Yili shares (600887): Buybacks are used to stimulate development confidence

Yili shares (600887): Buybacks are used to stimulate development confidence

The company plans to repurchase the company’s total shares 2.

5 to 5%, fully enjoying the new regulatory dividend.

The re-encouragement of the previous round of repurchases has strengthened the company’s cohesion and achieved steady growth in performance.

Year-to-date, the company ‘s performance exceeded market expectations, and strong revenue growth is expected to make the profit inflection point come earlier. It is recommended to actively arrange investment opportunities in the next two years.

Slightly adjusted EPS1 for 19-21.

14.1.

32, 1.

63, corresponding to a growth rate of 8%, 16%, 23%, given a price of 27XPE for 20 years, a target price of 35 yuan, maintaining the “strong recommendation-A” rating.

Event: Yili shares announced that it intends to use its own funds to not exceed RMB 35.

The price of 00 yuan / share (150% of the average price in the first 30 trading days) repurchases 2 of the company’s total shares.

5 to 5% is used to implement equity incentives, and the repurchase period is no more than 12 months from the date of approval of the plan by the board of directors.

The large-scale repurchase has enough incentives to fully enjoy the new regulatory dividend.

The number of shares repurchased this time is not less than 151,953,191 shares and not more than 303,906,380 shares, accounting for 2 of the total share capital.

5% -5%, the upper limit of the amount according to the price limit is 5.3-10 billion.

We believe that this repurchase amount breakthrough, leaving sufficient margin for future incentives, the next round of incentives or expanding the scope of incentives (29 people in 2006, 317 people in 14 years, and 294 people in 16 years).

In the short term, it shows development confidence and releases positive signals.

In the long run, because repurchase is an equity incentive, it will help strengthen the company’s cohesion and benefit long-term development.

In addition, the company formulates share repurchase and can enjoy the new repurchase policy, which may involve: 1) the holding time of treasury shares is relaxed from one year to three years: it can be redistributed or transferred within three years for the purpose of distributing incentives.

2) The amount of repurchase is included in the amount of cash dividends: The new rules treat cash paid for repurchased shares as cash dividends, and the amount of share repurchases that have been implemented in the year is calculated by the amount of cash dividends, which is a concept of cash dividends.

3) Green channel for financing: According to the “Opinions on Supporting Listed Companies to Repurchase Shares”, listed companies apply for refinancing after implementing share 杭州桑拿论坛 repurchases, and the financing scale does not exceed ten times the total amount of share repurchases in the last twelve months. RefinancingThe board of directors that issued the stocks has decided that the date of the previous fund raising will not be limited by the financing interval, and it will give priority to such refinancing applications during the review.

With reference to the previous round of repurchase incentives, layout investment opportunities in the next two years.

The last round of re-examination: 1) Share repurchase: The announcement of the repurchase plan was announced on July 9, 2015, and the maximum repurchase price was 18.

13 yuan, the first repurchase on September 11, announced on November 3 that the company repurchased shares of 63,941,958 shares, accounting for 1 of the company’s total share capital.

04%, the highest price is 16.

48 yuan / share, the lowest transaction price is 15.

The total amount paid for 01 yuan / share (the actual purchase price is about 20% from the upper limit) is 1 billion yuan.

2) Equity incentive: On December 28, 2016, an equity incentive plan was announced, granting 45 million stock options and 15 million shares of stock, stipulating unlocking conditions for two years of 17, 18, and then unlocking successfully.

Since the end of 16 years, performance estimates have double-clicked and are expected to nearly double.

With reference to the previous round of equity incentives, we believe that the repurchase price and the grant price are fair and reasonable, and after the implementation of the distribution incentives, the company’s performance has achieved steady growth under the high-level high-level cohesion.

We believe that after launching a new round of equity incentives in 20 years, we will improve and strengthen cohesion to ensure the company’s rapid development and achieve strategic goals. We recommend that investors actively arrange investment opportunities in the next two years.

Outlook for the next 1-2 years: income exceeds expectations, and the starting point of profit inflection point is expected.

We mentioned in the comments in the annual report that the company will operate around the top five hundred billion in 19-20, and it is likely to enter the year of profit release by 2021. The reasons are: 1) After an upward cycle of about three years from 18-20 years,20-21 may enter a price increase year, or raw milk prices will turn down. From the historical data, in the last year when raw milk prices go up or raw milk prices go down for the first year, the company’s profit often strengthens rapidly (such as 13-14 Years); 2) After the mid-term target is reached in 21, the cost is expected to slow down gradually; 3) Under the situation of increasing scale, the company’s profit will return to 9 in 16 years.

About 4% is reasonable.

From the beginning of the year to this year, Yili’s fundamentals have been strong and exceeded market expectations. We believe that the current profit growth of Yili is higher than expected. The profit inflection point has arrived earlier. From a one-year perspective, if demand continues to exceed expectations, The period of corporate profit release is expected to be advanced to 2020 or even earlier.

However, we also recommend that investors from the perspective of market share and industry pricing power, buy the leading strength of Yili increasingly strengthened.

Repurchase is used as an incentive to demonstrate development confidence and maintain the investment rating of “Highly Recommended-A”.

19 years will be the key sprint year for the company to achieve the 100 billion revenue target in 2020. The company’s target management is clear. Through effective incentives to maintain efficient operations, the leading style is fully demonstrated.

Slightly adjusted EPS1 for 19-21.14.1.

32, 1.

63 (previous time 1.

14.1.

27, 1.

60), corresponding to a growth rate of 8%, 16%, 23%, given 27XPE for 20 years, a target price of 35 yuan (previously 32 yuan), maintaining the “strong recommendation-A” rating.

Risk warning: demand declines, costs increase, competition intensifies, and new product promotion falls short of expectations.