得益于CPI再通胀及周期性复苏；2025财年/2026年一季度展望

Beneficiary from CPI reflation&cyclicalrecovery; FY25/1Q26 preview Reiterate Rating:BUY| PO:33.00 CNY| Price:26.44 CNY Threereasons for Buy: recovery, yield & overhang removal 09 April 2026 We lift 2025E EPS 3% and largely retain 2026E EPS. We also maintain Buy rating withPO of RMB33. We regard Yili as a CPI reflation & cyclical recovery pick. 1) China’s cowherd capacity cut is nearing an end, with raw milk prices having bottomed aroundRMB3/kg since 2Q25 and expected to trend up in 2H26. Historically, dairy companies’earnings are positively correlated with the raw milk cycle (barring an abnormal raw milkprice surge). With the reversal of“4D”shocks (demand, deflation, destocking and de-consolidation) in the prior raw milk down-cycle, we expect improving sales growth in2026/27, evidenced by YTD topline recovery of both Yili and Mengniu. 2) Yili now offersan attractive yield of c.5%, supported by its 3-year shareholder return plan (committing a Equity Chen Luo, CFA>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 2009 Jack Chen>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 8776 FY25/1Q26 earnings preview (results due April 29) 1) FY25. We expect results to be in-line/slightly ahead, with sales/NPAT/core NPAT+0.6%/+30%/+20% and net margin of 9.5% (vs. its guide of 9%+). Sales were forecastto be -3% in 4Q25, due to stringent channel inventory control and a late CNY. 2) 1Q26. ruofan.chen@bofa.com We estimate sales to be +3%, with slight liquid milk growth and faster growth in othersegments (led by milk powder), while margins could remain largely stable. This might beslower than Mengniu (with estimated HSD sales growth) in 1Q26, due to a higher base(Yili’s sales were +1.4%, while Mengniu declined by HSD in 1Q25). We also see market FY26: topline as a priority, with largely stable margins Yili will also offer its FY26 guide by end-April. With a solid start to 2026, we prudentlyforecast 4% revenue growth in FY26. As Yili’s net margin has increased >1% over 2023-2025 and its topline outlook is improving, we expect the company to prioritize topline in Acronyms: CNY: Chinese New YearHSD: high single-digit >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that takeresponsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. Refer to important disclosures on page 10 to 12. Analyst Certification on page 6. PriceObjective Basis/Risk on page 6. iQprofileSMYili Industrial Group (A) Company SectorFood-Dairy Products Company Description Yili is the largest dairy producer in China, and the 8th largestdairy by revenue globally (according to Rabobank) in 2016.Ithas over 30% market share in liquid milk. The companymanufactures and distributes dairy products, such as UHTmilk, milk beverages, yogurt, ice cream and infant formula Investment Rationale We rate Yili as Buy. Despite the challenging dairy market,Yili is still our preferred name in the sector thanks to itsrapid market-share gain, favorable category mix, strongexecution track record and solid dividend yields. It's also a Stock Data Price to Book Value Earnings revisions Exhibit1: Yili: Earnings revisionWeliftour 2025 EPS3%and largely retain 2026E EPS 9M25 results recap Focus charts BofA GLOBAL RESEARCH Financials Price objective basis & risk Yili Industrial Group (XIDRF) Our PO of RMB33.0 is based on a 50/50 blend of P/E (RMB30.6) and DCF (RMB35.4). Weapply 18x 2025E P/E, around 15% discount to its mid-cycle valuation to reflect dairydemand slowdown. For our DCF valuation, we apply a 9.4% WACC, a 0.8 beta and 3% The upside/downside risks to our price objective are (1) a more favorable or unfavorableraw milk price trend, (2) easing and more rational, or intensified competition from peers,and (3) faster- or slower-than-expected sales and margin recovery. Analyst Certification I, Chen Luo, CFA, hereby certify that the views expressed in this research reportaccurately reflect my personal views about the subject securities and issuers. I alsocertify that no part of my compensation was, is, or will be, directly or indirectly, related Disclosures Important Disclosures Equity Investment Rating Distribution: Global Group (as of 31 Mar 2026) FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicatorsof potential price fluctuation, are: A - Low, B - Medium and C - High. INVESTMENT RATINGS reflect the analyst’s assessment of both a stock’s absolute total retu