Yili with a Good Momentum of Development

(1) The sales situation in Q2 was positive with product inventory back to normal level
The top management of Yili informed that the revenue of the company in Q2 resumed a positive trend, product inventory at different sales channels was back to the normal level. The company expects to materialize its revenue target in 2020 (97 billion yuan as turnover, up 7.5% YoY).
(2) Raw milk cost faces upsurge pressure.
The top management also stated that alongside the improvement of the pandemic, demand for dairy could resume, yet raw milk cost shall still confront upsurge pressure.
(3) Still lots of uncertainties
There are many uncertainties due to the pandemic, the price for imported raw material, growth rate of the demand for dairy products and overseas market exploration.
(4) Intention to invest more for pasteurized milk business
Investment for pasteurized milk shall continue to grow and there shall be facilitation of the habit development for pasteurized milk consumption.
Currently Yili mainly promotes pasteurized milk at present in cities of first and second tiers and coastal cities that have the consumption habit and plans to promote in more cities in the latter half of the year. Yili shall continue to investment more for pasteurized milk business, for fostering consumers’ habit, for optimizing production capacity layout, for improving production capacity and technological level, for exploring profit generation ways from pasteurized milk and for continual enlargement of market share.
(5) Intention to enlarge adults’ cheese snack market
The Cheese Department of Yili worked on butter (Westpro and Westgold), whipping cream, shredded Mozzarella cheeses, cheese slices and children’s cheese. It introduced pouch cheese targeting adults in 2020, trying to foster adults’ cheese snack market.
Further expansion of production capacity
The annual production capacity of Yili was close to 12 million tons by the end of 2019. The company informed the utilization rate of the capacity is high and shall continue to enlarge the capacity by building new projects. A follow-up study finds that the company is devoting great effort to improve raw milk production and dairy processing capacity in Inner Mongolia, and meanwhile it is setting up new projects in both North China and East China. It invests to set up a dairy faring and processing project in Neiqiu County, Xingtai, Hebei, the total budget is 2 billion yuan. When set up, there shall be 100,000 dairy cattle and the daily milk output shall be 1,500 tons. In East China, Yili shall increase investment in Hefei, Anhui, for setting up a cluster of dairy businesses worth 10 billion yuan.