year-on-year decrease of 27.82%. In the first quarter of 2022, the company achieved a total operating revenue of 31.047 billion yuan, a year-on-year increase of 13.47%; The net profit attributable to the parent company was 3.519 billion yuan, a year-on-year increase of 24.32%, which was slightly higher than expected.
Sales growth and strong demand
From the perspective of revenue composition, in 2021, liquid milk / milk powder and dairy products / cold drink product series achieved operating revenue of 84.911/16.209/7.161 billion yuan respectively, with a year-on-year increase of 11.54% / 25.80% / 16.28% respectively. From the perspective of revenue attribution, sales volume / structure / price contributed 7.5% / 3.7% / 2.5% respectively. Sales volume became the primary factor for the positive growth of revenue last year. 2022q1 liquid milk / milk powder and dairy products / cold drink product series achieved operating revenue of 22.318/53.952795 billion yuan respectively, with a year-on-year increase of 6.98% / 35.25% / 35.55% respectively. The formation of milk drinking habits, the continuous upgrading of consumption and the continuous improvement of market penetration have led to the steady growth of sales. In terms of categories, Jindian organic milk in liquid milk increased strongly by 41.5%, accounting for 51.4%, and continued to rank first in organic dairy products. The market share of golden baby powder increased by 1.4 percentage points. In the cold drink market, China has continuously optimized the product structure, and the international capacity expansion has strengthened the layout.
High cost and slow competition
In 2021, the gross profit margin / net profit margin of the company’s main business sales were 30.70% / 7.87% respectively, with a year-on-year change (restated) of 0.47pct/0.57pct. Under the background of high upstream raw materials, the company ensured the stability of profitability through various ways. In 2022q1, the gross profit margin / net profit margin of the company’s main business sales were 34.60% / 11.33% respectively, with a year-on-year increase (restated) of 2.09pct/0.99pct. Benefiting from the marginal decline of cost and the slowdown of competition pattern, the company’s net profit margin reached a new high. The gross sales difference of 2021q1 / 2022q1 is 15.54% / 16.46% respectively, and the gross sales difference is further higher.
Investment advice
As a leading enterprise in China’s dairy industry, the company has strong scale and brand advantages. After the share of the two strong markets reaches a certain proportion, the industry competition slows down. In the past, enterprises resisted cost shocks by continuously adjusting product structure and controlling cost investment. Due to the impact of the epidemic, the national health awareness is continuously enhanced, and the consumption demand of dairy products is expected to continue to grow moderately. This year, under the marginal improvement trend of upstream raw milk price, the company’s performance is expected to continue to release. To sum up, we expect the company’s earnings per share from 2022 to 2024 to be 1.65/1.93/2.16 yuan respectively, and continue to give the company the investment rating of “overweight”.
Risk tips
Repeated outbreaks, food safety risks and macroeconomic downturn.
