Yili (600887): Accelerate market share, increase profits, steadily increase profits, and tap the value of Chenghe

Yili (600887): Accelerate market share, increase profits, steadily increase profits, and tap the value of Chenghe

Event: The company released a quarterly report, the company’s revenue was 23.1 billion, an increase of 17.

89%, exceeding market expectations, with a profit of 22.

76 trillion, a growth rate of 8.

36%, in line with market expectations.

Revenue: 19Q1 revenue was 23.1 billion, an increase of 18% year-on-year, mainly due to the continued sinking of channels + product structure upgrades, leading barriers deepened, and the city’s share of the market accelerated.

1) According to product breakdown, 19Q1 liquid milk (room temperature + low temperature) revenue was 18.9 billion, accounting for 82%. According to Nielsen data, the room temperature market share was 38.

8%, an increase of 3 per year.

With zero digits, double-digit income is expected to grow rapidly; the share of low-temperature cities is 15.

7%, down by 1 each year.

Three units, mainly due to the fierce competition in the low-temperature industry, the company’s low-temperature revenue is expected to increase by a small amount.

Milk powder and dairy products income 25.

500 million, accounting for 11%, the growth rate is expected to be a small double value, according to Nielsen data, Yili milk powder market share of 6.

3%, a year increase of 0.

5 units.

(Biostime 19Q1 milk powder revenue growth rate -0.

3%, according to Nielsen data 19M3 rolling December market share 5.

9% over the same period in 2018 5.

8% high.

1%, it can be speculated that the industry growth rate is obvious, Yili’s market share increased by 0.

5ppt is not easy).

According to our grassroots research, it is estimated that the company’s infant milk powder revenue will account for 70%, the large single product gold crown will account for 60-70% of milk powder revenue, and the growth rate in 19Q1 is expected to be 30%.Enhance brand power.

The income of middle-aged and elderly milk powder accounts for 30%, which is in line with the aging of the population. According to a grassroots survey, Yili’s market share of middle-aged and elderly milk powder is relatively high, and the sales volume of Supermarket’s super heap is better than expected.

Cold drink 19Q1 revenue was 1.5 billion, accounting for 7%.

2) From the perspective of the contribution of revenue growth, sales volume contributes 10%, structure contribution 5%, and unit price (price increase or purchase gift attenuation) contributes 2%.

3) From the perspective of sales model, the distribution income is 221.

800 million, accounting for 96%, direct sales income 8.

3.2 billion, accounting for 4%.

The company’s distribution is mainly based on the preliminary management of dealers, which is good for channel management, development and sinking.

4) In terms of regional distribution, North China earns 69.

700 million, accounting for 30%, South China’s revenue is 54.

3.6 billion, accounting for 24%, 106 in other regions.

100 million, accounting for 46%.

4) From the perspective of volume and price structure breakdown, gross profit margin: costs have increased slightly, product structure upgrade has accelerated, and buying gifts have remained basically the same.

1Q1 gross profit margin 39.

95%, increase by 1 every year.

At 15ppt, we analyzed the increase in gross profit margin in the first quarter, mainly due to the acceleration of the upgrade of product structure. Anmuxi, Jindian, Jinlingguan and other large items with high interest rates continued to maintain 30%, 20%, and 30% revenue growth.

1Q1 company raw milk purchase price 3.
89 yuan / kg, previously a modest increase of 5-6%, and a small number expected in advance.
As raw milk funding attempts to consume upstream dairy products, buying gifts are expected to continue to decline.

The possible costs of direct price increases, the company’s cost pressure is mainly digested through product optimization and upgrading.

Profit side: The sales expense ratio and the management expense ratio increase, and the gross sales gap is the same as last year.

The company’s 19Q1 gross sales difference was 15.

83%, unchanged from 2018Q1.

The company’s selling expense ratio is 24.

12%, increase by 1 every year.

15ppt, we analyze the expected expenditure is increased advertising costs, large single product + traffic hit variety show, sponsorship increased in the first quarter.

At the same time, he is an offline channel pioneer, superstore stacking and merchandising, increased sales personnel, increased channel sinking and increased marketing activities, leading to increased channel costs.

The company’s 19Q1 management expense ratio was 4.

09%, a year to raise 0.

38ppt, mainly due to the newly established health drinks division + cheese division, the increase in management staff and expansion, gradually looking at the estimated management expense rate is relatively stable.

19Q1 research and development expenses of 92.38 million yuan, a net increase of 66.2 million yuan, each increase of 253%, mainly due to company surveys, tests, design expenses increased.

The decrease in financial expenses was mainly due to the increase in interest income included in financial expenses in the current period.

Cash flow: The company’s net cash flow from operating activities in 19Q113.

500 million, before -19.

17%, net cash flow from investing activities is $ 1.73 billion, + 25% per year.

Net cash flow from financing activities 24.

4 trillion, a net increase of 43 trillion, the cash received from issuing ultra-short-term financing bonds and medium-term notes increased.

Notes and bills receivables increased by 17.

500 million, +36 in ten years.

5%, mainly due to the increase in sales receivables and e-commerce receivables in this period, and the increase in the sales business 深圳桑拿网 of dealers using bank acceptance bills for settlement.

Advance payment 21.

96 trillion, +50 for ten years.

43%, mainly due to the increase in prepaid materials and advertising marketing in this period.

The government subsidies received during the period decreased.

Yili’s channel and brand barriers have been strengthened through time deduction.

Channels, brands, and product development are the troika driving the enhancement of leading barriers. We believe that Yili’s brand and channel barriers are gradually increasing. One of the future performance drivers is the continuous introduction of new explosive product relays.

Through outbound mergers and acquisitions to subdivide brand products or research and development to promote a number of large single product portfolios that are expected to grow to 2 billion grades, the smooth relay of An Muxi, the growth rate of Jindian.

Second, after the market share increased, the leading bargaining power gradually increased and gradually entered the period of profit release.

In the new round of mild milk growth cycle, the market share of Illimon cattle increased gradually and the margins gradually decreased. Buying gifts decreased and the sales expense ratio decreased. It will enter the profit release cycle. Depending on the timing of the distribution incentive plan, we expectIn 2020, if the share repurchase progress is fast, it is expected to be realized in advance in 2019.

From the perspective of competing products, in the context of the reform of state-owned enterprises, COFCO requires higher quality growth of Mengniu. The proportion of profit assessment has gradually increased, which has also driven Mengniu to ease competition. In the long term, 2019 is the turning point year, and dairy companies will enter profit release.period.
Profit forecast and investment advice: We expect the company’s revenue to be 904 in 2019-2021.

4, 1000.

3, 1109.

2 ten percent, an increase of 13 per year.

7%, 10.

6%, 10.

9%, according to the development trend of the industry and the company’s potential competitiveness, the five hundred billion yuan is currently expected to be realized.
The product structure upgrade is accelerating. Raw milk is expected to grow moderately, and the purchase gift is expected to decline. The gross profit margin is expected to be stable overall.
The industry is fiercely competitive. It is expected that the selling expenses will increase, and the overall expense ratio will be uncertain along with the changes in the industry competition. It is expected to increase steadily.

We expect net profit at 72.


5, 91.

90,000 yuan, an increase of 13%, 15%, 10% in ten years.

Corresponding PE is 25X, 22X, 20X.

Long-term bullish on the company, maintain BUY rating and continue to recommend.

Risk reminders: Macroeconomic fluctuations, increased competition in the industry, lack of large single product relays, and food safety risks.

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