投资建议：维持增持评级。考虑2024年乳业实际调整幅度超过市场预期，下调公司2024-2026 年EPS 至1.86 元（前值2.04 元）、1.74元（1.94 元）、1.96 元（2.16 元），参考可比公司估值给予2025 年20X PE，上调目标价至35 元。Introduction to this report:
The dairy industry is expected to reach an inflection point in 2025, which will help the leaders increase their share. It is expected that Yili's liquid milk will grow well, increase in other businesses, release profit flexibility after depreciation is reduced, and an improvement in the liquid milk market driven by policy is expected to catalyze.
Key investment points:
Investment advice: Maintain an increase in holdings rating. Considering that the actual adjustment of the dairy industry in 2024 exceeded market expectations, the company's 2024-2026 EPS was lowered to 1.86 yuan (previous value 2.04 yuan), 1.74 yuan (1.94 yuan), and 1.96 yuan (2.16 yuan). Referring to comparable company valuations, the 2025 20X PE was applied, and the target price was raised to 35 yuan.
The reversal of the dairy industry's cycle favors the leaders. In 2024, the dairy industry was suppressed by the triple factors of oversupply, weak demand, and high inventories. Fresh milk prices continued to fall, and the competitive landscape deteriorated due to low costs. We believe that the industry's most pessimistic period (2024Q2) has passed. Combining the pace of supply and demand, it is expected that the balance point for fresh milk may occur in 2025Q3. Milk prices are expected to stabilize at that time, driving the improvement of the industry pattern. Judging from historical experience, leading companies usually show an improvement in gross sales margin during the period when milk prices rise, while reducing some expenses and losses, leading to profit repair and share growth.
The company's liquid milk grew well in 2025, and other businesses are expected to drive revenue. The 2025Q1 liquid milk market trend is still declining. Yili is starting out mainly with natural sales. Currently, the price market is stable and the freshness is good. In 2024, the company's liquid milk is committed to channel inventory adjustments, and 2025 is young, and the outlook for the whole year is cautiously optimistic. Other businesses are expected to provide revenue growth. Among them, baby powder will benefit from a small rebound in the birth population and continue to increase market share. The adult powder business will increase functional product development and channel construction after operation. The cold drink business is expected to resume growth after 2024 adjustments. The non-dairy business is expected to maintain a relatively rapid growth rate after new production capacity is put into operation, and internationalization will also increase. At the same time, the company will also explore more in the 2B business.
Reduced depreciation unleashes profit elasticity, and an improvement in the liquid milk economy is expected to catalyze. The industry's expectations for milk prices to bottom out in 2025 are strong. On the one hand, the average price of raw milk is still expected to be lower than 2024, and cost dividends still exist. On the other hand, dairy companies generally control milk collection. At the same time, Yili increases milk consumption through cost-effective customized products, reducing and increasing, and powder spraying is expected to decrease compared to 2024. Taken together, factors such as cost reduction, reduction in powder impairment losses, and cost dilution after revenue stabilizes are expected to release profit elasticity, and the company will keep its core net interest rate target of 9% unchanged in 2025. On this basis, the demand policy for dairy products has recently been positive. If more regions join the maternity allowance ranks, the liquid milk and milk powder boom is expected to improve at an accelerated pace, which will catalyze the company's revenue and profits.
Risk warning: Industry sentiment fluctuates, milk prices continue to fall, and competition intensifies.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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