\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 009 Hangzhou Coco Healthcare Products Co.Ltd(301009) )
Independent brand two wheel drive, leading brand of adult incontinence in China Hangzhou Coco Healthcare Products Co.Ltd(301009) is mainly engaged in the production, R & D and sales of adult incontinence, baby, pet hygiene products and masks. The business model is divided into ODM and independent brand, with a ratio of 7:3. In recent years, the company's revenue has shown a rapid growth trend, with a revenue of 1.635 billion yuan in 2020 and an average annual compound growth rate of 34.32% from 2018 to 2020. In 2020, under the background of the epidemic, the company carried out mask business, accounting for 10% of its revenue. In the first three quarters of 2021, the company achieved revenue and net profit attributable to the parent of 867 million yuan and 69 million yuan, with a year-on-year increase of - 29.73% and - 58.67%, mainly due to the decline of ODM business of infant care products caused by the control of the epidemic, the reduction of mask business and the reduction of China's newborn baby population.
Independent brand: main adult incontinence products
The high growth track with low penetration rate is expected to grow 2.5 times to 12.9 billion yuan in 2025. Compared with overseas countries, due to the factors such as China's consumption concept of adult incontinence products has not been formed, and domestic brands compete for market share at low prices, the industry presents the current situation of low penetration and per capita consumption. In the future, the intensification of the aging trend will bring about the growth of the total industry, the deepening of the national pension policy will promote the penetration rate, the arrival of the silver economy and the transformation of consumption structure will drive the increase of customer unit price. It is estimated that the industry will grow 2.5 times to 12.9 billion yuan by 2025. In terms of pattern, the industry is still in the early stage of consumer education, with only 26% of Cr4 in 2020. In the future, under the general trend of consumption upgrading, China's concentration will increase. In addition, with the addition of "pricing advantage + composite core", domestic leaders will accelerate import substitution.
Deeply cultivate products, brands and channels, and be in an absolute leading position. In 2020, the market share of "reliable" brand was 9.4%, ranking first. ① In terms of product strength, the company is guided by the use scene, constantly optimizes the product structure, and introduces mild incontinence products designed for Asian women to meet the market demand for the consumer awareness of the awakening mild incontinence group. ② In terms of brand strength, under the clear strategic positioning and persistent focus, build a multi-dimensional brand matrix and differentiated positioning to meet different consumer needs; Focus on the development of independent brands, only make adult incontinence categories, and invest more resources than rivals. ③ In terms of channel power, we will comprehensively layout Online + offline, combined with the new retail model, take online as the re purchase path, and offline special channel as the income channel. In addition, it also plays the role of education market and customer drainage.
ODM: mainly baby care products, supplemented by adult incontinence and pet hygiene products
Baby care products industry, a mature red sea market. With the implementation of the policy of encouraging fertility, the downward trend of the number of new students will be alleviated. The sinking market shows huge consumption potential, and the change of consumption habits drives the increase of use frequency. In recent years, the market scale of infant diapers has continued to increase. It is estimated that the proportion of ODM end value in terminal retail value is 0.67. In 2020, cr3.5% of the market share was occupied by foreign brands.
Stabilize quality + large-scale production capacity and bind high-quality customer resources. Based on many years of R & D and industry experience, the company has complementary advantages with brands that focus on brands and channels and lack self built factories, providing whole process services from product design to supply chain guarantee. JS, the largest customer, has been the first brand of baby diapers in the Philippines for many years; As the exclusive supplier of Dudi, the second largest customer, it has established a joint venture with Keai company, and the cooperation is highly sustainable. The 1.166 billion new production capacity brought by the implementation of the raised investment project and the strong product strength foundation laid by the upgrading of the R & D center will bring stronger customer stickiness to the company.
Profit forecast and investment rating. We are optimistic that the company will benefit from the development of adult incontinence industry, the continuous expansion of production capacity and the growth of performance. It is expected that the revenue from 2021 to 2023 will be RMB 14.16/17.812292 billion, with a year-on-year increase of - 13.4% / 25.7% / 28.7%, and the net profit attributable to the parent company will be RMB 42 / 168 / 244 million, with a year-on-year increase of - 80.4% / 299.7% / 45.1%. Combining relative and absolute valuation methods, we give the company a target price of 25.34 yuan. Benefiting from the development of the industry, the company is in an absolute leading position, with pressure on short-term performance and large space for long-term development. It is given a "buy" rating for the first time.
Risk factors: sharp decline in the growth rate of terminal demand, sharp rise in the price of raw materials, etc.
