[Introduction] Yili shares participated in the investor reception day event to study and judge industry trends and response measures
China Fund News reporter Qiu Dekun
When will the price of raw milk bottom out? How to achieve the 2024 goal? Can buybacks and dividends be increased?
html On the afternoon of August 9, Yili responded to the above questions raised by investors when participating in the 2024 investor online collective reception day event for listed companies in Inner Mongolia (hereinafter referred to as the reception day event).Industry insiders analyze that since the beginning of this year, domestic raw milk prices have continued to fall, causing poor overall performance in the industry. As a leading company in the industry, Yili Co., Ltd. has some reference significance for its research and judgment on the industry and how to deal with it.
In the second half of the year, the year-on-year decline in raw milk prices is expected to narrow.
Many investors asked Yili's management many times at the reception day: "When is this (milk) raw milk downward cycle expected to bottom out?"
The Ministry of Agriculture and Rural Affairs released a monthly report on the supply and demand of fresh agricultural products in May 2024. It shows that the oversupply of domestic raw milk continues. The purchase price of raw milk has declined year-on-year for 27 consecutive months, and the duration of decline is the longest since 2010. .
Zhao Lin, general manager of Yili's investor relations department, said that the supply of milk sources in the first half of 2024 is relatively sufficient, and the price of raw milk has declined year-on-year. In the second half of 2024, the company expects that as dairy consumption further improves, the year-on-year decline in raw milk prices is expected to narrow.
Affected by the decline in raw milk prices, many companies in the industry experienced year-on-year profit declines or even losses in the first half of 2024. As the industry leader, Yili's net profit after non-profit deductions in the first quarter of 2024 was 3.728 billion yuan, a year-on-year increase of 7.97%.
The picture shows: Part of the financial data of Yili Co., Ltd.’s first quarter report of 2024
Recently, Li Shengli, chief scientist of the National Dairy Industry Technology System, revealed that the surplus of raw milk will be more serious in 2024 than in 2023. As the purchase price of raw milk continues to fall, milk prices and costs have been inverted for the first time since the national dairy system was recorded.
Qiu Xiangmin, secretary of the board of directors of Yili Co., Ltd., said that the dairy market is in a period of oversupply in the short term, and the market consumption potential needs to be continuously stimulated. However, in the long term, the national per capita milk consumption is still far lower than the global and Asian averages, which bodes well for the dairy market. There is still potential for continued growth in consumption.
Can the 2024 goal be achieved?
Investors have repeatedly asked the management of Yili Co., Ltd. whether the company is confident that it can achieve the 2024 business goals set based on the 2023 annual report? In response to the continued decline in raw milk and consumer prices, what measures does the company take?
In 2023, Yili Co., Ltd. will achieve total operating revenue of 126.179 billion yuan and total profit of 11.721 billion yuan. The company mentioned in its 2023 annual report that based on industry development, it plans to achieve total operating income of 130 billion yuan and total profit of 14.7 billion yuan in 2024.
Qiu Xiangmin said that Yili relies on its rich R&D reserves to continuously launch new products to meet consumers' diverse needs for dairy products, and actively expands non-dairy and foreign businesses, hoping to make greater contributions in the future.
At present, Yili Co., Ltd. is in the four major areas of drinking water, beef, functional food, and pet food, and its business is in the process of building a business model.
In addition, investors suggest that Yili Co., Ltd. cooperates with multiple well-known brands, or learns from well-known foreign brands to develop chocolate puffed products to further enhance its brand influence.
Qiu Xiangmin said that Yili will pay attention to the demand for milk in various industries and will also cooperate with retailers or brands to create products.
responded to dividends and buybacks
Many investors directly suggested at the reception day: "Yili (shares) will increase its buyback and cancellation efforts and increase dividends!"
html In April, Yili Shares launched a share buyback plan, planning to The company's own funds of 1 billion to 2 billion yuan will be used to repurchase shares to reduce registered capital, and the repurchase price shall not exceed 41.88 yuan/share (inclusive).Lai Chunling, securities affairs representative of Yili Securities, said that as of the end of July, the company had invested nearly 300 million yuan (excluding transaction costs) to repurchase a total of 11.6417 million shares, accounting for 0.1829% of the company's total share capital.
Many investors have the above demands, mainly because the stock price of Yili shares has been in a downward trend in recent years.
From November 5, 2021 to August 9, 2024, Yili’s shares fell by 39.22%. As of the close of trading on August 9, 2024, Yili's stock price was 24.19 yuan per share, with a total market value of 154 billion yuan.
Many investors also suggested that Yili Shares increase the frequency of dividends, including increasing mid-term dividends or paying dividends two to four times a year.
Yili Co., Ltd. did not respond directly, only mentioning that it has been actively responding to the regulatory requirements for further improving the normalized dividend mechanism of listed companies.
In 2023, the dividend rate of Yili shares will reach 73.25%. If the amount of cash dividends included in the repurchase of shares is included, the company's total dividends account for approximately 80% of the net profit attributable to the parent company. Qiu Xiangmin said: "In the future, the company will continue to reward shareholders with higher dividend rates."
However, Yili's continued high dividends and high debt have also made investors worry about whether it will have a negative impact on its ongoing operations.
As of the end of the first quarter of 2024, Yili's total assets were 161 billion yuan, total liabilities were 98.15 billion yuan, and the asset-liability ratio was 60.95%.
Qiu Xiangmin said that the company has fully evaluated its future cash flow and asset situation and will not have an impact on operations under the current dividend level. In the future, the company will rationally use cash dividends and other methods to share development results with investors.
Editor: Captain
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