Proya Cosmetics Co.Ltd(603605) (603605)
The transition from one-way guidance of supply and demand to two-way cooperation has driven the continuous expansion of the scale of China’s cosmetics market
The market scale of China’s beauty industry is expected to reach 565.3 billion yuan in 2023, That is, the compound growth rate from 2020 to 2023e reached 14.6% (higher than 13.3% from 2016 to 2020). The consumer group continued to expand, and the potential demand of men, generation Z and low-level cities is expected to accelerate the release. China’s cosmetics market has experienced a traditional stage of just releasing demand and leading demand. At present, with the “advancement” of the supply side in “products, marketing and channels” Bring supply ahead of demand, help to deeply tap the value of a single customer, drive the market to realize the simultaneous rise of volume and price, and the industry is expected to continue its high outlook.
“Product driven + brand building + organizational change” is comprehensively upgraded to create a “perpetual motion machine” for development
(1) Product driven: the company adopts the mode of “focusing on independent R & D, supplemented by the combination of industry, University and research” to consolidate the competitiveness of the enterprise in R & D. thanks to the strong R & D support of the company, star products are given more effective ingredients in the process of product upgrading, and stand out from peers through excellent product strength. “Big single product + explosive product” The strategy quickly locks in consumer groups and enhances stickiness. (2) Brand building: through the mature operation of new media, it will not only bring a significant increase in online sales for the company, but also directly touch consumers and bring data such as acceptance and evaluation of various products of the brand, so as to form soft power to insight into the marginal changes of consumer structure. (3) organizational change: along the “organization, talent and mechanism” Implement reform at three levels, match the incentive mechanism with talents, and realize efficient self drive. So as to form a “development network from simplicity to complexity, and organization efficiency turns complexity into simplicity”.
Investment advice
Thanks to strong R & D support, the company’s main brands have been continuously upgraded and new brands have been added in large quantities, driving high performance growth, category expansion and matrix improvement. With the continuous consolidation of online operation capacity, explosive products quickly break the circle, the flow is natural, and strengthen brand construction. Online is the main line and offline is the parallel sales mode. While enjoying the dividend of e-commerce, we pay attention to the marginal change of traffic structure, and transition from traditional e-commerce to short video emerging platform, highlighting the first mover advantage. We expect that the company’s EPS from 2021 to 2023 will be 2.91, 3.52 and 4.24 yuan / share respectively, corresponding to 72, 59 and 49 times of the current share price PE respectively. For the first time, give a “buy” rating.
Risk statement
The industry competition intensifies, the channel expansion is less than expected, and the marketing effect is less than expected.
