Yili (600887) 2019 Interim Report Comments: The core value of short-term operating pressure remains unchanged

Yili (600887) 2019 Interim Report Comments: The core value of short-term operating pressure remains unchanged

Core point of view In 2019H1, the income / net profit attributable to mothers increased by 14% / 10%.

The short-term 深圳丝袜会所 fluctuations will not change the company’s core competitiveness, and will continue to move towards the health food giant for a long time.

   Performance review: 2019H1 revenue / net profit increased by 13 respectively.

6% / 9.

7%, of which 2019Q2 revenue / net profit increased by 9 respectively.

4% / 11.

8%, slightly lower than market expectations.

In 2019H1, the company achieved revenue of 45 billion yuan, an increase of 13%.

6%, net profit attributable to mother is 3.8 billion, an increase of 9%.

7%; of which, the company achieved revenue of 21.9 billion in the second quarter of 2019, an increase of 9%.

4%, net profit attributable to mother 1.5 billion, an increase of 12%, revenue growth was lower than market expectations.

The company’s gross profit margin for 2019H1 is 38.

6%, basically flat; sales expenses 四川耍耍网 injected 24.

7%, down by 1.

0Pct, mainly due to reduction in advertising and marketing expenses; management expenses and R & D expense ratio4.

7%, the same increase of 1.

Two.

In summary, 2019H1 net profit is 8.

4%, the same minus 0.

3Pct.

   Business analysis: steady revenue, enhanced competition, follow-up promotions, and a fall in advertising rates.

On the revenue side, 2019H1 revenue increased by 13 as well.

6%.

Preliminary observation: ① Liquid milk income increased by 13.

2%, of which the core Anmuxi increased by about 20%, Jin Dian increased by about 17%, industry competition intensified, the company’s Q2 growth rate increased earlier than Q1, but still maintained a large and steady growth.

② Cold drinks increased by 15.

4%, growth accelerated.

③ Milk powder income increased by 13.

4%, a growth rate of 2018H1 (27.

3%) Obviously, the main reason is that the birth rate has dropped, and the growth rate of the industry has obviously increased to single digits.

In terms of gross profit margin, the gross profit margin of H2 in 2019 is basically flat, among which the gross profit margin of Q2 decreased by 1.

4Pcts, mainly because the cost of raw milk increased by 6%, and the increase in sales increased its price by 1% -2%.

2019Q2 sales expense ratio is 25.

3%, down by 3.

1Pcts, mainly due to the significant decrease in advertising expense rate in the high base of 2018H1.

In addition, the newly established international business department of Q2 Company has increased the salary of employees, etc. Therefore, the salary of personnel has increased significantly, which has affected the sales and management expense ratio.

   Future outlook: short-term fluctuations will not change the core competitiveness, long-term march toward the health food giant, and the core value will be prominent.

  2019H1 company’s room temperature liquid milk market share also increased2.4 pieces, of which the room temperature yogurt market share also increased by 5.

8Pcts, the market share continues to grow, and the leading position continues to strengthen.

We make a judgment. Although the short-term industry still maintains a stalemate competition, the company has obvious competitive advantages in terms of brands and channels. Changes in short-term revenue do not represent changes in core competitiveness.

In the long run, the company has the expectation to become a health food giant, and it will continue to launch non-dairy beverages such as dairy milk beverages Yiran, ready-to-drink coffee St. Ruisi, and it is expected to maintain a long and steady growth in the future.

In addition, in the company’s equity incentive budget, the company’s assessment target is that the company’s deducted non-net profit compound growth rate will not be less than 8% in 2018-2023 (it is expected that the compounded net profit compound growth rate will not be less than 7%)The bottom line for the company’s future growth.

   Risk factors: food safety risks, policy risks, and risk of declining industry prosperity.

   Investment suggestion: Maintain the company’s EPS forecast for 2019-2021 to 1.

17/1.

36/1.

55 yuan, the company’s current price corresponding to PE is 25/21/19 times, maintain “Buy” rating.