Event
The company released its semi-annual report for 2021: 2021H1's income was 45.91 billion yuan, an increase of 22.3% over the same period last year; its net profit was 2.95 billion yuan, an increase of 143.2% over the same period last year; and earnings per share was 0.75 yuan.
Brief comment
The performance in the first half of the year exceeded expectations and achieved a good start to the 14th five-year Plan. In the first half of 2021, 2021H1 earned 45.91 billion yuan, an increase of 22.3% over the same period last year. Although the epidemic repeatedly brought short-term challenges, the accelerated formation and development of national nutrition and health awareness stimulated dairy consumption and promoted the recovery and upgrading of the dairy industry. The company actively promotes brand upgrading, launches innovative products, and continues to improve its product portfolio to the middle and high end. From the perspective of various business sectors, 2021H1 Mengniu normal temperature liquid milk, low-temperature yoghurt and lactic acid bacteria beverages, fresh milk business actively promote product innovation, brand upgrading, channel intensive cultivation, driving the Group's liquid milk business revenue to increase by 21.1% year-on-year to 39.45 billion yuan, accounting for 85.9% of the income. The income of ice cream, milk powder and other (cheese) sectors was 30.05 trillion yuan, an increase of 34.8%, 11.6% and 98.2% over the same period last year.
Seizing the opportunity of industry growth after the epidemic, the business of room temperature, fresh milk and cheese increased significantly. (1) Room temperature: the growth of high-end brands accelerated, achieving the fastest growth rate in the past five years. 2021H1 room temperature liquid milk revenue grew by more than 20 per cent year-on-year, and its market share increased by 60 basis points to 28.8 per cent from the end of 2020. High-end products focus on upgrading and innovation, and the Dream cover series has led to a 40% increase in the Trensu brand. The product structure of pure milk has been continuously optimized, with an increase of more than 20% year on year. (2) fresh milk: revenue increased by more than 120% compared with the same period last year, market share increased to 13.1% from 11.1% at the end of 2020, and daily growth exceeded 120%. In terms of new products, daily fresh A2 fresh milk, 4.0g milk protein fresh milk and mini milk tea were launched in the first half of the year. (3) Cheese: the Eichen Chenxi organic cheese bar with zero addition concept and the new leisure cheese products at room temperature were marketed. at the same time, Miaokelan multi-directional additional strategic investment was completed in July, and the leading position of cheese category was initially established. (4) milk powder: the revenue of Yashili adult powder has increased by more than 90%, becoming a new business growth point. Bellamy accelerated the layout of domestic cross-border channels, and the market share of cross-border e-commerce channels increased in the first half of the year.
The cost of raw milk is under pressure to rise, and the cost of the company returns to stability. 2021H1's comprehensive gross profit margin was 38.2%, down 0.8% from a year earlier, mainly due to the rising cost of raw milk.
The net interest rate was 6.4%, an increase of 3.2% over the same period last year, mainly due to the decline in the rate of sales expenses and management expenses. In the first half of the year, the company's sales expenses and management expenses were 128.9 / 1.63 billion yuan respectively, accounting for 28.1% of revenue, down 2.5 percentage points from the same period last year.
The company puts forward a five-year plan to create a new Mengniu. In 2020, Mengniu flexibly adjusted its business strategy to upgrade its corporate culture system, formulated a five-year plan, and took "create a new Mengniu in 2025" as a new slogan. The company mainly depends on endogenous growth, ordinary low temperature in the next 5 years as the core category, the growth rate will be maintained at a good level, category structure will continue to improve. According to the market potential and product strategy, the company has 41 production bases in the country in 2020, and one production base in Australia, New Zealand and Indonesia respectively, with an annual production capacity of 9.9 million tons, an increase of 400000 tons over the same period last year. With the reduction of the negative impact of the epidemic, the operating profit margin of comparable business in 2021 is expected to be higher than that in 2019.
Profit forecast: from 2021 to 2022, the company is expected to achieve an income of 885.2 yuan and 102.07 billion yuan, and a net profit of 53.2 yuan and 6.38 billion yuan, with a corresponding EPS of 1.35 yuan and 1.61 yuan per share, and a corresponding PE of 28x and 23x respectively.
Risk tips: food safety risk, dairy feed price rise risk, epidemic risk, management risk and so on.