Proya Cosmetics Co.Ltd(603605) (603605)
Event comments: the company issued an announcement on the issuance of convertible bonds. The funds to be raised are mainly used for the upgrading of production base, R & D base and information system, so as to improve the strength of supply chain, middle and back office. The amount raised by the company in this offering does not exceed 752 million yuan, the initial conversion price is 195.98 yuan / share, and the duration is 6 years. The fund-raising amount is proposed to be used for the construction of Huzhou expanded production base, Longwu R & D center, information system upgrading and construction, and supplement working capital. The fund-raising amount is proposed to be RMB 339 million, RMB 195 million, RMB 91 million and RMB 128 million respectively. The development and construction of the production end is accelerated, and the company’s production capacity is expected to be gradually improved to match the future sales growth; Actively layout the R & D side, continuously strengthen the company’s comprehensive R & D strength such as new product development and efficacy testing, and further consolidate its competitiveness.
Highlights of the company: thanks to R & D precipitation, the company’s large single product strategy has achieved remarkable results. The company has flexible organization, uses market-oriented thinking to build a “R & D +” structure, cooperates with multiple departments, improves product development efficiency, and successfully creates high-quality products with both efficacy and selling points. The company’s 2021 main tiktok Proya Cosmetics Co.Ltd(603605) brands in the first three quarters of the year achieved a revenue of 2 billion 440 million yuan /+28%, accounting for 81% of its revenue. Its ruby and double anti star products upgraded their product terminal voice through upgrading and iterative marketing, and combined marketing. The star’s large single product 2021Q3 has exceeded 50%/10% in Tmall / shaking platform, which boosted the overall customer price and the repeat purchase rate. In the future, the company’s product production will accelerate the superposition of R & D strength and information system upgrading. The company will continue to optimize product structure and refine channel operation to ensure high-quality growth.
Investment advice and profit forecast: brand upgrading, product optimization and refined channel operation promote high growth and maintain the company’s “recommended” rating. In the future, the company will continue to deepen the strategy of large single products and actively layout emerging channels by using the advantages of refined operation. The product strength and brand strength are expected to be further boosted and the development prospect of the company is optimistic. Considering that the company’s self broadcasting benefit is good and the sales volume of main brands has increased significantly year-on-year during the double 11, We raised the company’s revenue from 2021 to 2023 to RMB 47.78/57.98/6.938 billion respectively (the growth rate was 27.34% / 21.35% / 19.67% respectively), and the net profit attributable to the parent company was RMB 608/756/923 million respectively (the growth rate is 27.73% / 24.34% / 22.14% respectively), EPS is 3.02/3.76/4.59 yuan respectively, and the corresponding PE of current performance is 64x / 52X / 42x respectively. Considering that the company continues to consolidate the production end and R & D end, the star large single products will continue to make efforts in the medium and short term, opening up the space for the company to increase both volume and price. In the long term, the company will build a multi brand matrix, carry out full link extension development, and improve the company’s upstream and downstream life According to the normal layout, the compound growth rate of the company’s performance in the next two years is 23.21%. Based on the valuation level of comparable companies, we give the company 2xpeg in 2023, with a reasonable price range of 213.07-223.72 yuan, maintaining the company’s “recommended” rating.
Risk tip: the prosperity of the industry is declining; Intensified market competition; The incubation of new products is not as expected; Macroeconomic downside risk.
