Key points of the report:
Industry: the short-term growth rate was adjusted in the second half of the year, the dual logic of category penetration and per capita consumption growth remained unchanged, and there was no worry about the long-term prosperity
From January to October 2021, the retail sales of units above designated size increased by 15.1% year-on-year, including cosmetics, which outperformed the overall market by 16.7% year-on-year. Since the second half of the year, the growth rate of the industry has slightly adjusted, which is mainly affected by the low and high base before and after last year, the new regulations of cosmetics, the decline in the growth rate of cosmetics under the repeated epidemic situation and other factors. In the long run, the dual logic of the prosperity of the cosmetics industry, the improvement of category penetration and the growth of per capita consumption remains unchanged.
Brand: new and cutting-edge enter the brand era, and capital helps the rise of local beauty groups
From 2015 to 2021, the phenomenon of cutting-edge brands broke out, showing the characteristics of multi, fast, detailed and capital inflow. New and cutting-edge brands mostly adopt the explosive product strategy of "one belt and many", concentrate their advantages and select one SKU to "explode", then drive the growth of the whole brand, and rise rapidly under the dual blessing of category dividend and flow dividend. At present, the weakening of category dividend, the decline of flow dividend and the joint action of the new regulatory era of cosmetics promote the accelerated transition of cutting-edge brands to the "brand era", and cutting-edge brands are facing a reshuffle. On the other hand, the listing process of local large-scale beauty groups tends to accelerate. Since 2020, it has significantly increased R & D investment and actively adjusted the product structure. With the help of capital, the overall multi brand layout trend of beauty groups is gradually clear. In the next 3-5 years, the Chinese market will usher in a number of cosmetics groups exceeding 10 billion.
Channels: online channels are decentralized and offline channels seek change
Looking forward to 2022, we believe that the online platform will continue to decentralize, and tiktok will be selected by direct seeding business providers to share the beauty makeup. After the Jingdong epidemic, the overall GMV growth will be good. Offline traditional channels recover slowly in the post epidemic era, while collective change is sought. Offline cutting-edge Beauty Collection stores and medical beauty channels are gradually emerging as a new force.
Investment advice
From the perspective of investment, beauty listed companies ushered in a wave of concentrated rise after the second quarter of 20 years, the industry valuation reached a high level, and the overall correction since July 2021. Looking forward to the multi brand growth curve of the listed beauty group next year, it will become more and more clear, support the continuous growth of the company in terms of performance, and the differentiation of industry channels will be greater. Suggestions: (1) actively lay out companies with excellent channel extension ability and multi brand layout. Key recommendations: Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Bloomage Biotechnology Corporation Limited(688363) . At the same time, pay attention to: Shanghai Jahwa United Co.Ltd(600315) , Lushang Health Industry Development Co.Ltd(600223) , Yixian e-commerce, Guangdong Marubi Biotechnology Co.Ltd(603983) . (2) Upstream manufacturing end: the rising price of raw materials this year has put pressure on the profits of the manufacturing end. Next year, with the gradual digestion of the cost pressure of new product launch, the upstream profits are expected to be repaired. Recommended attention: Fujian Green Pine Co.Ltd(300132) . (3) in terms of beauty agent operation, the decentralized online channel pattern also provides new channel opportunities for agent operators. Key recommendations: Shanghai Lily&Beauty Cosmetics Co.Ltd(605136) , Hangzhou Onechance Tech Corp(300792) .
Risk statement
The prosperity of the industry is declining, the epidemic situation is repeatedly affected, and overseas brands are impacted
