It is said that Inner Mongolia Yili Industrial Group (600887.SH) exceeded expectations in the third quarter report. What exactly exceeded expectations? Let's sort it out today.

Core data significantly exceeded expectations.

Companies like Inner Mongolia Yili Industrial Group, which have been listed for a long time and have been increasing in value for over 20 years in the consumer blue-chip sector, have always attracted market attention. The market's expectations of them are extremely high. Even under such scrutiny, it is sustainable to say that Yili's third quarter report significantly exceeded market expectations.

The third quarter report shows that in the first three quarters, Inner Mongolia Yili Industrial Group's total operating income reached 89.039 billion yuan, and net income attributable to shareholders exceeded the "hundred billion" mark to reach 10.868 billion yuan, surpassing last year's annual net income, with a year-on-year growth of 15.87%. Looking at the third quarter, both revenue and profit have significantly increased, entering an upward trend. Especially the third quarter net income attributable to shareholders of 3.34 billion yuan, an 8.5% year-on-year increase. Profits are mainly from the efficient operation of the main business, rather than other factors.

Moreover, in the first three quarters, Yili's operational cash flow was balanced at 13.87 billion yuan, an 8.46% year-on-year increase, indicating the quality of operations. In the current period, Yili's earnings per share were 1.71 yuan, a 16.33% year-on-year increase. The potential for dividends in the future is greatly enhanced, and the dividend amount is set to reach new highs.

Furthermore, Yili's profitability has further improved. During the reporting period, Yili's ROE (TTM) reached 21.19%, an increase of 0.56 percentage points from the same period last year; gross profit margin reached 34.81%, an increase of 1.91 percentage points; gross sales difference of 15.48%, an increase of 0.29 percentage points; net income 12.24%, an increase of 2.62 percentage points, strengthening the systematic enhancement of profitability.

According to the performance meeting, the main source of Yili's profit improvement comes from a significant increase in internal operating efficiency and the use of advanced operational measures such as digitalization. The third quarter data shows a further improvement in the efficiency of Yili's various expenses.

Diverse businesses exceeded expectations across the board.

From a business perspective, relying on the absolute leading comprehensive competitive advantages in the industry, Yili's market share in all categories of business has been increased.

The financial report shows that in the first three quarters, Yili's liquid milk business achieved a revenue of 57.524 billion yuan, with a significant improvement in the third quarter, achieving an income of 20.637 billion yuan, a 24.12% increase from the previous quarter, showing strong performance. Among them, the Organic Golden Milk continued to lead in growth in the first three quarters, continuing to expand market share.

As for milk powder and dairy products, as categories that Yili has focused on in recent years, they have achieved significant growth that outperforms the industry, once again confirming Yili's forward-looking global strategic vision. In the current period, this business achieved a revenue of 21.33 billion yuan, a 7.07% year-on-year growth. Not only did the performance reach a historic high, but the revenue growth rate continues to steadily increase. Among them, infant formula milk powder business also achieved continuous growth, with revenue and market share continuously increasing.

In the cold beverage business, a revenue of 8.344 billion yuan was achieved in the first three quarters, maintaining the top spot in the country for 29 consecutive years, with continuously expanding market share.

In addition, it is worth noting that Yili stated in the third quarter performance meeting that active adjustments have been completed for the liquid milk and cold beverage business, and the channel level has reached its optimal state, undoubtedly laying a solid foundation for Yili's healthy growth in the future.

Future prospects exceed expectations across the board.

In addition to reviewing the better-than-expected performance in the third quarter, at the third quarter performance briefing, Inner Mongolia Yili Industrial Group's outlook for the future also exceeded expectations.

Traditionally, many people still think that Inner Mongolia Yili Industrial Group is a domestic dairy product company, but in reality, Yili has been the leader in the Asia dairy industry for ten consecutive years. Today, Yili's business has expanded to five continents globally, with its development vision being 'to become the most trusted provider of healthy food globally.' Guided by such a vision, Yili also provided a clearer development path for international expansion, non-dairy businesses, and deep processing of dairy products at the third-quarter performance briefing.

Regarding international development, Yili mentioned that apart from Indonesia and Thailand, the company has set up new layouts in other countries with growth potential, expanding into other dairy product categories beyond ice cream.

Looking at the global dairy industry rankings, excluding exchange rates, Yili is clearly the fastest-growing company among the top five global dairy companies. Striving towards the goal of 'becoming the number one in the global dairy industry by 2030,' Yili's future international development is meticulous and strategic.

In terms of non-dairy businesses, Yili's recent developments in tea and bottled water have shown pleasing growth rates. Yili mentioned that in the future, with increased production capacity for bottled water and tea drinks, there will be gradual expansion in distribution channels and marketing. There will also be new flavors of tea drinks launched next year from the reserve.

Furthermore, Yili's increased investment in deep processing in the dairy industry is also promising. Leveraging the innovative technology for targeted extraction and protection of lactoferrin, Yili's lactoferrin factory in New Zealand commenced operations in 2023. Upon completion, Yili will rank among the top three globally in lactoferrin production capacity. Apart from this, Yili is also accelerating its deep processing capabilities in other dairy product categories to better meet the differentiated product demands of business customers.

Clearly, Inner Mongolia Yili Industrial Group has exceeded the expectations of many in terms of breaking the barriers of internationalization, non-dairy sectors, and higher value-added developments in the dairy industry.