YILI(600887) 交银国际证券·2024-05-05 03:00Investment Rating - The report maintains a "Buy" rating for Yili Co., Ltd. (600887 CH) with a target price raised to RMB 33.50, indicating a potential upside of 17.1% from the current price of RMB 28.61 [1][4]. Core Insights - Yili continues to expand its market share and profit margins despite a sluggish market, with a notable performance in fresh milk and ice cream segments [1]. - The company reported a decline in revenue for Q4 2023 and Q1 2024, with year-on-year decreases of 1.8% and 2.6%, respectively, primarily due to challenges in the liquid milk business [1]. - The management has guided for a revenue growth of 3% in 2024, targeting RMB 130 billion, with a pre-tax profit increase of 25% to RMB 14.7 billion [1]. Financial Summary - Revenue for 2023 is projected at RMB 126.18 billion, with a modest growth of 2.4% compared to 2022. For 2024, revenue is expected to reach RMB 130.24 billion, reflecting a growth of 3.2% [2]. - Net profit for 2023 is estimated at RMB 10.43 billion, with a year-on-year growth of 10.6%. The forecast for 2024 anticipates a net profit of RMB 13.27 billion, representing a significant increase of 27.3% [2]. - The earnings per share (EPS) for 2023 is projected at RMB 1.63, with an expected rise to RMB 2.07 in 2024 [2]. Market Performance - Yili's stock has shown resilience with a year-to-date increase of 6.95%, and its market capitalization stands at approximately RMB 180.39 billion [3]. - The stock has a 52-week high of RMB 30.67 and a low of RMB 25.33, indicating a stable trading range [3]. Product Performance - The liquid milk segment faced pressure, but fresh milk sales doubled year-on-year, while ice cream sales grew robustly by 11.7% in 2023, driven by expansion in lower-tier markets and Southeast Asia [1]. - For Q1 2024, sales in liquid milk, milk powder, ice cream, and other products showed varied performance, with liquid milk sales declining by 6.8% [1]. Strategic Outlook - The management aims to achieve a pre-tax net profit margin of no less than 9% by 2025, up from 8.3% in 2023, despite anticipated increases in operating expenses due to enhanced channel investments [1]. - The report emphasizes that Yili's ability to maintain and grow its market share in a challenging environment positions it favorably for future growth [1].