\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 887 Inner Mongolia Yili Industrial Group Co.Ltd(600887) )
Key investment points
Event (1): the company released its annual report for 2021, and achieved revenue of 110.6 billion yuan in the whole year, a year-on-year increase of + 14.2%; The net profit attributable to the parent company was 8.7 billion yuan, a year-on-year increase of + 23.0%; Deduct non net profit of RMB 7.94 billion, a year-on-year increase of + 19.9%
Event (2): the company released the first quarterly report of 2022 and realized a revenue of 31.05 billion yuan in 22q1, a year-on-year increase of + 13.5%; The net profit attributable to the parent company was 3.52 billion yuan, a year-on-year increase of + 24.3%; Deduct non net profit of RMB 3.29 billion, a year-on-year increase of + 25.2%.
The liquid milk business grew steadily and the contribution of product structure was obvious. The company’s 21q4 revenue was 25.59 billion yuan, a year-on-year increase of + 10.7%, and the net profit attributable to the parent was 760 million yuan, a year-on-year increase of – 27.8%, deducting 400 million yuan of non net profit, a year-on-year increase of – 51.5%.
1) category: normal temperature milk grew steadily, and the cheese milk powder business continued to perform well. In 21 years, liquid milk, milk powder and dairy products, cold drinks and other products achieved revenue of 84.9/162/72/200 billion yuan respectively, with a year-on-year increase of + 11.5% / 25.8% / 16.3% / 1.9%. Liquid milk maintained steady growth. In the growth of liquid milk, sales volume, structural upgrading and average price increase contributed 6.7% / 2.2% / 2.7% respectively. Normal temperature liquid milk maintains the leading position in the industry, with a market share of nearly 40%. Yili pure milk, Jindian pure milk and amuxi normal temperature yogurt series have an annual sales scale of more than 20 billion yuan. The milk powder and cheese business continued to perform well. On the milk powder, the annual sales revenue of jinlingguan exceeded 10 billion. According to Nielsen zero research data, the company’s retail share of infant powder and adult powder was + 1.4pct and + 2.2pct respectively year-on-year. Cheese achieved more than 150% revenue growth, and the market share increased significantly by 6.3pct. The revenue of 22q1 liquid milk, milk powder and dairy products, cold drinks and other products increased by 7% / 35% and 36% / 262% respectively. Under the epidemic, the just needed consumption attribute of dairy products was prominent and the growth was steady.
2) in terms of split volume and price: the sales volume of liquid milk, milk powder and dairy products, cold drinks and other products in 21 years were + 6.8% / 10.3% / 9.6% / 205% respectively, and the price was + 4.5% / 14.1% / 6.1% / – 15.4% year-on-year respectively. Most categories have achieved both volume and price increases.
3) sub channels: in the past 21 years, the sales revenue of distribution and direct channels reached 105 / 3.5 billion yuan respectively, with a year-on-year increase of + 13.8% / 12.2%. 22q1 distribution and direct marketing channels were + 13.8% / 8.1% year-on-year respectively. Under the background of repeated and serious epidemic, the company actively expands new channels such as community, B2C and o2o to meet the market demand in the sealed area; Timely and efficient adjustment of strategies and handling of passes ensure smooth logistics, with limited overall impact.
4) by Region: in 21 years, North China, South China, central China, East China and other regions achieved revenue of RMB 31.4/27/197191/11.3 billion respectively, with a year-on-year increase of + 11.8% / 14.3% / 18% / 12.9% and 12.3% respectively.
The profit margin has been steadily improved, and the product structure has been upgraded to effectively hedge the rising pressure of raw milk costs. The net interest rate for the whole year of 21 was 7.9%, with a year-on-year increase of + 0.6pct, and the profit margin increased by 0.5pct every year. The goal was gradually realized. Due to the adjustment of accounting standards, the comparable gross sales difference was 13.2%, with a year-on-year increase of -0.6pct, mainly due to the influence of the base of strong dynamic sales and low cost investment in 2020. The management expense ratio was 3.8%, with a year-on-year increase of -1.2pct, mainly due to the reduction of amortization expenses of equity incentive + dilution of depreciation and other costs due to scale effect. The R & D and financial expense rates are 0.5% / 0.0% respectively. The net interest rate of 21q4 was 3%, with a year-on-year decrease of -1.6pct, mainly due to the impact of pre Winter Olympic publicity expense investment + provision for impairment of 310 million yuan of Westland intangible assets. 22q1 net interest rate reached an all-time high of 11.3%, with a year-on-year increase of + 1.0pct; Deduct non net interest rate of 10.6%, year-on-year + 1.0pct. The gross profit margin is 34.4%, the sales expense rate is 18.1%, and the gross sales difference is 16.3%, with a year-on-year increase of + 0.1pct. The rates of management, R & D and financial expenses were 3.3% / 0.4% / – 0.4% respectively, with a year-on-year increase of – 1 / + 0 / – 0.3pct.
The competition of liquid milk is slowing down, and the coordinated development of milk powder M & a Aoyou can be expected, waiting for the continuous realization of the increase of net interest rate. We believe that the logic of increasing the company’s net interest rate every year will continue to be realized. In terms of cost, at present, the price of raw milk has decreased slightly from a high level. It is expected to maintain a tight balance this year, and the overall upward pressure has slowed down. Yili, as a leading company, has a strong control over the upstream milk source, which makes its performance more stable on the cost side. At the same time, since this year, the channel feedback industry cost has been relatively rational, the offline promotion cost of Yili Mengniu shuanglongtou has been slightly reduced, and the industry competition has remained rational. In terms of milk powder business, the company has completed the tender offer for Aoyou. The coordinated development of milk powder import product line, mother and baby channel layout and global supply chain is worth looking forward to. The momentum of milk powder and cheese business as the second growth curve is gradually emerging.
Profit forecast and investment suggestions: Yili has entered the post 100 billion era and is optimistic about the continuous growth brought to the company by the extension of categories such as milk powder and cheese and the improvement of profit level brought by the improvement of normal temperature liquid milk pattern. According to the latest performance of the company, considering that Aoyou will start to consolidate its performance in April, we raised the company’s profit forecast. It is estimated that the company’s revenue will be 129.7/144.8/158 billion yuan from 2022 to 2024, with a year-on-year increase of 17% / 12% / 9%, the net profit attributable to the parent company is expected to be 10.65/124.1/14.33 billion yuan, with a year-on-year increase of 22% / 17% / 16%, EPS is 1.66/1.94/2.24 yuan respectively (1.66/1.93 yuan in the previous 22-23 years), and the corresponding PE is 23x, 20x and 17x respectively, Maintain the “buy” rating.
Risk tips: intensified industry competition, risk of food safety events and price fluctuation of raw materials.
