21H1 achieved a high profit growth and its performance exceeded market expectations. According to the company's mid-21 report, 21H1 achieved a revenue of 45.905 billion yuan (yoy+22.3%), an increase of 15.2% over 19H1, and a net profit of 2.947 billion yuan (yoy+143.2%), an increase of 41.9% over 19H1.
Core point of view
The growth of white milk is strong, and the performance of fresh milk and cheese is eye-catching. 21H1's liquid milk, ice cream, milk powder and other businesses (cheese, etc.) achieved income of 39.45 billion yuan, 3 billion yuan, 2.55 billion yuan and 910 million yuan respectively, an increase of 21.1%, 34.8%, 11.6% and 98.2%, respectively. According to the category, normal temperature milk increased by 20% compared with the same period last year, and its market share increased by 0.6pct to 28.8%. Among them, the Dream cover series led to a 40% increase in Trensu, an increase of 20% in Mengniu pure milk, and a return to high single-digit growth in room temperature yoghurt. Low-temperature milk increased by 7% compared with the same period last year, significantly outperforming the industry, of which Youyi C and Crown Milk increased by 20% and 20% respectively. Fresh milk increased by 120% compared with the same period last year, and its market share increased to 13.1%, of which daily fresh words increased by 120% compared with the same period last year. A2 fresh milk and other new products were listed during the period. Cheese year-on-year growth of 68%, Ericsson launched a number of new products, after the company realized the holding of Miaoke Lando in July, the competitive advantage of the cheese business has been strengthened. Ice cream domestic business grew 16%. At the end of March 21, the company acquired Ai Xue, a leading ice cream brand in Southeast Asia, to strengthen its overseas layout. In the milk powder business, Yashili adult milk powder increased by 90% compared with the same period last year, and infant powder grew in small digits; Bellamy was affected by the epidemic, and the purchasing channels were blocked, showing a decline compared with the same period last year.
Gross profit margin fell slightly and fee control boosted profitability. The price of 21H1 raw milk rose significantly, but thanks to structural upgrading and discount rate control, gross profit margin fell 0.80pct to 38.2% year-on-year. In the first half of the year, the sales expense rate was 28.1% (yoy-2.6pct), of which the proportion of advertising and marketing expenses decreased from 0.7pct to 11.5%; the management expense rate decreased by 3.6% (yoy-0.3pct); and other expenses accounted for 1.0% (yoy-1.5pct), mainly due to the high donation expenditure due to the 20H1 epidemic. Overall, the 21H1 net interest rate is 6.4% (yoy+3.2pct).
Competition slows down and is fulfilled on schedule, and it is optimistic that Mengniu will be rebuilt in the next five years. Compared with the guidance at the beginning of the year, the company's full-year revenue growth is expected to exceed expectations, and the operating profit margin is expected to improve under the downward trend of sales expense rate. Looking to the future, benefiting from the rise of residents' nutritional demand and the sinking of channels, the white milk business is expected to maintain rapid growth; in addition, the company will strengthen the layout of new businesses such as cheese and pasteurized milk, and continue to double its revenue and profit plans.
Financial Forecast and Investment advice: due to the amalgamation of Miocolandol, revenue is increased, gross profit margin and expense rate are reduced, and earnings per share for 21-23 are forecast to be 1.36x1.66xpx 1.99 yuan (original forecast is 1.34pxpx 1.95 yuan). According to the comparable company, it is valued at 28 times for 21 years, with an exchange rate of 0.83 and a target price of HK $45.88, maintaining the buy rating.
Risk tips: consumption upgrade is not as expected, the cost of raw milk has risen sharply, and the risk of food safety incidents.