Yili (600887): Large single product revenue growth rate and market share continue to increase

Yili (600887): Large single product revenue growth rate and market share continue to increase

Key points of investment: The growth rate of large single products is stable, and the market share continues to increase due to (1) the continued decline of third- and fourth-tier channels and the development of new channels such as convenience stores;Strawberry oat flavor, the launch of new mango passion fruit, orange pineapple, and the promotion of high-end products of Jindian Juanshan; (3) the market launch of the parent brand premium sour milk shake, and the coverage of plant selection channels, the room temperature of Yili in the first half of this yearThe market share of the products has continued to increase. It is expected that the revenue growth of Jindian will be> 17%, and the growth rate of Amex will be> 20%.

Raw milk cost pressure has slightly increased, and product upgrade mitigation partially affected the raw milk purchase cost of 19H1 company + 6%, slightly exceeding the initial expected increase of 3% to 5%. It is expected that continuous improvement of product structure can alleviate some of the impact.

Due to the 上海夜网论坛 increase in the cost of raw milk, the company’s purchase of gifts in Q1 has decreased, and the gross profit margin has also increased by +0 every year.

7ppt, entering Q2, benefiting from the impact of increased downward adjustments, the company’s cost back-feeding channels and the effect of discounts on competing products. Q2 overall purchase gift strength increased slightly from the previous month, but it is still controllable.

Judging from the announced purchase prices of raw milk in the main producing areas, the price of raw milk this year shows a trend of not off-season. It is expected that the stocking of downstream products will be held during the Mid-Autumn Festival and the National Day. The price of raw milk is expected to maintain a growth rate of> 5% this year.

This year’s increase in raw milk prices is mainly due to 武汉夜网论坛 (1) the continued slump in raw milk prices, which has led to cattle rushes affecting high-yield cows; (2) the grave environmental protection policies have led to the closure and withdrawal of some ranches, and few more ranches;(3) The increase in the proportion of downstream high-end products has increased the demand for raw milk.

At present, some large ranches have plans to expand production, and they will initially increase their contribution in the second half of next year.

Under the high base last year, costs could be controlled under the influence of the World Cup. Last year, the company’s Q2 sales expense ratio reached 28.

35%, while the normal level is about 25%. This year, it is expected that Q2 will be placed online and offline at the expense rate. There will be about 3% of the cost space each time. The traditional transmission efficiency such as CCTV will be reduced. The company is also actively looking for products.The marketing of intermediate resources, diversified and differentiated business product marketing, and improving the efficiency of the use of expenses.

Earnings forecasts and estimates We expect the company’s operating income for 2019-2021 to be 894.

300 million / 992.

900 million / 1,073.

500 million, each year +13.

24% / 11.

02% / 8.

12%, net profit to mother is 71.

300 million / 81.

200 million / 92.

1 trillion each year +10.

5% / 14.

0% / 13.

4%, corresponding to EPS 1.

17 yuan / 1.

33 yuan / 1.

51 yuan, the company is currently expected to correspond to 19/20 PE of 28X / 24X, maintain “Buy” rating.

Risk reminder: Raw milk price rises more than expected / Intensified competition among dairy companies