\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Event overview
1) Yili achieved an operating revenue of 110.1 billion yuan in 2021, a year-on-year increase of + 14.1%; The net profit attributable to the parent company was 8.7 billion yuan, a year-on-year increase of + 23%. In terms of splitting, the operating revenue of 4q21 was 25.5 billion yuan, a year-on-year increase of + 10.7%; The net profit attributable to the parent company was 760 million yuan, a year-on-year increase of – 27.8%.
2) Yili achieved an operating revenue of 30.9 billion yuan in 2022q1, a year-on-year increase of + 13.4%; The net profit attributable to the parent company was 3.52 billion yuan, a year-on-year increase of + 24.3%. In terms of splitting, the revenue from January to February in 2022 is about + 15% year-on-year, and the same ratio in March is about + 10%; The same ratio of net profit attributable to the parent company from January to February is about + 20%, and that in March is about + 23%.
3) the company aims to have a total operating revenue of 129.6 billion yuan and a total profit of 12.2 billion yuan in 2022.
Analysis and judgment:
Steady growth of performance in 2021 & 2022q1 has a good start
Yili set a performance target of 107 billion yuan in revenue and 9.3 billion yuan in total profit at the beginning of 2021, and actually achieved 110.1 billion yuan in revenue and 10.1 billion yuan in total profit, exceeding the target. Q1 in 2022 continued the steady growth trend in 2021 as a whole, showing strong performance robustness and anti risk ability under the epidemic situation.
Liquid milk and cold drinks increased steadily, while milk powder and dairy products accelerated
In terms of products, the liquid milk revenue in 2021 was 84.9 billion yuan, a year-on-year increase of + 11.5%, of which the contribution of volume increase was + 6.7%, the contribution of structural upgrading was + 2.2%, and the contribution of ASP was + 2.7%. The growth came from the cultivation of milk drinking habits in the offline market, the improvement of penetration rate, continuous product iterative innovation, and the improvement of the relationship between liquid milk supply and demand. The highlights of the products are the upgrading of normal temperature white milk consumption, the rapid growth of low-temperature fresh milk, the taste innovation of normal temperature yogurt, etc. On a quarterly basis, the liquid milk revenue in 2021q4 was + 7.2% year-on-year, and the growth rate was higher than that in Q3. The liquid milk revenue in 2022q1 was + 7% year-on-year, maintaining a steady growth.
In 2021, the income from milk powder and dairy products was 16.2 billion yuan, a year-on-year increase of + 25.8%. Among them, the cheese revenue exceeded + 150% year-on-year, and we judged that the revenue was about 1.75 billion yuan. Excluding cheese, the growth rate of milk powder revenue is about + 19% year-on-year. If Westland is excluded, we judge that the growth of Yili’s own milk powder business revenue is faster. In 2021, Yili infant milk powder market accounted for + 1.4pps to 7.4%, ranking second in the industry. Thanks to the rapid growth of mother infant channel sales and product formula upgrading, jinlingguan’s revenue exceeded 10 billion yuan. The tender offer for Aoyou was completed in March 2022, with a final shareholding of 59.17%, which will be included in the consolidated statements in April. In 2022, with the cooperation of the two countries, the milk powder business will become the second development curve of Yili. Yili cheese business is growing rapidly, with the help of product innovation reserves and the innovation of incentive mechanism of subsidiaries. It is expected to maintain a rapid growth trend in 2022.
In 2021, the revenue of cold drink business was 7.16 billion yuan, with a year-on-year increase of + 16.3%. The volume and price rose together, and the upgrading of product structure was the main driving force for growth.
Steady improvement of profitability
In terms of profitability, Yili’s return to parent net interest rate in 2021 was 7.9%, a year-on-year increase of + 0.57pcts. Among them, the gross profit margin was + 0.47 PCTs year-on-year, the sales expense rate was + 0.04 PCTs year-on-year, and the management expense rate was -0.19 PCTs year-on-year. In 2021, although the price of raw milk increased year-on-year, the company still achieved an increase in gross profit margin, thanks to the upgrading of product structure and ASP. The sales expense rate increased steadily, slightly, as Q4 confirmed more investment in the Winter Olympics. In 2022q1, Yili’s net interest rate was 11.4%, year-on-year + 1pcts. Among them, the gross profit margin was + 2.09pcts year-on-year, the sales expense rate was + 1.18pcts year-on-year, and the management expense rate was -0.22pcts year-on-year. In 2022q1, the gross profit margin increased significantly. We expect the price of raw milk to fluctuate at a high level throughout the year, and the increase trend of Yili’s gross profit margin will continue throughout the year; The increase in sales expense rate is expected to be stable and controllable throughout the year due to the investment in the Winter Olympic Games. Since Q2, Aoyou will be consolidated, which is expected to further increase the overall net interest rate.
Investment advice
Yili achieved performance that exceeded the target at the beginning of the year in 2021 and put forward a faster growth target for 2022. 2022q1 made a good start under the pressure of the epidemic, which strengthened our confidence in Yili’s performance in 2022. Considering the consolidation of Aoyou, the revenue forecast for 202223 will be raised from 123.8/137.4 billion yuan to 131.1/147.6 billion yuan, the net profit attributable to parent will be adjusted from 11.2/13.2 billion yuan to 11.1/13.2 billion yuan, and the revenue forecast for 2024 will be increased by 161.7 billion yuan and the net profit attributable to parent will be 15.3 billion yuan. From 2022 to 24, EPS was 1.74/2.06/2.39 yuan respectively, corresponding to the closing price of 38.47 yuan on 2022 / 4 / 29, and P / E was 22 / 19 / 16 times respectively, maintaining the buy rating.
Risk tips
The risk of epidemic expansion, sharp fluctuations in raw milk prices and food safety incidents.
