YILI(600887) 信达证券·2024-10-31 13:31Investment Rating - The investment rating for the company is "Buy" [1]. Core Views - The report highlights a recovery in revenue quarter-on-quarter, with profits exceeding expectations. The company achieved operating revenue of 89.039 billion yuan in the first three quarters of 2024, a year-on-year decrease of 8.59%, while net profit attributable to shareholders reached 10.869 billion yuan, an increase of 15.87% [1]. - In Q3 2024, the company reported operating revenue of 29.125 billion yuan, a year-on-year decrease of 6.67%, and a net profit of 3.337 billion yuan, up 8.53% year-on-year. The adjusted net profit attributable to shareholders was 3.184 billion yuan, an increase of 19.86% year-on-year [1]. - The report notes that the company has seen a significant recovery in revenue due to channel inventory clearance and a reduction in the year-on-year decline in revenue [1]. Summary by Sections Financial Performance - The company’s Q3 gross margin was recorded at 35.05%, an increase of 2.47 percentage points year-on-year. This improvement is attributed to a decrease in the average price of raw milk by 14.9% year-on-year and a narrowing decline in retail prices [1]. - The report indicates that the company’s overall expense ratio has decreased, with sales expense ratio increasing by 1.08 percentage points year-on-year, while management, R&D, and financial expense ratios decreased [1]. - The net profit margin for Q3 reached 11.41%, an increase of 1.62 percentage points year-on-year, indicating a strong profit performance that exceeded market expectations [1]. Market Position - The company maintains a leading position in all product categories, with liquid milk holding the top industry position, and the milk powder segment achieving the highest sales volume in the Chinese market [1]. - The report emphasizes that the company is well-positioned to capitalize on market recovery, with expectations for a substantial turnaround in the dairy product market in the coming year [1]. Earnings Forecast - The earnings per share (EPS) estimates for 2024-2026 are projected at 1.87, 1.70, and 1.89 yuan, respectively, corresponding to price-to-earnings (PE) ratios of 15X, 16X, and 15X [1].