Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

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

<p>We initiate coverage of Inner Mongolia Yili Industrial Group, or Yili, with a fair value estimate of CNY 17.50, along with narrow moat and stable moat trend ratings. Our fair value estimate implies forward price/earnings of 18.6 times, enterprise value/EBITDA of 11.4 times, and free cash flow yield of 4% to estimated fiscal 2017 earnings and cash flow. The shares are trading at 1.04 times our fair value estimate, and we view the shares as fairly valued.</p><p>We believe Yili has a narrow economic moat, derived from cost advantage and its entrenched distribution network. Yili’s enviable market share gives the firm a certain degree of cost advantage over regional competitors, which is demonstrated by its industry-leading profitability. Additionally, the firm has achieved high penetration of distribution channels, with over 2 million points of sale in both urban and rural markets, leading an outperformance in growth to its peers. Quantitatively, the company has consistently delivered solid returns on invested capital, averaging 24% during 2010-15 and we forecast its ROIC to maintain an average of 35.9% through 2020.</p><p><em>Analyst: Allen Cheng</em></p>

We initiate coverage of Inner Mongolia Yili Industrial Group, or Yili, with a fair value estimate of CNY 17.50, along with narrow moat and stable moat trend ratings. Our fair value estimate implies forward price/earnings of 18.6 times, enterprise value/EBITDA of 11.4 times, and free cash flow yield of 4% to estimated fiscal 2017 earnings and cash flow. The shares are trading at 1.04 times our fair value estimate, and we view the shares as fairly valued.We believe Yili has a narrow economic moat, derived from cost advantage and its entrenched distribution network. Yili’s enviable market share gives the firm a certain degree of cost advantage over regional competitors, which is demonstrated by its industry-leading profitability. Additionally, the firm has achieved high penetration of distribution channels, with over 2 million points of sale in both urban and rural markets, leading an outperformance in growth to its peers. Quantitatively, the company has consistently delivered solid returns on invested capital, averaging 24% during 2010-15 and we forecast its ROIC to maintain an average of 35.9% through 2020.Analyst: Allen Cheng

Launching Coverage of Yili at CNY 17.50 FVE With Narrow Moat and Stable Trend; Shares Fairly Valued

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Thematic (Sector/Industry)

<p>It has been slightly over half a year since I joined this community, so here is a brief summary of stock calls that worked and stock calls that didn't work for me. </p><blockquote><p style="text-align: center;"><strong>But first, a note of thanks to the SK community</strong></p></blockquote><p>Besides doing an update, it is also an opportunity to thank everyone here at Smartkarma for your wonderful support (especially the Data Desk team) and collaborative work with fellow insight providers. Looking forward to a stellar year ahead together!</p><h2>Table showing IPO deals covered</h2><table class="table table-striped"><tbody>
<tr>
<td><strong>IPO</strong></td>
</tr>
</tbody></table>…

It has been slightly over half a year since I joined this community, so here is a brief summary of stock calls that worked and stock calls that didn't work for me. But first, a note of thanks to the SK communityBesides doing an update, it is also an opportunity to thank everyone here at Smartkarma for your wonderful support (especially the Data Desk team) and collaborative work with fellow insight providers. Looking forward to a stellar year ahead together!Table showing IPO deals covered

IPO

…

Founder, Supreme Peoples Court Monitor

Susan Finder

Founder

Supreme Peoples Court Monitor

<p>A senior judge of China's Zhejiang Province Higher People's Court gave a <a href="http://mp.weixin.qq.com/s?__biz=MjM5NjA3NDc5MA==&amp;mid=2654696679&amp;idx=1&amp;sn=de31519c793d3104b951aff8f5533d8a&amp;chksm=bd2110ae8a5699b82257b31d4423e80eb779f5de31303016012381e999a9c774bac4eaa2d167&amp;mpshare=1&amp;scene=5&amp;srcid=0123rxQfyxxt74qmE8hHGXcm#rd" target="_blank">status report</a> on civil and commercial litigation in his province, providing statistics as of the end of September, 2016. What he reported provides signals on the state of the economy there, a province critical to the Chinese economy.</p><h2>What is special about Zhejiang?</h2><p>Zhejiang is an important export base, accounting for about 12% of all Chinese exports in <a href="http://china-trade-research.hktdc.com/business-news/article/Facts-and-Figures/Zhejiang-Market-Profile/ff/en/1/1X000000/1X06BVYH.htm" target="_blank">2015</a>.  Many of the exporting companies are private and in 2015, private…</p>

A senior judge of China's Zhejiang Province Higher People's Court gave a status report on civil and commercial litigation in his province, providing statistics as of the end of September, 2016. What he reported provides signals on the state of the economy there, a province critical to the Chinese economy.What is special about Zhejiang?Zhejiang is an important export base, accounting for about 12% of all Chinese exports in 2015.  Many of the exporting companies are private and in 2015, private…

Bad Debt Litigation in China's Export Base

Founder, Riedel Research

David Riedel

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

<p><span class="s1"><em>GCSI Rises In December but Increased Polarization Predicts Volatility in 2017</em></span></p><ul><li class="li2"><span class="s1">In December the RRG Global Consumer Sentiment Index (GCSI) increased slightly to a level of .53, up from .5 in November and above the average reading of 0.37 for the first 11 months of the year.</span></li></ul><ul>
<li class="li2"><span class="s1">Upward momentum in the GCSI has been enough to offset concern about rising inflation and the uncertainty of the Trump presidency in the U.S. set to begin Jan 20th.</span></li>
<li class="li2">
<span class="s1">US dollar strength since Trump’s election in November dampened</span>…</li>
</ul>

GCSI Rises In December but Increased Polarization Predicts Volatility in 2017In December the RRG Global Consumer Sentiment Index (GCSI) increased slightly to a level of .53, up from .5 in November and above the average reading of 0.37 for the first 11 months of the year.
Upward momentum in the GCSI has been enough to offset concern about rising inflation and the uncertainty of the Trump presidency in the U.S. set to begin Jan 20th.

US dollar strength since Trump’s election in November dampened…


Global Consumer Sentiment Strong in Dec but Troubling Patterns Risk Volatility in 2017

Co-founder & Managing Director, Marketnomix 

Rajan Govil

Co-founder & Managing Director

Marketnomix 

Macroeconomics

<ul><li>Industrial production in China appears to be stabilizing above the 6.0% level</li><li>Impact of the economic and political policies of the incoming US administration as well as the impact of Brexit on China’s exports will need to be monitored</li><li>The RMB is likely to weaken as exports and economy slow and capital outflows continue</li></ul>

Industrial production in China appears to be stabilizing above the 6.0% levelImpact of the economic and political policies of the incoming US administration as well as the impact of Brexit on China’s exports will need to be monitoredThe RMB is likely to weaken as exports and economy slow and capital outflows continue

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)

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

Launching Coverage of Yili at CNY 17.50 FVE With Narrow Moat and Stable Trend; Shares Fairly Valued

We initiate coverage of Inner Mongolia Yili Industrial Group, or Yili, with a fair value estimate of CNY 17.50, along with narrow moat and stable...

Morningstar, Inc.

A Summary of Stock Calls and Actions

It has been slightly over half a year since I joined this community, so here is a brief summary of stock calls that worked and stock calls that...

Valerie Law, CFA

Bad Debt Litigation in China's Export Base

A senior judge of China's Zhejiang Province Higher People's Court gave a status report on civil and commercial litigation in his province,...

Susan Finder

Global Consumer Sentiment Strong in Dec but Troubling Patterns Risk Volatility in 2017

GCSI Rises In December but Increased Polarization Predicts Volatility in 2017In December the RRG Global Consumer Sentiment Index (GCSI) increased...

David Riedel

Marketnomix Insight: China

Industrial production in China appears to be stabilizing above the 6.0% level Impact of the economic and political policies of the incoming US...

Rajan Govil

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)