| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.80 | 13 |
| Intrinsic value (DCF) | 16.01 | -39 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 0.38 | -99 |
Inner Mongolia Yili Industrial Group Co., Ltd. stands as China's leading dairy producer and one of the world's largest dairy companies, headquartered in Hohhot, Inner Mongolia. Founded in 1956, Yili has grown into a comprehensive dairy powerhouse offering a diverse product portfolio including liquid milk, milk powder, yogurt, ice cream, cheese, and packaged drinking water. Operating in the consumer defensive sector within packaged foods, Yili dominates the Chinese dairy market with extensive distribution networks spanning both domestic and international markets. The company's vertically integrated operations ensure quality control from pasture to production, leveraging China's growing dairy consumption trends and increasing health consciousness among consumers. Yili's strong brand recognition, extensive R&D capabilities, and strategic acquisitions have positioned it as a national champion in China's essential food industry, serving millions of consumers daily while maintaining robust supply chain resilience.
Yili Industrial Group presents a compelling investment case as China's dairy market leader with stable defensive characteristics. The company demonstrates strong financial health with CNY 115.8 billion in revenue and CNY 8.45 billion net income, supported by robust operating cash flow of CNY 21.7 billion. With a market capitalization of CNY 178.6 billion and a conservative beta of 0.632, Yili offers relative stability in the consumer defensive sector. The company maintains a reasonable debt level (CNY 41.3 billion) against substantial cash reserves (CNY 25.4 billion) and pays an attractive dividend of CNY 1.22 per share. However, investors should monitor China's demographic trends, potential regulatory changes in the food industry, and competitive pressures from both domestic and international dairy players. The company's scale advantages and market dominance provide defensive qualities, but growth may be constrained by market saturation in certain dairy categories.
Yili Industrial Group maintains a dominant competitive position in China's dairy market through several key advantages. The company benefits from massive scale economies, extensive distribution networks reaching both urban and rural markets, and strong brand loyalty built over decades. Yili's vertical integration allows for quality control throughout the supply chain, particularly important in a market sensitive to food safety concerns following past dairy scandals. The company's extensive R&D capabilities enable continuous product innovation and differentiation across dairy categories. However, Yili faces intensifying competition from domestic rival Mengniu Dairy, which has been aggressively gaining market share through product innovation and marketing. International players like Nestlé and Danone also compete in premium segments, leveraging global brand recognition and technical expertise. Yili's competitive positioning is strengthened by its deep understanding of Chinese consumer preferences and government relationships, but it must continuously invest in product quality and safety to maintain consumer trust. The company's scale provides cost advantages in procurement and distribution, but rising input costs and potential trade disruptions could impact margins. Yili's international expansion efforts face challenges against established global dairy giants with stronger international footprints.