Yili Earnings: Q1 Off to Good Start, On Track To See Earnings Rebound in 2023; Retain FVE at CNY42

Wide-moat Yili reported 2022 and first-quarter 2023 results that largely met our expectations and, in our view, assured the market of its ability to navigate a challenging operating environment. The stock, which we perceived to be undervalued for some time, reacted positively following the report. We moderately raised our sales and profit estimates for the full year and retain our fair value estimate at CNY 42 per share, which implies 24 times 2023 P/E and is in-line with its 5-year average. We believe the stock continues to be undervalued and the company is on track to see earnings rebound in 2023.