Equity Analysis /

CN : Inner Mongolia Yili Indus-A - Mix upgrade to offset raw milk price rise

    Lei Yang
    Lei Yang

    Research Analyst

    18 January 2021
    Published byCGS-CIMB

    We hosted an investor conference call with Yili on 18 Jan. Although demand for UHT milk products as a New Year gift in 1Q21 might be affected since the government urged people not to make unnecessary trips for CNY to control the pandemic, demand for protein products because of health concerns will continue to drive strong sales growth of UHT milk in FY21F. We expect Yili to deliver strong 1Q21F results. Management said Yili will mitigate margin pressure from the raw milk price increase through a mix upgrade and fewer promotions in FY21F. We expect Yili’s sales to grow by 12.7% and net profit by 14.4% yoy in FY21F. We reiterate our Add rating with an unchanged DCF-based TP of Rmb60.