---
title: "Revenue Gap of 10 Billion Yuan, Net Profit Less Than Half: Mengniu Is No Longer on the Same Level as Yili"
description: "Mengniu has taken many detours in recent years, and the widening gap with its peers has become an indisputable fact. On February 28, Yili Co., Ltd. (600887.SH) took the lead in releasing its 2018 annual report. According to the report, Yili achieved total operating revenue of 79.553 billion yuan, a year-on-year increase of 16.89%. Revenue increased by 11.5 billion yuan, the largest increase in history. At the same time, Yili's net profit attributable to shareholders of the listed company was 6.439 billion yuan, up 7.31% year-on-year; non-GAAP net profit increased by 10.32%."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-03-29"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/IH1cmAqFbTdymUfN3dIS3Q"
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# Revenue Gap of 10 Billion Yuan, Net Profit Less Than Half: Mengniu Is No Longer on the Same Level as Yili

> Mengniu has taken many detours in recent years, and the widening gap with its peers has become an indisputable fact. On February 28, Yili Co., Ltd. (600887.SH) took the lead in releasing its 2018 annual report. According to the report, Yili achieved total operating revenue of 79.553 billion yuan, a year-on-year increase of 16.89%. Revenue increased by 11.5 billion yuan, the largest increase in history. At the same time, Yili's net profit attributable to shareholders of the listed company was 6.439 billion yuan, up 7.31% year-on-year; non-GAAP net profit increased by 10.32%.

Mengniu has taken many detours in recent years, and the widening gap with its peers has become an indisputable fact.

On February 28, Yili Co., Ltd. (600887.SH) took the lead in releasing its 2018 annual report. According to the report, during the reporting period, Yili achieved total operating revenue of 79.553 billion yuan, a year-on-year increase of 16.89%. Revenue increased by 11.5 billion yuan, the largest increase in history.

At the same time, Yili's net profit attributable to shareholders of the listed company was 6.439 billion yuan, up 7.31% year-on-year; non-GAAP net profit increased by 10.32%.

A month later, on March 28, Mengniu Dairy (02319.HK) released its annual report, stating that in 2018 it achieved revenue of 68.977 billion yuan, a year-on-year increase of 14.66%; net profit attributable to owners of the company was 3.043 billion yuan, up 48.6% year-on-year. This performance was enough to make Mengniu Dairy secretly happy for a while.

But in comparison, Mengniu Dairy's revenue was more than 10 billion yuan behind Yili, with the former only 86.7% of the latter. More absurdly, although Mengniu Dairy's net profit growth rate was higher than Yili's, the amount was nearly 3.4 billion yuan less, with the former only half of the latter.

Obviously, Yili has stronger "money-making" ability, and its main performance indicators all crush Mengniu Dairy.

Looking at the performance of both in recent years, from 2015 to 2018, Yili continued to lead Mengniu, with revenue gaps of 10.836 billion yuan, 6.533 billion yuan, 7.392 billion yuan, and 10.576 billion yuan respectively.

From the data, although the revenue gap between the two narrowed to 6.533 billion yuan in 2016, it broke through the "100 billion mark" again two years later.

It is worth noting that in 2016, due to the poor performance of its controlled affiliates such as "Yashili", Mengniu Dairy suffered its first loss in nearly 10 years, with a loss of up to 751 million yuan.

Unlike Mengniu Dairy, which has been on a "roller coaster", Yili's performance in recent years can be described as "steady progress".

Interestingly, both dairy companies have proposed the same goal: to achieve revenue of 100 billion yuan by 2020.

There are only two years left for the two companies. If calculated based on their respective 2018 revenue growth rates, Mengniu Dairy could reach 90.6 billion yuan by 2020, while Yili would be 107.9 billion yuan.

From this perspective, Yili only needs to maintain the status quo to easily complete its performance commitment, while Mengniu Dairy still has a significant gap.

Shen Meng, executive director of Chanson Capital, said in an interview, "Yili, with its industry leader advantage, continuously points out new directions for industry development, and uses its strong ocean current effect to promote the quality improvement and upgrading of the entire industry. We should praise such a leading enterprise."

Why has Mengniu Dairy fallen behind in the competition? Some industry analysis suggests that Mengniu Dairy's revenue is more concentrated than Yili's, mainly relying on the performance of single products such as Telunsu and Chunshen. The poor performance of new products and the difficulty in creating hit products have also exacerbated the risks for Mengniu Dairy in future competition.

Not only has its products lost in competition, but its performance growth has also been questioned by authoritative institutions.

Before Mengniu Dairy released its annual report, research firm GMT believed that the company, through extremely complex accounting methods, tried to avoid owning raw material supplier China Modern Dairy while holding a majority stake in it, in order to avoid the erosion of Mengniu's profits after consolidating Modern Dairy.

It is understood that GMT is a research company headquartered in Hong Kong, founded by former Nomura and CLSA analyst Gillem Tulloch. It mainly focuses on research of audited accounting and financial reports of listed companies in Asia, with emphasis on debt and cash flow issues.

In fact, Mengniu Dairy's 2018 revenue increased by 14.66% year-on-year, while net profit increased by 48.6% year-on-year. The two figures indeed do not match, which inevitably makes market institutions speculate.

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