20230221-招银国际-伊利股份-600887.SH-Shares_could_rally_in_relief_on_back_of_an_in_line_4Q22_4页_942kb

Yili Industrial (600887 CH) Summary

Core Content

This document provides an equity research update on Yili Industrial (600887 CH), highlighting its potential for a stock price rally due to a recovery in the consumption sector. The report suggests that Yili is currently undervalued relative to its peers, who have already been re-rated on reopening sentiment. The research analyst recommends a "BUY" rating with a target price of RMB44.0, which is an increase from the previous target of RMB41.5.

Main Points

4Q22 Performance

• Revenue Growth: Expected to grow 6% YoY to RMB27bn.
• Momentum: Weak in October and November, but a more noticeable recovery started in December.
• GPM: Likely to show a QoQ improvement due to increased gifting demand.
• Opex Ratio: Expected to decline YoY due to less eventful spending compared to last year's Winter Olympics.
• NPM: Flattish at 8% for 2022.

2023E Outlook

• Revenue Growth: Expected to increase slightly from 2022E, driven by accelerated liquid milk sales.
• IMF Business: High growth, but from a high base, with a 25% YoY growth forecast.
• Market Share: Yili's market share increased from 9% in 2021 to 11% by end-2022.
• Low-Temp SKU: Expected to maintain 25–30% YoY growth, with summer temperature being a key swing factor.

Earnings Change

• 2022E Estimates: Unchanged.
• 2023E GPM: Lowered by 0.4pp, resulting in a 4.2% cut in net profits.
• Net Margin: Expected to expand by an average of 0.5pp over 2023–2024E, aligning with management expectations.

Valuation

• Target Price (TP): RMB44.0, based on a 25.0x rolled-forward end-2023E PE, benchmarking to its 3-year average.
• P/E Ratio: 17.8 for 2023E and 15.2 for 2024E.
• P/B Ratio: 3.6 for 2023E and 3.3 for 2024E.
• Dividend Yield: 4.3% for 2023E and 5.0% for 2024E.
• ROE: Expected to increase from 19.0% in 2022E to 23.6% in 2024E.

Key Financial Data

Revenue (RMB mn)

• FY20A: 96,886
• FY21A: 110,595
• FY22E: 121,017
• FY23E: 133,919
• FY24E: 147,030

Net Income (RMB mn)

• FY20A: 7,078
• FY21A: 8,705
• FY22E: 9,641
• FY23E: 11,491
• FY24E: 13,453

EPS (RMB)

• FY20A: 1.2
• FY21A: 1.4
• FY22E: 1.6
• FY23E: 1.9
• FY24E: 2.2

Net Margin

• FY22E: 8.0%
• FY23E: 8.6%
• FY24E: 9.1%

Share Performance

• 1-month return: -2.5%
• 3-month return: 8.0%
• 6-month return: -11.8%

Stock Data

• Market Cap: RMB197,087 mn
• Average 3-month Turnover: RMB1,259 mn
• 52-week High/Low: RMB41.2 / RMB24.5
• Total Issued Shares: 6,399 mn

Shareholding Structure

• HKSCC: 17.9%
• Hohhot Investment Co.: 8.4%
• Pan Gang: 4.5%

Key Ratios

• Gross Margin: 31.3% (FY22E), 32.4% (FY23E), 33.3% (FY24E)
• Operating Margin: 8.3% (FY22E), 9.4% (FY23E), 10.1% (FY24E)
• Pre-tax Margin: 9.3% (FY22E), 10.0% (FY23E), 10.7% (FY24E)
• Net Margin: 8.0% (FY22E), 8.6% (FY23E), 9.1% (FY24E)
• ROE: 23.3% (FY20A), 19.0% (FY22E), 21.4% (FY23E), 23.6% (FY24E)

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over next 12 months.

Analyst Information

• Analyst: Joseph Wong
• Contact: (852) 3900 0838 | josephwong@cmbi.com.hk

Disclaimer

• The report is for informational purposes only and not investment advice.
• CMBIGM does not provide individually tailored investment advice.
• There are risks involved in transacting in any securities.
• The information is based on publicly available data and may not be accurate or complete.
• CMBIGM is not a registered broker-dealer in the U.S. or Singapore and is subject to specific distribution rules in these jurisdictions.