It has been more than a year since the last analysis of Yili. Today, Lao Mi will take you to sort it out As for Yili’s business, as a follow-up report, friends who have not read the previous article do not have to worry, just read this one. This is Lao Mi’s latest understanding of Yili and will not refer to the analysis logic of the previous article.
Lao Mi usually traces the company once a year, even if it is a new analysis, it will not be seen again within a year, and then the analyzed underestimation is recorded. When the price falls, it starts to increase the position. In fact, the main reason is the limited spare time. In addition, Lao Mi is usually very irrational and his thinking is still relatively jumpy. It may not be able to hold stocks in analysis and analysis. Therefore, instead of active trading, it is better for Lao Mi to passively hold. There is still a chance to make some money. Okay, let's not talk more nonsense, let's start the text.
(Lao Mi has been reduced, but the article is still a bit long, everyone read it slowly)
(1) Company profile
Yili originated from a Muslim dairy factory in Hohhot. At that time, it caught up with a good factory director Zheng Junhuai, which made Yili stand out from the thousands of dairy factories. Yili implemented the shareholding system reform in 1993, and in 1996 Yili was officially listed on the stock market. As of 2019, Yili's operating income has reached 90.223 billion yuan, and its net profit is as high as 6.934 billion yuan. Currently, Yili has become the number one dairy company in Asia and eighth in the world.
Next, Laomi will divide Yili’s business into three major categories to discuss with you, namely, room temperature milk business, low temperature milk business, and milk powder business.
(2) Analysis of room temperature milk business
Yili's room temperature milk business revenue in 2019 was 64.187 billion, accounting for 71% of total revenue.
At present, my country's room temperature milk industry is in a duopoly pattern of Yili and Mengniu. In 2018, Yili’s share of room temperature milk was 37%, while Mengniu’s share was 28%. From the perspective of market share, the proportion of domestic room temperature milk faucets has reached the international level, so it is difficult to increase it, that is to say the future development It can only be an increase in consumption and unit price.
In 2019, the overall market size of room temperature milk in my country was 94.16 billion, and the annual growth rate in the past five years was 3.3%. The average price of room temperature milk in 2019 was RMB 12.5 per liter, and the annualized growth rate was also 3.3% in the past five years. However, the sales volume of room temperature milk has remained flat for a long time. That is to say, the only factor driving the growth of room temperature milk in the past 5 years is the increase in price. From this, we can also realize that the sales volume of room temperature milk has indeed reached the ceiling, and the future efficiency can only be flat inflation.
However, Lao Mi has also seen one piece of data, that is, the amount of dairy products consumed per capita. The current per capita consumption of dairy products in China is US$44.5/year, while the world average level is US$65.3/year, and that of neighboring Japan is as high as US$174.1/year. In fact, this data alone is incomparable, because most Western countries rely on milk as their staple food, which is culturally dictated. Because the average height of the Japanese is relatively short, the country advocated drinking milk to improve the physique of the whole people, which preserved the culture of drinking milk. On the other hand, China’s food culture is very diversified, and the population will continue to decrease in the future, so it is difficult to expect a substantial increase in per capita consumption of dairy products.
However, there is one good point. With the continuous introduction of mid-to-high-end products, the way of competition for room temperature milk will change in the future. We know that in the past, room temperature milk competition was a channel war, a price war, which caused both damage and prosperity. This way of competition has created a cyclical effect on the room temperature milk industry. But at present, the competition is more concentrated on the investment in innovation and advertising.Enter.
✘Lao Mi below combined with the above mentioned, to elaborate on Yili's two major competitive advantages in the room temperature dairy industry.
①Milk source, channel advantage
The milk source is the country's leading source, and it is mainly controlled by cooperation. In 1999, Yili pioneered the "company + farmer" development model to improve the shortage of milk source , The current situation of difficulty in milk collection. In 2000, the “company + cow community” model was recreated to solve the problems of backward breeding technology, low treatment rate of sick cows, and pollution of human settlements. In 2005, the "Company + Standardized Pasture Park" model was born, introducing world-class raw milk quality inspection and analysis, and realizing the transformation to a scientific, standardized, intensive, and modern business model. At present, Yili is also actively helping the development of dairy farmers through financing loans. So from a historical perspective, Yili is adopting regulations and helping the development of dairy farmers. Change direction to do vertical integration.
Compared with Yili’s milk source construction model of cooperation and mutual assistance, Mengniu’s milk source construction is continuously merged and purchased. From Junlebao, Modern Dairy, Yashili to Shengmu, Mengniu has adopted a The series of mergers and acquisitions quickly realized the expansion of the milk source layout. Looking at it this way, Yili is beneficial to the construction of milk sources in the long-term, and the quality and quality of milk sources will also be controlled. But it is very difficult for Mengniu to control milk sources, and there will be many problems in its digestion and integration, including not only management problems, but also financial problems. After all, acquisition is not buying stocks, and you can't always get benefits. s price. Therefore, Lao Mi believes that Yili's milk source construction is indeed second to none in China.
Also in terms of channels, Yili is also far ahead. In 2006, Yili formally implemented the "National Net Weaving" plan. By establishing a modern dairy production base that integrates production and marketing, it focuses on entering the second and third tier markets. It has intensively cultivated each market, improved its control over the market, greatly reduced costs, and gradually formed The strategic layout of "passing north-south and radiating east-west" was established. As of 2019, the company has achieved direct control of 1.04 million outlets in towns and villages. The market penetration rate of normal temperature liquid dairy products is as high as 84.9%. The number of sales personnel is as high as 17,800. The number of sales personnel ranks first in the A-share food and beverage sector. Listed companies.
Mengniu's use of the development strategy of large distributors. Although this method is in the early stage of entrepreneurship, the channel has developed rapidly (this is why Mengniu will come from behind, quickly occupy the domestic market, and surpass Yili in the short term). However, with the development of distributors, Mengniu's control over channels has gradually declined and bargaining power has weakened. However, Yili channels can dominate orders, distribution services, and supply through continuous deepening, and have stronger control over channels and more sensitive response to terminal demand. We can see this from the profit margin of the enterprise and the turnover rate of prepayments receivable.
②Product diversification, brand advantage.
As we mentioned earlier, the current room temperature milk competition is gradually moving towards innovation and brand competition. The current proportion of Yili’s high-end product revenue has increased from 30% in 2013 to the current 50%. %the above. Intuitively, innovation is investment in research and development, while brand is investment in advertising.
From the perspective of R&D, Yili’s R&D investment is unsurpassed in the industry. We can see clearly with the data on R&D investment of dairy companies in 2019.
Yili's R&D investment in 2019 495.17 million / Mengniu Dairy 205 million / Feihe 17.17 million / Bright Dairy 68.14 million / New Dairy 27.63 million / Beinmei 16.86 million / Ausnutria 13.21 million / Yantang Dairy 10.98 million /Tianrun Dairy 3.18 million/Western Animal Husbandry 2.55 million.
So from the perspective of product diversification, Yili has always been in the lead.
Yili has also invested heavily in advertising. In 2008, Yili entered the Beijing Olympics in a big way. Since then, it has continued to adhere to Olympic marketing and will be qualified as a sponsor of the 2022 Beijing Winter Olympics. At the same time, in the process of high-endization, a large number of programs have been named, and sales expenses have continued to increase. In 2019, sales expenses exceeded 21 billion. At present, Yili also focuses on the special investment of a single product. It carries out multi-category and differentiated branding through various variety shows (not listed here) and offline launches. In the industry, only Mengniu can compete with Yili, but it is still stretched. In 2019, Yili’s advertising expenditure was 11.04 billion yuan, while Mengniu’s investment was 8.499 billion yuan.
So in general, Yili’s advantages in the field of room temperature milk cannot be surpassed in the medium term (within 10 years), but unfortunately the development of the industry of room temperature milk has been very slow, but Yili’s advantage in the field of room temperature milk The growth will also be very stable. As for the growth, we are discussing it in the final valuation.
(3) Low-temperature milk business analysis
Yili In 2019, the low-temperature milk business (mainly pasteurized milk) revenue was 9.574 billion, accounting for 10.6% of the total revenue.
The cold beverage business (ice cream and the like) revenue of 5.63 billion accounted for 6.2% of the total business.
In the future, the low-temperature milk business will focus on pasteurized milk growth, and pasteurized milk will become one of the two main growth forces for future emulsions (the second is milk powder). In 2019, the market size of pasteurized milk in my country was 34.32 billion, with an annual growth rate of 9.2% in the past five years. Pasteurized milk is milk that is fresher than ordinary milk. It is characterized by a short shelf life, but with higher quality and better taste. At present, the competitive landscape of pasteurized milk is still relatively fragmented. The market share of Bright Lotion, which ranks first, is 12.1%. In addition, the top five in the industry include Sanyuan, New Hope, Weigang, Jiabao, and Yili Mengniu. Make the list.
In fact, the competition model of pasteurized milk is a bit like the short-term bread industry. Because the shelf life is very short, the delivery radius is near the milk source. Yili and Mengniu do not have this advantage, because they Most of the milk sources are concentrated in the north, and foreign areas are not scattered, so the delivery radius of pasteurized milk products will also be small. Moreover, Yili’s most prominent channel advantage cannot be borrowed, because Yili’s channels are mostly for the sale of long-term preservation milk, and it is difficult to store and sell short-term preservation milk.
However, Yili Mengniu is currently looking for ways to extend the shelf life of pasteurized milk. Like Mengniu's recently launched pasteurized milk, the shelf life is 15 days, but Laomi is also very strange. Isn't pasteurized milk unique because it is fresh? If the shelf life is the same as ordinary milk, what is the difference from ordinary milk? Therefore, although the prospect of pasteurized milk is relatively good, it is difficult for Yili Mengniu to use its existing advantages to seize the market. At present, Laomi is not very optimistic about Yili's prospects in the pasteurized milk industry.
Next Laomi is talking about this cold drink business.
Yili's position in the cold beverage industry is very high. It has been the industry leader for many years, and its market share is about 14%. (This data is only for reference. Lao Mi did not find this data, so he pressed The performance is extrapolated to an approximate value). Its brands such as Ice Factory, Yili Ranch, Wonderful, Yili Torch, Qiao Lezi and Zhenxi are well-known.
But why do many researchers ignore this business? Mainly since 2011, the growth of Yili's cold beverage business has stopped and has been fluctuating. It has not started to grow until the past two years, but in fact, the growth rate of the industry at this stage has been maintained at about 4%, which is not bad. We have carefully studied that Yili still has a certain degree of competitiveness in the cold beverage industry.
Yili has the highest investment in cold beverage research and development, and its product design is also the industry’s first, and some products have been deeply rooted in the hearts of the people. If we ignore the year-on-year fluctuations, Yili’s cold beverage business growth will still outperform the industry growth. . Therefore, Laomi is more optimistic about the future growth of this business. Although the proportion of the business is small, no matter how small the mosquito is, it is still meat, and it is better than the business that accounts for the decline in performance.
As for the future impact on performance, we still leave it to the valuation stage to discuss.
(4) Milk powder business analysis
Yili's milk powder business revenue in 2019 was 10.05 billion, accounting for 11.1% of total revenue.
In 2018, the total scale of China's milk powder industry was 245 billion, with an annualized growth of 11.2% from 2014 to 2018, of which high-end milk powder accounted for about 38%, and the proportion of high-end milk powder is increasing year by year. Since the Sanlu incident, my country's domestic milk powder companies have been in a slump. However, in recent years, with the state's support for the milk powder industry policy, the advancement of quality control, and the launch of various domestic milk powder brands such as Feihe, the profitability of domestic milk powder companies has gradually eased and the market share has gradually increased.
Among them, the annualized revenue of Yili's milk powder business in the past three years is as high as 22.6%. After 2016, the company began to increase the improvement of its milk powder business research and development capabilities. It released the concept of "maternal and infant ecosystem" that year. In 2019, the "Yili Maternal and Infant Nutrition Research Institute" was established. In 2018, after the formula registration system was implemented, it was distributed through profit distribution. Since then, Yili has successively launched the first domestic probiotic organic milk powder gold-collar champion "Sena Mu" and high-end infant formula goat milk powder gold-collar champion "Youzi Lamb". Now Yili is in The milk powder industry also has a place.
But overall Yili’s competitiveness in the milk powder industry is not as good as FeiheIn 2018, Feihe’s market share was 15.6%, while Yili’s market share was only 5.8%.
Because Feihe is positioned as a high-end milk powder, and it has done a good job in brand promotion, basically even non-investors will have heard of Feihe milk powder. However, Yili’s product gold-collar crown positioning is mainly ordinary milk powder, plus Yili’s main battlefield is room temperature milk, so little attention is paid to the milk powder business, and Feihe focuses on the development of milk powder. Coupled with the gradual increase in national consumption in the future and the gradual increase in the proportion of high-end milk powder, Feihe’s brand moat will become higher and higher, but Yili has not seized the opportunity. However, Yili will maintain a relatively good growth in the process of localization of milk powder.
Finally, I would like to mention Yili’s expansion in the field of functional beverages. This is also the current difference between Yili and Mengniu. Mengniu intends to remain in the dairy industry, while Yili intends to diversify and expand the beverage industry. Energy drinks are a breakthrough for Yili. At first glance, the market scale of functional drinks of more than 600 billion yuan seems to have a promising future, but it is actually undercurrents and fierce competition. In the functional beverage industry, there are not only domestic star brands such as Reignwood Red Bull, Dongpeng Special Drink, and Le Tiger, but also foreign brands such as Coca-Cola and Pepsi are competing with each other.
A dairy industry and a functional beverage industry seem to be beverages, but the gaps are very different. No matter in terms of channel development, product design, or branding, they are far behind. So Lao Mi thinks that it is difficult for Yili to distract and make functional drinks. At present, this is actually a relatively wrong decision, which wastes both the energy of the company and the resources of the company. Yili has launched several products in recent years, including Huan Xing Yuan, Yi Ran, St. Ruisi, and Yi Ke Huoquan. All without success, stand on your heels.
Okay, basically here, Laomi has finished talking about Yili's business, and now we will enter the financial analysis link.
(5) Financial analysis
Take out Yili's 2019 balance sheet.
We can see that Yili’s total assets are 60.46 billion. Among them, monetary funds are 11.325 billion, accounting for 18.7% of total assets, no more, no less just right. Receivable prepayments (accounts receivable, prepaid accounts, and other receivables) were 3.187 billion, accounting for 5.2% of total assets and 3.5% of total revenues. The proportion is very low, and corporate payments are relatively fast.
Yili’s inventory is 7.715 billion, accounting for 12.76% of total assets and 8.55% of total revenue. The inventory has increased by 40% over the previous year, but it is mainly due to the increase in inventory caused by the acquisition of wastland.
Yili’s production assets (fixed assets + construction in progress) are 24.461 billion, accounting for 40% of total assets, and its asset efficiency (pre-tax profit ÷ production assets) is 33.5%, which is the average social asset efficiency Five times that of 6%, but combined with the proportion of its assets, Yili belongs to the most important category among light-asset companies.
Yili’s investment assets (non-bank wealth management business) are 3.25 billion, accounting for 5.3% of total assets. Most of them are businesses in the industry chain, and some are partnership-type financial management, which is not a big problem as a whole. Yili’s goodwill is only 520 million, and there is basically no possibility of a goodwill thunder. Yili’s intangible assets are 1.4 billion, accounting for 2.3% of total assets. This proportion is very small and does not pose too many additional risks.
Yili’s liabilities total 34.187 billion, of which interest-bearing liabilities (bank loans, bonds) are 6.83 billion, which is much smaller than Yili’s monetary funds. Yili’s operating liabilities (payments payable in advance, Lao Mi doesn’t like to add employee salaries to it, because this money is internal and has no operational reference value) is 20.641 billion, accounting for 60.3 of the total liabilities. %.
We all know that the prepayments payable by companies are the funds that the companies occupy upstream and downstream, and the prepayments receivable are the funds occupied by the upstream and downstream companies. Therefore, we can know the status of the company in the upstream and downstream by using the prepayment receivables ÷ the prepayments payable. If the capital occupied by the company is less than the capital occupied by the company, then the status of the company is relatively high. Yili's ratio is 15.4%, so Yili's position in the upstream and downstream is very high, and we can confirm it financially.
We are looking at corporate benefits. Yili’s return on net assets in 2019 is 26.4%. This ratio shows that the company’s operations are excellent. Yili's gross profit margin is very stable. It has remained at around 37% in the past four years. However, considering that the increase in inventory this year has led to an inflated gross profit margin, Yili's gross profit margin in 2019 has been declining, but the magnitude is not large. YiliYili’s profit margin has declined slightly in the past two years, from 10.4 in 2017 to 9.2% in 2019, mainly due to Yili’s growth in advertising for high-end products, and the expansion of new business channels, product innovation, and advertising The waste of resources invested is also consistent with our previous analysis.
Yili's expense ratio is also very stable, fluctuating around 28%. However, Yili’s R&D investment has indeed risen year by year, from 0.13% of operating revenue in 2015 to 0.6% of operating revenue in 2019, which shows that enterprises’ emphasis on R&D and innovation has increased year by year. Yili's dividend rate is very stable and very high. In recent years, it has been around 70%.
In general, Yili's financial statements are relatively good. Next, Laomi will proceed to the next demining step.
✘Five demining methods
① Yili’s "cash received from selling goods and providing labor services" in the past three years was 334 billion yuan, which is greater than its total revenue of 2,984 billion in the past three years Billion
② Yili’s cash flow from operating activities in the past three years is 36.9 billion, which is greater than its net profit of 25.037 billion in the past three years.
③ Yili’s cash flow from operating activities in the past three years is 36.9 billion, which is greater than its investment outflow of 18.49 billion in the past three years.
④ Yili's inventory growth in the past three years was 78.3%, while its operating income growth was only 48.8%, mainly due to the acquisition of Wesrland from 2018 to 2019 , But do not rule out the phenomenon of weak corporate sales and inflated profits.
⑤Haikang’s operating assets have grown by 55.5% in the past three years, which is in line with its revenue growth.
Overall, Yili's profit storm is unlikely, but there is a short-term profit increase, so we can make reasonable adjustments in the valuation.
Finally, Mi is commenting on Yili’s semi-annual report. Yili’s semi-annual report’s revenue increased by 5.29% and profit fell by 1.2%, mainly due to the current ultra-short-term financing, bond financing, and financial Cost increases. Its non-net profit growth was 7%, which is more in line with expectations. During the epidemic, Yili actively maintained production and channel operations, so that the supply chain was not affected. In general, Yili performed relatively well.
In fact, Yili’s business operations are very good. What annoys Lao Mi most is Yili’s shareholding structure. Yili’s shareholding structure is relatively dispersed and several executives jointly control the company. This is inevitable. If the interests of shareholders are not coordinated, it is like managing a treasury. Anyway, you are not the owner of the treasury, and you will certainly take advantage of it more or less. This can be seen whether we look at the salary level of the management team or the frequent equity incentives over the years. However, there is no perfect thing in the world, and naturally there is no perfect company. So far, Lao Mi can only think like this.
Okay, finally, it’s the final stage of valuation. In fact, it’s relatively easy to value Yili because of Yili’s business. The regularity is relatively large. In the valuation, we also need to estimate Yili’s businesses separately, and then add them together, namely, room temperature milk, low temperature milk, milk powder, and cold beverage business. In fact, we have already talked about these businesses one by one before, so Laomi gave the estimated results directly. The old rule still assumes that it will be sold after five years to calculate the current price.
Lao Mi believes that Yili’s profit should be around 10.92 billion in five years (the gross estimate, gross estimate, and gross estimate are important things to say three times). We assume that it is sold at a price-earnings ratio of 20 times, then the corresponding market value The current market value is 218.4 billion, and the current market value is 234.2 billion. So it is obvious that Yili is in an overestimated position. In fact, if a company like Yili has slowed down, it will definitely not make a profit if it buys it normally (unless the cost of buying it before is very low), but Yili It is relatively stable, so you can only make a good profit by waiting for emergencies or a big bear market and buying at the bottom.
Finally, Mi was talking briefly.
At present, the blue chips in the stock market are basically in a bubble stage, and many of them are outrageously overestimated. Laomi is still continuing to reduce holdings. Of course, there is still a degree of reduction. It is not the kind of bargain-hunting. That kind, Laomi just wants to keep a part of the funds. In a bear market, I buy some cheap stocks. If the stock market really rises fiercely (the probability is very low), Laomi can also make a lot of positions left by him. How much is the profit? ? Just don't lose money.
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