Yili (600887) first report: Extending business lines to find Yili incremental logic

Yili (600887) first report: Extending business lines to find Yili incremental logic

The core point is that the high-end drivers have been upgraded, and the channels have been cultivated and shared.

The company’s revenue is leading, the leading is 杭州夜网 basically solid, its performance has mainly increased liquid milk, and its revenue and profit structure is relatively stable.

From the main business perspective: 1) Liquid milk: The sales volume has grown steadily, the structural upgrade trend is obvious, the key and high-end varieties have maintained rapid growth, and the company’s liquid milk revenue has increased 17 in 18 years.

The growth rate of 8%, Anmuxi and Jindian reached over 35% and over 20% respectively; the growth rate of basic white milk income has promoted improvement and has been close to double digits in 18 years; affected by the substitution effect of rapid development of room temperature yogurt, low temperature yogurt has increasedSlightly toxic.

We believe that the company’s liquid milk growth in the future is mainly due to the sinking of channels in low-tier cities, grabbing competing products and upgrading categories.

2) Milk powder: Consumption demand is relatively rigid. It belongs to the stock market, and strives to maintain double-digit growth. Expenditure under the registered dividend is expected to continue to increase.

However, due to the decline in the number of new students, the growth rate may improve in the short term.

3) Cold drinks: The structure continues to upgrade to the mid-to-high end, and the revenue and gross profit margin have steadily increased. The acquisition of Thailand’s largest ice cream company is expected to contribute to performance growth and accelerate the deployment of Southeast Asian markets to compete overseas.

The gap between supply and demand has narrowed, and domestic milk prices have risen moderately, with gross margins under pressure.

As the consumption of dairy products recovers and the number of domestic dairy cows continues to decline under the pressure of environmental protection, the milk price cycle has gradually entered a tight balance between supply and demand.

Domestic milk prices have entered a modest growth channel since the second half of 2018, and this trend is expected to continue in 19 years; while the supply of international raw milk is still increasing, and the supply-side surplus is still expanding. It is expected that the import price of bulk bales will remainLow.
We judge that Yili ‘s milk price cost increased by about 3% in 18 years, and the cost pressure of upstream raw milk in 19 years may offset the dividends brought by the structural upgrade, resulting in a slight decline in the company ‘s gross profit margin.

Dairy companies are competing with each other, and the cost is high.

Historically, the company’s sales expense ratio is mainly related to industry demand and raw milk prices.

Affected by the increase in advertising and promotion efforts, the company’s advertising expenses increased significantly in 18 years, and the sales expense ratio increased by 2%.

04pct up to 24.

85%.

Considering Mengniu’s pursuit of Yili at this stage, we do not expect the company’s sales expense ratio to decline significantly in the short term.

From both online and offline perspectives, due to the upward impact of milk prices, the company’s offline promotion efforts may have decreased slightly in 19 years; but under strong branding demands, online advertising 重庆耍耍网 costs are expected to remain high.

Financial Forecast and Investment Suggestions We predict the company’s earnings for 2019-2021 will be 1.

19, 1.

34, 1.

58 yuan, combined with the estimates of comparable companies in dairy products, we believe that the current company’s reasonable estimate is 27 times P / E ratio in 19 years, and the corresponding target price is 32.

13 yuan, the first buy rating.

Risks suggest that the channel sinks less than expected, the risk of raw milk prices continues to rise, and the risk of increased competition in the industry.