YILI(600887) Xinda Securities·2024-09-01 07:31Investment Rating - The investment rating for the company is "Buy," consistent with the previous rating [1]. Core Views - The company reported a revenue of 59.9 billion yuan for H1 2024, a year-on-year decrease of 9.49%, while the net profit attributable to shareholders was 7.531 billion yuan, an increase of 19.44% year-on-year [1]. - The company is actively adjusting its shipment pace to clear channel inventory, which has impacted revenue in Q2 2024, particularly in liquid milk, while the milk powder segment showed strong performance [2][3]. - The company is expected to see a gradual recovery in revenue and profit starting from Q3 2024, as the adjustments made in Q2 are nearing completion [3]. Summary by Sections Financial Performance - In Q2 2024, the company achieved a revenue of 27.3 billion yuan, down 16.54% year-on-year, with a net profit of 1.608 billion yuan, down 40.21% year-on-year [1]. - The gross margin for Q2 was 33.84%, an increase of 1.11 percentage points year-on-year, primarily due to the decline in raw milk prices [2]. - The net profit margin for Q2 was 5.92%, a decrease of 2.32 percentage points year-on-year, affected by increased sales expenses and asset impairment losses [2]. Market Position and Competitive Advantage - The company maintains a strong competitive advantage, with its liquid milk products performing better than the industry average despite adjustments in shipment [2]. - The milk powder segment has seen significant growth, with market share reaching 16.9% for infant formula, and the adult powder segment remains the market leader [2]. - New business segments, such as cheese and water beverages, have also shown robust growth, with cheese C-end business recovering and achieving positive growth in Q2 [2]. Earnings Forecast and Valuation - The company is expected to have an EPS of 1.81 yuan in 2024, with a corresponding P/E ratio of 13 times, indicating a low valuation compared to historical levels [3]. - The long-term outlook for dairy consumption in China remains positive, correlating with GDP growth, suggesting potential for further consumption increases [3].