Core viewpoints
With the return of the founder, the trend of reducing fees and increasing efficiency is obvious. The company has been deeply ploughing the field of infant milk powder for nearly 30 years and is in the ranks of domestic leaders. Since 2014, the company's performance has fallen sharply due to changes in management and ownership structure, as well as a wave of price cuts in milk powder. But in 2018, Xie Hong, the founder of the company, returned to management and actively promoted internal cost reduction and efficiency. The company's sales and management expenses decreased, and revenue and net profit rebounded.
High-end infant milk powder, domestic head milk powder enterprises are expected to benefit. In recent years, China's birth rate has declined, and the total demand for milk powder is facing downward pressure. At the same time, the average price of milk powder is rising, and the market for high-end and ultra-high-end milk powder is growing rapidly, with a combined market share of about 58% in 2021, according to Frost Sullivan. The income level and health awareness of Chinese residents have been continuously improved in recent years. Domestic milk powder has entered a stage of high-quality development after industry rectification and supervision. The income scale and market share of domestic milk powder in the domestic market have increased steadily, reaching 188.5 billion yuan in 2020, and the market share has surpassed that of foreign milk powder by 54%. With good product quality as the starting point, domestic head milk powder enterprises are expected to fully benefit from the high-end trend of milk powder by virtue of the first-mover advantage.
The advantages of the industrial chain are obvious, and the results of channel optimization are expected to be transformed smoothly. Under the efforts of the company to cultivate the minds of consumers for many years, the Beinmei brand has a high national awareness. In the product matrix, the company is based on a comprehensive R & D layout, which can be applied to consumers of all ages. In order to ensure high-quality supply, the company has reached cooperation with the world's well-known milk powder raw material suppliers, and expanded high-end production capacity to pave the way for product structure optimization. In terms of channels, the company combs distribution and optimizes direct sales channels, and forms a new retail model layout, online and offline channels complement each other, which is expected to increase the repurchase rate of end consumers and brand stickiness.
Investment suggestion
Under the condition that the channel carding is gradually clear and the new retail model is formed, the company is expected to fully benefit from the high-end trend of the milk powder industry by virtue of brand strength, products, supply chain and other advantages. It is estimated that the EPS from 2022 to 2024 is 0.13, 0.20 and 0.29 yuan per share, respectively. Based on the closing price of 4.82 yuan on July 22, the corresponding PE is 36.40, 23.60 and 16.66 respectively. For the first time, coverage gives a "recommended" rating.
Risk hint
The price of raw materials has risen sharply; the disturbance of the epidemic has intensified and affected store consumption; channels have not been combed as expected; food safety issues.
