Yili Co. (600887) Company dynamic comment: Market share continues to increase and platformization strategy advances steadily

Yili Co. (600887) Company dynamic comment: Market share continues to increase and platformization strategy advances steadily

Revenue grew steadily, and market share continued to increase.

The average value of 1-3Q19 liquid milk and milk powder business was double-digit growth, of which the growth rate of basic white milk was double-digit.

Yili room temperature, milk powder market share continued to increase, 1-3Q19 market share was 38.

8%, 6.

3%, an increase of 2,0.

5 points.

At present, the per capita consumption of dairy products in third- and fourth-tier cities continues to increase; the average per capita consumption of dairy products in all tier cities has significantly increased under the consumption upgrade, and the dairy industry is still in the stage of volume and price improvement.

In the future, it will sink further through the company’s channels, the product structure will continue to be upgraded, and Yili’s revenue will continue to grow steadily.

Raw milk is still in the upward cycle. Yili has laid out ahead of schedule and has sufficient upstream milk sources.

The profitability of pastures has deteriorated for 15 years since the supply of raw milk, and cows have begun to reduce production capacity due to stricter environmental protection, and it usually takes about 2 years for dairy cows to fill stalls. The demand for dairy products has maintained a steady growth trend.

Under the weak balance of supply and demand, raw milk is in the growth cycle, and the upward cycle of raw milk is expected to continue until 2021.

Since 2H18, Yili has long-term strategic cooperation with medium and large-scale ranches for many years to ensure the supply of milk sources and a large accumulation of upstream milk sources.

Raw milk has a downward pressure on the gross profit margin, and the expense ratio may decline due to scale effects.

Under the upward cost, the company can ease the cost pressure through structural upgrades and reduce promotions. It is expected that the gross profit margin will remain under pressure next year.

Expected in 2019 under the effect of scale, the expense ratio will exceed slightly.

In 2020, the company will still need to spend on brand building such as the Winter Olympics; new products such as water and light milk drinks will still need to be promoted; new markets will still need to be expanded on expenses. It is expected that the amount of expenses in 2北京桑拿洗浴保健020 will still lead to expenses.Still high.

Steady advancement of platformization strategy, new business and new markets are still in the cultivation period.

The company is still steadily advancing diversification and development strategies: (1) Diversification strategy: launch of Ikehuoquan, Wei Kezi milk tea, Yiran, etc. gradually enter the mineral water, milk tea, milk mineral light drinks industry, of which IkehuoquanhuiPiloting in the north first; Wei Kezi milk tea is operated through the Liquid Milk Division.

At present, the preliminary construction of the Kangyin Division is completed, and the new business is still in the growth period, and may have some revenue contribution in the future.

(2) Strategic strategy: Westland has a trading platform, raw milk reserves, butter and cream and other high value-added products. The acquisition of Westland can synergize with Yili’s proprietary business; the ice cream business in the Southeast Asian market currently has two Thai brands, Chomthana and JOYDAY.In the future, the ice cream factory will be put into production, and it can gradually spread from Indonesia and Thailand to other neighboring countries.

The company continues to advance its platformization strategy, and its core competitiveness can be further enhanced in the future.

Profit forecast and investment advice: EPS is expected to be 1 in 19-21.

18, 1.

28, 1.

47 yuan, an increase of 11 in ten years.

4%, 8.

7%, 15.

3%, the PE corresponding to the latest closing price is 25, 23, 20 times.

Yili integrates its brand and channel advantages, continuously improves its market share, and further consolidates its leading position.

Considering that Yili’s diversified layout can be expected to become a major platform for healthy food, it is worthy of long-term layout, and it still gives a “recommended” rating.

Risk warning: the risk of rising raw material prices, food safety incidents.