External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Inner Mongolia Yili Industrial Group (A) / Equity Bottom-Up

<ul><li>We forecast Yili’s 4Q revenue/net profit to reach RMB30.7bn/1.1bn.</li><li>Excluding Ausnutria, of which we forecast a LSD sales decline, we expect recurring revenue to grow MSD% YoY.</li><li>This will be predominately composed of: 1) HSD growth in basic white milk, for which premiumization momentum drives Satine to grow by double digits; 2) LSD growth in milk powder, for which adult formula to grow by double digits. On the flip side, headwinds prevail in a few segments that balance out the strength. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We forecast Yili’s 4Q revenue/net profit to reach RMB30.7bn/1.1bn.Excluding Ausnutria, of which we forecast a LSD sales decline, we expect recurring revenue to grow MSD% YoY.This will be predominately composed of: 1) HSD growth in basic white milk, for which premiumization momentum drives Satine to grow by double digits; 2) LSD growth in milk powder, for which adult formula to grow by double digits. On the flip side, headwinds prevail in a few segments that balance out the strength. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yili (600887 CH) - 4Q Preview: Rev/Np Reach RMB30.7bn/1.1bn

<ul><li>Yili’s 3Q revenue/net profit stood at RMB31.2/3.1bn, up +2.7%/59.5%, and both came in in line with our estimates.</li><li>The former was largely driven by a sequential acceleration in liquid milk sales to +8.5% YoY (from -2.6%/+0.5% in 1Q/2Q) that offset a rather disappointing momentum in low-temp/IMF sales (-35.7%/-3.9% YoY).</li><li>Meanwhile, the latter grew off a low comps with a 1.6pp expansion in GPM, along with a notable 1.6pp decline in opex ratio which we previously asserted it to be a major earnings growth driver. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yili’s 3Q revenue/net profit stood at RMB31.2/3.1bn, up +2.7%/59.5%, and both came in in line with our estimates.The former was largely driven by a sequential acceleration in liquid milk sales to +8.5% YoY (from -2.6%/+0.5% in 1Q/2Q) that offset a rather disappointing momentum in low-temp/IMF sales (-35.7%/-3.9% YoY).Meanwhile, the latter grew off a low comps with a 1.6pp expansion in GPM, along with a notable 1.6pp decline in opex ratio which we previously asserted it to be a major earnings growth driver. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yili Industrial (600887 CH) – 3Q Rev/Np +3%/59%; Cost Cut Was Key to Profit Growth

<ul><li>2Q results came in slightly below us, with revenue and net profits growing only 1%/3% (vs CMBIe MSD growth for both), respectively.</li><li>We attribute this to &lt;1%/- 9% growth/decline in liquid milk/milk powder revenue, when both exhibited slowdown from 1Q. Management did not explicitly revise down the 10% full year revenue guidance, and looks forward to seeing the below to help attain the target.</li><li>These include 1) the continued double-digit growth in Satine, when premium room-temp milk remains popular among health-conscious consumers; 2) a recovery on 2C demand for cheese products, as initiatives taken for 2C (new launches) and 2B (consumer education) should start bearing fruit; 3) a gradual recovery on low-temp SKU along with the resumption of consumption habits post-pandemic; and 4) the resolution of patent bottleneck associated with Ausnutria. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

2Q results came in slightly below us, with revenue and net profits growing only 1%/3% (vs CMBIe MSD growth for both), respectively.We attribute this to &lt;1%/- 9% growth/decline in liquid milk/milk powder revenue, when both exhibited slowdown from 1Q. Management did not explicitly revise down the 10% full year revenue guidance, and looks forward to seeing the below to help attain the target.These include 1) the continued double-digit growth in Satine, when premium room-temp milk remains popular among health-conscious consumers; 2) a recovery on 2C demand for cheese products, as initiatives taken for 2C (new launches) and 2B (consumer education) should start bearing fruit; 3) a gradual recovery on low-temp SKU along with the resumption of consumption habits post-pandemic; and 4) the resolution of patent bottleneck associated with Ausnutria. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yili Industrial (600887 CH) – 2Q Rev/Np +1%/3%; All Eyes on Cost Savings

<ul><li>We hosted a NDR with Yili management to obtain follow-up post the company’s investor day on 14th Jul and 2Q operational update.</li><li>Overall, Yili maintained its initial guidance of a HSD top line growth with a 0.3pp uptake in net margins for the year.</li><li>On a sequential basis, 2Q sales has further accelerated from that of 1Q. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We hosted a NDR with Yili management to obtain follow-up post the company’s investor day on 14th Jul and 2Q operational update.Overall, Yili maintained its initial guidance of a HSD top line growth with a 0.3pp uptake in net margins for the year.On a sequential basis, 2Q sales has further accelerated from that of 1Q. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yili Industrial (600887 CH) – Full-Year Guidance Unchanged

Equity Analyst

Xin Yu, CFA

<ul>
<li>4Q22 result beat and 1Q23 result was roughly in line</li>
<li>Revenue growth to accelerate and margin to improve in 2023</li>
<li>Long-Term targets remain unchanged and the valuation becomes attractive now</li>
</ul>


4Q22 result beat and 1Q23 result was roughly in line
Revenue growth to accelerate and margin to improve in 2023
Long-Term targets remain unchanged and the valuation becomes attractive now


China

Inner Mongolia Yili Industrial Group Co., Ltd. produces milk, powdered milk, ice cream, and other dairy products.  The Company also produces frozen food and noodles.

Inner Mongolia Yili Industrial Group (A) (600887 CH)

Inner Mongolia Yili Industrial Group (A) (600887 CH)

Yili (600887 CH) - 4Q Preview: Rev/Np Reach RMB30.7bn/1.1bn

We forecast Yili’s 4Q revenue/net profit to reach RMB30.7bn/1.1bn. Excluding Ausnutria, of which we forecast a LSD sales decline, we expect...

CMB International

Yili Industrial (600887 CH) – 3Q Rev/Np +3%/59%; Cost Cut Was Key to Profit Growth

Management has guided down full-year sales growth target to MSD% (from low-teen), and we believe this would not come in as a total surprise to the...

CMB International

Yili Industrial (600887 CH) – 2Q Rev/Np +1%/3%; All Eyes on Cost Savings

2Q results came in slightly below us, with revenue and net profits growing only 1%/3% (vs CMBIe MSD growth for both), respectively.

CMB International

Yili Industrial (600887 CH) – Full-Year Guidance Unchanged

We hosted a NDR with Yili management to obtain follow-up post the company’s investor day on 14th Jul and 2Q operational update.

CMB International

Yili: 4Q22 and 1Q23 Results - Buy

4Q22 result beat and 1Q23 result in line. Revenue growth to accelerate and margin to improve in 2023. Attractive valuation.

Xin Yu, CFA