YILI(SH:600887) Huafu Securities·2024-02-01 16:00Investment Rating - The report assigns a "Buy" rating for the company with a target price of 38.39 CNY per share [2][33]. Core Insights - The company is positioned as a global health food provider with a strong management team and deep channel barriers, aiming to become the world's leading dairy company by 2030 [12][21]. - The dairy industry in China has significant growth potential, particularly in underdeveloped markets, with a clear dual oligopoly structure between the company and its main competitor [17][18]. - The company is focusing on product innovation and digital transformation to enhance operational efficiency and market reach [29][30]. Summary by Sections 1. Management and Channel Advantages - The company has a stable and experienced management team, which is crucial for maintaining strategic continuity and operational efficiency [12][13]. - The "network weaving plan" initiated in 2006 has strengthened the company's channel management, particularly in lower-tier markets [14]. 2. Industry Growth Potential - China's per capita dairy consumption is still below global averages, indicating room for growth, especially in rural areas [17][18]. - The company is well-positioned to capitalize on emerging segments such as adult milk powder and low-temperature fresh milk, which are experiencing rapid growth [18][21]. 3. Steady Performance in Core Products - The company maintains a strong market share in liquid milk, infant formula, and ice cream, with ongoing product upgrades and innovations [21][22]. - The liquid milk segment is expected to see steady revenue growth, driven by increased health awareness among consumers post-pandemic [30]. 4. Profit Margin Improvement Factors - The company aims to increase its net profit margin to 9%-10% by 2025 through product mix optimization and cost management [28]. - The reduction in raw milk prices is anticipated to further enhance profit margins [28]. 5. Digital Transformation Initiatives - The company is advancing its digital transformation to improve marketing and supply chain efficiency, which is expected to drive future growth [29][30]. - The establishment of a smart manufacturing base is set to significantly enhance production efficiency [29]. 6. Financial Projections - Revenue forecasts for 2023-2025 are 1274.89 billion, 1358.82 billion, and 1467.53 billion CNY, with expected growth rates of 3.9%, 6.6%, and 8.0% respectively [33]. - Net profit projections for the same period are 104.25 billion, 116.38 billion, and 132.14 billion CNY, with growth rates of 10.5%, 11.6%, and 13.5% respectively [33].