Jahen Household Products Co.Ltd(300955) (300955)
Key points of the report:
The company is a leading R & D, production and service provider of daily chemical product OEM and plastic packaging in China
Founded in 2005, the company was engaged in the production and sales of plastic packaging containers for daily chemical products in the early stage. In 2011, it entered the cosmetics OEM business and entered the supply chain of Johnson & Johnson and other well-known daily chemical groups at home and abroad through strict audit, forming a one-stop service capacity for OEM + plastic packaging design and production of daily chemical products.
Cosmetics OEM industry: the growth of terminal demand drives the market expansion, and the new regulations promote the concentration
In 2020, the scale of China’s cosmetics and personal care market reached 519.9 billion yuan. Affected by the epidemic, the growth rate has dropped. In the long run, China’s cosmetics category penetration and per capita consumption have great room for improvement, and the growth prospect is good. The prosperity of the retail end is expected to drive the continuous expansion of the OEM market. According to Qingyan, the scale of China’s cosmetics OEM market is expected to exceed 60 billion in 2020. At present, the competition pattern of China’s OEM market is scattered. As of December 2021, there are 5695 licensed cosmetics production enterprises in China, of which only 2 have a scale of more than 2 billion yuan, and the rest are more than 100 million yuan, which is in a state of disorderly competition. Under the catalysis of the new cosmetics regulations, small and medium-sized enterprises with low production and configuration conditions, non-standard management process and weak R & D capacity may be eliminated. The leading enterprises are expected to benefit and the concentration is expected to increase.
The coordinated development of daily chemical product OEM + plastic packaging is expected to bring new increment by expanding production capacity and expanding customers
The coordinated development of daily chemical product OEM / ODM and plastic packaging business promotes the continuous expansion of the company. We believe that the company’s core advantages are: 1) stable and efficient production capacity: fast production response, strong quality management ability, and the delivery date of cosmetics is controlled within 30 days to meet the needs of rapid iteration of daily chemical products. The company’s capacity utilization rate is often high. In 2022, the new plant in Huzhou is expected to be put into operation gradually to release the growth potential. 2) Provide content + packaging one-stop service, integrate and optimize customer supply chain, and meet the comprehensive needs of customer cost control and delivery speed. 3) It is bound to large groups outside China and has strong performance stability: it has deeply cultivated Johnson & Johnson, shell, Shanghai Jahwa United Co.Ltd(600315) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) and other high-quality customers outside China for many years, continuously deepened services and had strong performance stability. In terms of new customer development, the company has established cooperative relations with famous brands such as P & G, Unilever and Beiqin, as well as cutting-edge brands such as zhuben and PMPM, which is expected to contribute new increment.
Investment advice and profit forecast
We expect that from 2021 to 2023, the company will achieve revenue of RMB 1.200/16.17/2.148 billion, net profit attributable to parent company of RMB 0.88/1.40/192 million and EPS of RMB 0.88/1.39/1.90 respectively. Referring to the valuation of comparable companies and considering the good growth of the company, pe30x in 2022 is given a “buy” rating corresponding to the target price of 41.70 yuan for the first coverage.
Risk statement
Intensified market competition, loss of customers, repeated epidemics and fluctuations in raw material prices
