YILI(600887) KAIYUAN SECURITIES·2024-08-31 10:00Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6] Core Views - The company is experiencing short-term performance pressure due to channel adjustments, but there is an expectation for a sequential improvement in the second half of the year [6][7] - The company's total revenue for H1 2024 was 599.15 billion, a year-on-year decrease of 9.5%, while the net profit attributable to shareholders was 75.31 billion, an increase of 19.4% [6] - The report anticipates a steady improvement in long-term profitability due to diversified product categories, enhanced channel matrix, and strengthened brand power [6] Financial Performance Summary - In Q2 2024, total revenue was 273.38 billion, down 16.5% year-on-year, with a net profit of 16.08 billion, down 40.2% year-on-year [6] - The company has slightly adjusted its profit forecast for 2024-2026, expecting net profits of 116.8 billion, 115.6 billion, and 126.0 billion respectively [6] - The earnings per share (EPS) for the same period are projected to be 1.83, 1.82, and 1.98, with corresponding price-to-earnings (PE) ratios of 12.3, 12.5, and 11.4 [6] Business Segment Performance - The liquid milk segment saw a significant decline of 19.6% year-on-year, while the milk powder segment grew by 16.5% [7] - The company maintains the leading market share in both infant and adult milk powder, with shares of 16.9% and 24.3% respectively [7] - The cold drink segment faced a decline of 44.3% due to adverse weather conditions and high base effects from the previous year, but the company remains the industry leader in both online and offline revenue [7] Profitability Metrics - In Q2 2024, the gross margin improved by 1.1 percentage points to 33.8%, while the net margin decreased by 2.3 percentage points to 5.9% [8] - The increase in sales expense ratio to 20.6% was a contributing factor to the decline in net margin [8] - The report projects that the gross margin will continue to improve due to stable or slightly decreasing raw milk costs and ongoing optimization of product and business structure [8]