Deeply involved in the dairy industry, the progressive company is mainly engaged in the production and distribution of ultra-high temperature sterilized milk, milk drinks, yogurt, ice cream products, milk powder, etc. The company has now established 41 domestic production bases and overseas production bases in New Zealand, Indonesia and Australia, bringing the total number of factories worldwide to 68. The company's sales mainly adopt a distribution model with distributors as the main body and direct management of branch companies to set a benchmark. At the performance level, 2023H1 achieved operating income of 51,119 billion yuan, +7.12% year over year, and realized net profit of 3,020 billion yuan, or -19.48% year over year. It mainly confirmed fair value income from one-time financial liabilities during the same period last year, and achieved operating profit of 3.275 billion yuan, an increase of 29.9% over the previous year.
Long-term layout on the product side, accelerated adjustment on the channel side
On the product side, all categories go hand in hand, and the layout is developing in the long term. 1) Room temperature white milk: Terunsu and Mengniumu brand pure milk sales lead the industry growth, and Terunsu further expands its high-end leading edge; 2) Low-temperature milk: adhere to category value, lead the return to growth of low-temperature yogurt, the fresh milk business continues to grow rapidly, and the daily fresh milk market share continues to increase; 3) Ice cream: the business has entered a new cycle, comprehensively promoted innovative breakthroughs, and achieved continuous compound growth; 4) Milk powder business: Yashili actively seizes new national standard opportunities and has passed the new national standard infant formula products. Formulation registration approval while continuing to strengthen middle-aged and elderly people Market segmentation and profitability of milk powder and children's milk powder. Bellamy is vigorously expanding the high-end organic milk powder and food supplement product matrix to lay out long-term development.
The channel side actively responds to shocks and enhances control over terminal outlets. 1) Accelerate the pace of adjustments on the channel side:
With a complete supply chain and extensive sales channels, the company pioneered a new model of community group buying business, maximizing the opening of a 24-hour uninterrupted fresh milk supply line, which significantly enhanced Mengniu's brand popularity in the East China market. The company continues to promote omni-channel expansion and construction, adapt to the impact of external environmental challenges on offline channels and channel transformation trends, and accelerate the deepening cultivation of new retail channels such as O2O to meet consumers' needs for convenient shopping and multi-point access; 2) Improve terminal control: The company continues to promote the implementation of RTM strategies, optimize the channel structure, and improve the marketing level and channel control. At the same time, we rely on the Zhencun Connect platform to continue to promote dealer cooperation, attack village-level market development, and explore opportunities for business growth in the sinking market. In '22, the Room Temperature Division covered more than 780,000 outlets through the Town and Village Connect Project, and it is expected that the number of outlets covered will increase in '23.
Investment advice
Revenue for 2023-2025 is expected to be 967.01, 1030.11, and 109.822 billion yuan, respectively, with corresponding growth rates of 4.44%, 6.52%, and 6.61%, respectively, and net profit to mother of 54.65, 61.22, and 6.948 billion yuan, respectively. The corresponding growth rates are 3.05%, 12.02%, and 13.49%, respectively. Corresponding to 2023-2025 PE valuations are 13, 11, and 10X, respectively, covered for the first time, giving a “buy” rating.
Risk warning
New products and channel expansion fell short of expectations, industry competition intensified, raw material prices fluctuated greatly, macroeconomics fell short of expectations, etc.