Proya Cosmetics Co.Ltd(603605) (603605)
The company is a steady growth leader in domestic cosmetics. It is covered for the first time and rated “buy”
Proya Cosmetics Co.Ltd(603605) is a domestic cosmetics leader with multi brand, multi category and omni-channel layout. In recent years, the company’s products have been continuously upgraded, the channel operation is excellent and the core competitiveness is outstanding. The company implements the strategy of large single product, and it is expected to continue to contribute to revenue and enhance profitability. Tiktok will also bring incremental growth. We expect the net profit attributable to the parent company from 2021 to 2023 to be RMB 585 / 738 / 913 million, corresponding to EPS of RMB 2.91/3.67/4.54, and the current share price corresponding to PE of 66.7/52.9/42.8 times. For the first time, give a “buy” rating.
Cosmetics industry: the overall prosperity is high, and the importance of large single products and multi-channel logic is prominent
Industry level: the cosmetics industry as a whole has maintained a high prosperity (Euromonitor data show 2015-2020 years tiktok CAGR=10.3%, 2021Q1-Q3 cosmetics industry zero year-on-year +17.9%). Channel angle: online share continues to improve, among which the original mainstream business channel channel slowdown, and vibrant new channels such as rapid rise and volume, the future can better grasp the brand flow of the brand outside the flow of the brand is expected to benefit more. Consumers’ skin care is rational and scientific, and the importance of large single products is prominent. On the one hand, it can help enterprises establish a high-quality brand image, on the other hand, it can also contribute to stable income and improve profitability. We believe that in the future, brands with strong channel operation ability and high-quality large single products are expected to stand out in the industry competition and increase market share.
Proya Cosmetics Co.Ltd(603605) : logic test of large single product, multi-channel layout and large volume, and potential brand growth can be expected
(1) Product: powerful single product. Since 2020, the company has continued to implement the large single product strategy. The sales proportion of shuangkang series and Ruby series has continued to increase, driving the gross profit margin to rise (the gross profit margin of the company has reached 66.1% in 2021q3 single quarter). The large single product strategy is expected to continue to improve the company’s main brand image and profitability in the future.
Tiktok tiktok, tiktok, Ltd., 2, the channel: the electricity business of the Department of electronics has been growing steadily, and the new channels such as jitter are in good condition. The company has excellent channel operation ability, with the exception of Tmall flagship store, which maintains a relatively high growth rate (2018-2020 CAGR=65.3%), and actively layout new channels such as jitter to create the first mover advantage. In 2021, it was ranked the top three in the sales of the beauty shop category of the tramp store for many months.
(3) Brand: the main brand is upgraded, and the potential brand growth can be expected. The company’s main brand Proya Cosmetics Co.Ltd(603605) is younger and upgraded, and the brand image is more deeply rooted in the hearts of the people; among the new brands, Caitang is gradually large-scale, and yuefuti, keruifu and yincaibaha are also expected to contribute to the increment, and the overall growth can be expected in the future.
Risk tip: the expansion of new brands and new channels is not as expected; The epidemic situation repeatedly affects demand; Intensified competition
