(以下内容从招银国际《2Q rev/np +1%/3%; all eyes on cost savings》研报附件原文摘录)
伊利股份(600887)
2Q results came in slightly below us, with revenue and net profits growing only1%/3% (vs CMBIe MSD growth for both), respectively. We attribute this to <1%/-9% growth/decline in liquid milk/milk powder revenue, when both exhibited slowdown from 1Q. Management did not explicitly revise down the 10% full year revenue guidance, and looks forward to seeing the below to help attain the target. These include 1) the continued double-digit growth in Satine, when premium room-temp milk remains popular among health-conscious consumers; 2) a recovery on 2C demand for cheese products, as initiatives taken for 2C (new launches) and 2B (consumer education) should start bearing fruit; 3) a gradual recovery on low -temp SKU along with the resumption of consumption habits post-pandemic; and 4) the resolution of patent bottleneck associated with Ausnutria. While these are legitimate to us, however, some of them might take further time to materialize, and the implied 15% 2H revenue growth looks to be quite challenging to achieve, in our view. On the contrary, cost efficiency could be the last resort to achieve a 9% net margins by 2025E, and the trajectory was well-tracked with a 0.6pp decrease in SG&A ratio in 1H. We remain buyer of Yili.
Other call takeaway. 1) UHT yogurt is undergoing a transition, when the sales of new SKU has not fully caught up with the obsolete. The decline has sequentially narrowed with momentum improving in July/August; 2) Goodwill impairment on Ausnutria could be detrimental, and Yili is striving its best to prevent this from happening. Excluding Ausnutria, Yili delivered 2% organic revenue growth for 1H; 3) 70% payout ratio will be maintained as capex cycle has already peaked-out; 4) raw material inventory writeoff of RMB400mn was a drag to 1H net profits, and the same could happen in 2H as the mismatch between demand and supply remains.
Earnings change. We lower our 2023-24E revenue by 3% each to reflect our concern. We also trim our gross margins by 0.4pp to reflect the destocking impact from smaller IMF brands upon the enactment of the new license legislation. These are partially mitigated by a 0.2pp lower in SG&A ratio, and result in a 2% cut in our 2023E net profits.
Valuation. Our new TP is based on an updated 21.0x (from previously 24.0x) roll-forwarded mid-24E PE, which benchmarks to -1sd below average (from previously at average). We now value both Mengniu (2319 HK, BUY), Yili (600887 CH, BUY) and Feihe (6186 HK, HOLD) at -1sd below average, in view of a lukewarm dairy demand amid a faltering consumption recovery.
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