Key investment points
In the post epidemic era, the dairy industry is booming. The demand for dairy products after the epidemic is rigid and stable. In 2021, the sales of liquid dairy products in China increased by 4.4% and the penetration rate was 99.6%. The health awareness of consumers has been improved, and the per capita consumption of milk has increased to 14.4kg (YoY + 10.8%), which is still large. In 2021, the sales of normal temperature / low temperature dairy products were + 7.7% / – 6.1% year-on-year respectively. The volume and price of normal temperature milk increased simultaneously, and the permeability of low temperature milk decreased significantly.
The leading enterprise is constantly strong, and the upgrading of product structure is the main melody.
2021 ends smoothly and 2022q1 starts well. In 2021, Yili / Mengniu / Guangming / New Hope Dairy Co.Ltd(002946) revenue increased by 14.2% / 15.9% / 15.8% / 32.9% respectively. Among them, the completion rate of Yili / Guangming’s income target is 103.4% / 108.2%. Yili / Mengniu / New Hope Dairy Co.Ltd(002946) ‘s net profit attributable to parent increased by 22.98% / 42.57% / 15.23% respectively, and Guangming’s net profit attributable to parent decreased by 2.6% year-on-year under the pressure of rising costs. In 2022q1, Yili’s net interest rate returned to its parent company reached 11.3%, reaching a new high; Guangming has actively invested in brand building, and the performance at the performance end is better than that at the income end New Hope Dairy Co.Ltd(002946) optimized the product structure, and the growth rate of net profit attributable to the parent company reached 48.7%. According to the combination, the Spring Festival stock in 2021q4 + 2022q1 and 2022 is early, and the dairy enterprises adjust the cost rhythm. 2021q4 + 2022q1 Yili / Guangming / New Hope Dairy Co.Ltd(002946) net profit attributable to parent company + 10.2% / + 11.3% / – 13.3% year on year.
Raw milk prices are at a high level, and the gross profit margin of national dairy enterprises is significantly higher than that of regional dairy enterprises. In 2021, the price of raw milk has always been higher than 4.25 yuan / kg, and dairy enterprises are facing obvious cost pressure. In 2022q1, the price of raw milk is 4.22 yuan / kg, which is still high, but it has decreased by 1.7% month on month compared with 2021q4. We expect that the upward pressure on the price of raw milk will ease in 2022. Reducing the adjustment factors of accounting standards, the gross profit margin of leading dairy enterprises is significantly higher than that of regional dairy enterprises. 2021h2, Yili / Mengniu gross profit margin is 35.3% / 35.1%; Guangming / New Hope Dairy Co.Ltd(002946) gross profit margin is 19.3% / 23.3%.
The category structure of leading dairy enterprises has been significantly optimized and the leading strategy has been differentiated. In 2021, Yili officially stepped into the 100 billion camp and Jindian organic became the first brand of organic white milk; Room temperature yogurt continues to innovate, and high-end new products have gradually become the core driver of Amherst’s growth. Golden crown collar upgrade formula, while enabling the coordinated development of Aoyou. In 2021, Mengniu’s normal temperature business revenue grew strongly in double digits for five consecutive years, and the revenue growth rate of terensu reached 32.8%. Daily fresh language income increased by 80% at the same time. Regional dairy enterprises take advantage of low temperature to continue differentiated innovation. Guangming strengthened the development of new fresh milk products and proposed the strategy of “one city, one thing” for cold drinks New Hope Dairy Co.Ltd(002946) promote high-end upgrading in the field of fresh milk and make breakthroughs in functional, sugar control and other sub circuits.
Improve the cost delivery efficiency and improve the gross sales difference in 2022q1 month on month. Yili’s sales expense rate increased in the fourth quarter, mainly due to the increase of product publicity activities of the Winter Olympic Games. 2022q1 sales expense ratio is 18.1% (YoY + 1.2pct). Mengniu optimized the cost delivery efficiency, and the sales cost ratio of 2021h1 / H2 was -2.56 / -0.98pct year-on-year. Guangming 2022q1 has a sales expense rate of 13.3% (YoY + 0.77pct), and accelerates brand building through titled documentary programs New Hope Dairy Co.Ltd(002946) 2022q1 sales expense rate is 14.6% (yoy-0.64pct), which is related to the wrong date of the Spring Festival. In 2022q1, the price of raw milk tends to be stable, and the gross sales difference of dairy enterprises generally improves month on month.
Leading dairy enterprises have strong profitability, and the net interest rate of dairy enterprises in 2022q1 has increased year-on-year. In 2021h1 / H2, Yili achieved a net interest rate of 9.42% / 6.25% and Mengniu achieved a net interest rate of 6.42% / 4.92%. It showed strong anti risk ability under the epidemic situation. 2022q1 Guangming / New Hope Dairy Co.Ltd(002946) ‘s net profit attributable to the parent company increased by 0.86/0.42pct respectively year-on-year.
Key investment points: this round of epidemic mainly affects logistics and transportation, and the terminal demand is strong against the trend. Compared with national dairy enterprises, regional dairy enterprises with a larger proportion of regional revenue in East China will be more affected. Yili and Mengniu are strategically divided, the industrial competition pattern is optimized, and the cost rate shrinks. With the cost pressure slowing down in 2022, the leader will continue to upgrade the product structure and improve the profitability. It is recommended to Inner Mongolia Yili Industrial Group Co.Ltd(600887) , and it is recommended to pay attention to Mengniu Dairy industry.
Risk tips: the macro environment is not as expected, the impact of the epidemic is repeated, the logistics and transportation is blocked, the cost pressure of raw milk, and food safety problems
