Yili’s semi-annual report for 2022 has been released. The performance of the second quarter has always worried everyone. Now that the boots are on the ground, they are generally in line with expectations.
Yili is one of my heavy holding stocks, and it is also the stabilizer of my holding portfolio. From the holding experience alone, Yili’s overall trend is rising in waves, the retracement is controllable, and the income level is excellent. The annualized income can reach about 25%. This is also the reason why most shareholders can hold it for a long time.
Although Yili has been adjusting for more than a year, I have not lightened up my positions. A high-quality company can always continue to make new highs after the adjustment, and Yili is like this.
In the past few years, the dairy industry is one of the few industries that continues to grow. As a leader in the industry, Yili has long since gotten rid of the impact of the epidemic and has become a scarce target with strong certainty and growth.
Let’s talk about the answers given by Yili in the past six months in combination with Yili’s semi-annual report.
1. Performance
Judging from Yili’s semi-annual report, it is completely in line with expectations.
In the first half of 2022, Yili achieved a total operating income of 63.46 billion yuan, an increase of 12.3% over the same period last year, and a net profit of 6.14 billion yuan, an increase of 15.4% over the same period last year.
Put another picture of the good news officially released by Yili.
I am very satisfied with Yili’s performance, with both revenue and net profit hitting record highs.
Moreover, during the reporting period, the growth rate of Yili milk powder and dairy products was 58.28%, ranking first in the world. Among them, the growth rate of infant formula milk powder ranked first in the industry, and the adult milk powder ranked first in the market segment.
The cheese business grew by over 40%, achieving leapfrog growth.
Liquid milk market share first.
The growth rate of cold drinks was 31.71%, ranking first in the industry and leading the market share for 28 consecutive years.
So overall, Yili’s semi-annual report is fully in line with expectations.
But I think the second quarter, which everyone is most worried about, has to be taken out and looked at separately, because the impact of the epidemic on the second quarter is relatively large.
Judging from the semi-annual report alone, except for 2020, Yili has achieved positive growth in recent years, and has performed better in the last two years, with a double-digit growth rate.
From a quarterly perspective, the net profit in the first quarter of 2021 was 2.83 billion and in the second quarter was 2.49 billion.
Net profit in the first quarter of 2022 was 3.52 billion, and in the second quarter was 2.61 billion.
In other words, in the second quarter of this year, the net profit increased by only 120 million year-on-year, and the growth rate of net profit in the second quarter slowed down significantly.
I think this has long been expected. Because of the repeated epidemics in the second quarter, Shanghai and Beijing were both severely affected. Judging from the results, Yili can still maintain positive growth, which I think even exceeded expectations.
Therefore, the overall performance of the first half of the year is completely beyond expectations, and the impact on Yili’s performance in the second half of the year is not the epidemic, but the consumption power.
However, with regard to consumption, the state attaches great importance to it and is already formulating a series of measures. I believe that Yili can continue to maintain a good operation under this circumstance, and even continue to expand its market share at this stage.
2. Segmentation
(1) Liquid milk
The semi-annual report shows that Yili’s total liquid milk operating income was 42.89 billion yuan, a year-on-year increase of 1.14%, and its market share in retail sales increased by 0.1 percentage points compared with the same period last year, ranking first in the industry in terms of scale and market share.
According to statistics, in the first half of this year, the output of dairy product manufacturing enterprises above designated size in the country was 15.109 million tons, a year-on-year increase of 1%. The growth rate of Yili liquid milk was basically the same as that of the entire dairy product.
Liquid milk is the basic business of Yili. Although the growth rate of liquid milk has slowed down, Yili still maintains its leading position in the industry.
There are many 20 billion-level star items in Yili, such as Jindian, An Muxi, and Yili pure milk. Among them, Anmuxi has a market share of 65%, ranking first in the category; Jindian Organic, as the first brand in the organic category, continues to be the first in the industry in terms of market share; the 10 billion-level large single product premium yogurt is also growing rapidly. There are 1 billion single products Shuhua Milk, Grain Duo, QQ Star, etc.
In the future, it is foreseeable that the liquid milk market will be more of a stock game rather than an incremental market. Therefore, whichever company has a better brand image will have a higher market share. Yili has always attached great importance to this.
(2) Milk powder and dairy products
Milk powder is a technological highland for innovative research and development of dairy products. Based on nearly 20 years of breast milk nutrition research, Yili has promoted infant formula milk powder into the “patent era”. At present, Jinlingguan has more than 70 patents.
Milk powder and cheese are Yili’s rising second growth curve, and it has indeed maintained a high growth rate far exceeding the industry in recent years.
Yili’s milk powder and dairy products business achieved operating income of 12.07 billion yuan in the first half of the year, a year-on-year increase of 58.3%.
Among them, the market share of infant formula milk powder increased by 3.5 percentage points over the same period last year, the market share of adult milk powder increased by 1.3 percentage points over the same period last year, and the market share of cheese business increased by nearly 4 percentage points over the same period last year.
At present, the growth rate of Yili infant formula milk powder ranks first in the industry, and the adult milk powder ranks first in the market segment.
(3) Cold drinks
Yili’s cold drink business has also grown at a very impressive rate, with sales revenue up 31.71% year-on-year, ranking first in the industry in terms of growth rate. Among them, the revenue growth rate of Cholez series products is as high as 33.31%, which is a very good ice cream brand.
The above market retail sales share are all taken from Nielsen retail research data.
3. Finance
Finance pick a few key points to talk about.
The increase in selling expenses, administrative expenses and R&D expenses was mainly due to the merger of Ausnutria Dairy by the subsidiary, and another reason for the increase in selling expenses was that Yili increased its advertising and marketing expenses.
In the first half of the year, Yili also encountered many challenges. For example, due to the impact of overseas economic inflation, the prices of imported raw milk powder, oil, and logistics and transportation have risen sharply year-on-year, and the pressure on the cost side has intensified. In addition, uncertainties in factors such as international trade policies and regulations, exchange rate fluctuations and overseas epidemics also bring many challenges.
4. Summary
Overall, Yili’s semi-annual report is completely in line with expectations. My expectations for Yili have never been amazing, and stability is the biggest surprise for Yili.
According to the latest ranking of the top 20 global dairy industries in 2022, Yili has been ranked among the top five in the global dairy industry and the first in the Asian dairy industry for many consecutive years. According to Yili’s current growth momentum, its medium and long-term strategic goal of “achieving the top three in the global dairy industry by 2025 and the number one in the global dairy industry by 2030” is likely to be achieved ahead of schedule.
I hope Yili can continue to maintain and create brilliant future!
@Today’s topic @snowball creator center @ball friend welfare #Investment in alchemy season in 2022# @Investment in alchemy season $ Yili (SH600887) $ $ Midea Group (SZ000333) $ $ Gree Electric (SZ000651) $
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