\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
Key investment points:
The company is committed to the mass skin care market and actively layout the high growth cosmetics sector. Skin care products are the company's main revenue generating business, and beauty and makeup business is the second largest revenue generating business. From 2017 to 2020, the revenue of the company's skin care business increased year by year from RMB 1.761 billion to RMB 3.242 billion, with a CAGR of 22.56%, and the proportion in the company's main revenue decreased from 98.88% to 86.50%; The revenue of beauty and makeup business increased from 20 million yuan to 465 million yuan year by year, and the CAGR was as high as 185.41%, accounting for 12.41% of the company's main revenue from 1.12% year by year. In 2021h1, the revenue of skin care business was 1.63 billion yuan, an increase of 33.94% at the same time, accounting for 85.30% of the revenue; The revenue of beauty and makeup business was 271 million yuan, an increase of 97.81% and the revenue accounted for 14.18%.
The company focuses on the main brand, constantly incubates new brands and improves the brand matrix. " Proya Cosmetics Co.Ltd(603605) " is the main source of income for the company. From 2017 to 2020, the revenue of " Proya Cosmetics Co.Ltd(603605) " brand increased year by year from 1.582 billion yuan to 2.986 billion yuan, and the CAGR was 29.57%; The proportion in the company's main revenue decreased from 88.83% to 79.67% year by year. In 2021h1, " Proya Cosmetics Co.Ltd(603605) " series brands achieved a revenue of 1.487 billion yuan, an increase of 31.44% and accounting for 77.81%. While committed to developing its own main brand, the company actively expands other brands. In recent years, the growth rate of other brands is higher than that of the main brand. From 2017 to 2020, the revenue of other brands of the company increased year by year from 200 million yuan to 762 million yuan, and the CAGR reached 51.82%; The proportion of revenue increased from 11.23% to 20.33%. In 2021h1, the revenue of other brands of the company was 425 million yuan, an increase of 68.92% at the same time, and the revenue accounted for 22.24%.
China's cosmetics industry has developed steadily, with a development speed higher than the overall global level, and there is huge room for development in the future. From 2015 to 2019, the global cosmetics market increased from US $441.2 billion to US $512 billion, with a CAGR of 3.79%; In the same period, the scale of China's cosmetics market increased from 318.1 billion yuan to 426 billion yuan, with an annual compound growth rate of 7.58%, 3.78 percentage points higher than the overall compound growth rate of the world. Compared with major countries in the world, the per capita consumption of China's cosmetics market is low. In 2019, China's per capita consumption of cosmetics was $50 / person, only 11%, 16%, 17% and 18% of that of Hong Kong, Japan, Norway and the United States.
The company has its own advantages and characteristics in product R & D and operation. The company pays attention to research and development and continues to launch new products of large single products. From 2017 to 2020, the total R & D investment of the company increased from 41 million yuan to 72 million yuan, and the CAGR was 20.93%; The proportion of R & D personnel has increased from 4.28% to 6.76% year by year. In terms of profitability, the company's roe, gross profit margin and net profit margin showed an upward trend as a whole. Compared with comparable companies in the same industry, the company's inventory turnover capacity is strong, and the turnover days of receivables rank in the middle.
Investment suggestion: China's cosmetics industry is developing steadily, and there is a huge space for development in the future. The company is a leading enterprise in China's Volkswagen cosmetics, and has significant advantages in brand building / marketing / product R & D / operation. The company is committed to the mass skin care market, constantly creating large single products and new products. At the same time, it actively arranges the high growth cosmetics sector and continues to improve the product matrix. Referring to L'Oreal, an international cosmetics giant, while focusing on the development of main brands, the company continues to incubate new brands and enrich the brand matrix. The company's performance continues to increase, and its future growth can be expected. It is estimated that the company's earnings per share from 2021 to 2022 will be 2.90 yuan and 3.57 yuan respectively, and the current share price corresponding to PE will be 62.96 times and 51.27 times respectively, maintaining the "recommended" rating of the company.
Risk warning: market competition risk; The risk of the impact of e-commerce and other emerging business forms; Dealer management risk; Brand image maintenance risk; Litigation, punishment and brand damage risk caused by product quality problems.
