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Find the Yili incremental logic from the business line split

Westdollar.com March 14, 2019 00:00 Oriental Securities Ye Shuhuai View original PDF

Yili shares (600887)

Core view

The high-end drivers have all been upgraded, and the channel has been steadily increasing. The company's revenue is leading, its leading position is stable, its performance is mainly from liquid milk, and its income and profit structure is relatively stable. From the main business: 1) Liquid milk: steady sales growth, obvious structural upgrading trend, key and high-end varieties maintained rapid growth, 18 years of company liquid milk revenue increased by 17.8%, Anmuxi, Jindian growth rate of 35 More than %, more than 20%; the growth rate of basic white milk income has increased, 18 years has been close to double digits; affected by the rapid development of normal temperature yogurt, the growth rate of low temperature yogurt has slowed slightly. We believe that the future growth of the company's liquid milk is mainly due to the sinking of channels in the low-tier cities, the seizure of competing products and the upgrading of categories. 2) Milk powder: Consumer demand is relatively rigid and belongs to the stock market. It is expected to maintain double-digit growth, and the share of the registration system dividend is expected to continue to increase. However, due to the decline in the number of new students, the growth rate may slow down in the short term. 3) Cold drinks: The structure continued to upgrade to the mid-to-high end, and the revenue and gross profit margin increased steadily. The acquisition of the largest ice cream company in Thailand is expected to contribute to the increase in performance and accelerate the deployment of the Southeast Asian market.

The gap between supply and demand narrowed domestic milk prices moderately, and the gross profit margin may be under pressure. With the recovery of dairy consumption and the pressure of environmental protection, the number of domestic dairy cows continued to decline, and the milk price cycle gradually entered a tight balance between supply and demand. Domestic milk prices have entered a modest upward trend since the second half of the year. It is expected that this trend will remain in 19 years. The international raw milk supply is still relatively abundant, and the supply-side surplus is still expanding. It is expected that the import price of large-sized powder will remain low. . We judge that Yili's 18-year milk price will increase by about 3%. The cost pressure of upstream raw milk in 19 years may offset the dividend brought by structural upgrading, resulting in a slight decline in the company's gross profit margin.

The milk-making enterprises 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, the company's public announcement fee increased significantly in 18 years, and the sales expense ratio increased by 2.04pct to 24.85%. Considering that Mengniu is catching up with Yili at this stage, we expect that the company's sales expense ratio will not drop significantly in the short term. From the online and offline perspectives, due to the upward impact of the milk price, the company's offline promotion may be slightly reduced in 19 years; but under the strong brand promotion appeal, the online advertising promotion rate is expected to remain high.

Financial forecasting and investment advice

We predict that the company's earnings per share for 2019-2021 will be 1.19, 1.34, and 1.58 yuan respectively. Combined with the valuation of comparable dairy products, we believe that the current reasonable valuation of the company is 27 times the price-earnings ratio of 19 years, and the corresponding target price is 32.13 yuan. , the first to give a buy rating.

risk warning

The sinking of the channel is less than the expected risk, the price of raw milk continues to rise, and the competition in the industry exacerbates the risk.

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Erie's fundamental data
  • Total share capital of 6.078 billion shares
  • Circulating shares of 6.040 billion shares
  • Earnings per share 1.06 yuan
  • Undistributed profit per share 2.58 yuan
  • Net assets per share 4.59 yuan
  • ROE 24.33%
  • Net profit 643,974,600
  • Net profit growth rate 7.31%
Yili Investment Rating
Overall rating within one month
Overall rating in March
Statistical period Buy Overweight neutral Reduction Sell total
Within one month194000twenty three
Within three monthstwenty three400027
Within six months33900042
Within a year451200057
Yili stock earnings forecast
                                index 2017A 2018E 2019E 2020E
Earnings per share (yuan) 0.99 1.06 1.17 1.34
Net profit (100 million yuan) 59.99 64.37 71.17 81.63
name Quote change Number of research reports Institutional investment rating (nearly six months)
Buy Overweight neutral Reduction Sell
Deep Grain Holdings 8.10% 0 0 0 0 0 0
Qianhe Weiye 6.38% 17 3 14 0 0 0
*ST Longli 4.95% 0 0 0 0 0 0
Xinghu Technology 4.91% 0 0 0 0 0 0
Anji Food 4.66% 0 0 0 0 0 0
Black sesame 4.52% 0 0 0 0 0 0
Tianbao Food 4.10% 0 0 0 0 0 0
West King Food 4.01% 8 6 2 0 0 0
Qiaqi Food 3.93% 16 10 6 0 0 0
Deep grain B 3.93% 0 0 0 0 0 0
Nutrient drink 3.79% 7 3 3 1 0 0
Guangzhou Restaurant 3.72% 12 7 5 0 0 0
Bright dairy industry 3.60% 3 0 3 0 0 0
Anjing Food 3.57% 18 11 7 0 0 0
Keming face 3.10% 6 2 4 0 0 0
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Data Sources:Eastern Fortune Choice Data