Market differentiation, the head brand is dominant. In terms of market situation, according to Shenwan cosmetics index, as of December 24, the cosmetics industry has increased by 2.9%, of which Lushang Health Industry Development Co.Ltd(600223) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Shanghai Jahwa United Co.Ltd(600315) , Proya Cosmetics Co.Ltd(603605) has increased by more than 16%, and the overall performance of brands is better. In terms of fundamentals, under the influence of factors such as the epidemic base last year and the slowdown of online traffic dividends, the growth rate of the industry slowed down quarter by quarter. The head brands had stronger anti cycle ability by virtue of brand precipitation and flexible marketing. In the first three quarters of 21 years, the growth rate of parent net profit representing the subject was 12.6% and 10.2% respectively, of which Syoung Group Co.Ltd(300740) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Shanghai Jahwa United Co.Ltd(600315) , Proya Cosmetics Co.Ltd(603605) achieved performance growth of 102.9% and 65.0% respectively 34.7% and 27.8%, far better than the industry growth.
Long term demand is upward, domestic brands catch up, and domestic brands catch up. According to Ourui consulting, the market scale of cosmetics industry will reach 520 billion yuan in 2020, with a compound growth rate of about 10% in 15-20 years; From January to November of 21, the zero growth rate of cosmetics quota society rebounded to 15.3%, which is a sub industry with high mid-range bearing in the consumer goods sector. Compared with the global mature market, the per capita consumption of cosmetics in China is still low. In 2020, the per capita consumption of cosmetics in China was US $58 / year, while that in the United States, Japan and South Korea was US $277 / year, US $272 / year and US $263 / year in the same period. The participation of the new generation of consumer groups will continue to increase the annual average consumption, with large long-term space. Local skin care brands have established advantages in the field of popularization and catch up in share. In 2020, seven brands, namely, bailing, Natang, Proya Cosmetics Co.Ltd(603605) , Winona, yunifang, baicaoji and HFP, entered the top 20, with a share of 13.2%, an increase of 2.7pct over 15 years. Compared with the concentration of local brands in the global mature market, domestic brands are expected to continuously improve their products and marketing power to catch up in share.
Be optimistic about subdivided high potential tracks such as professional skin care and make-up, and pay attention to the improvement of product strength and flexible marketing brands. As the industry enters the brand and product driven year, traffic differentiation puts forward higher requirements for brand precipitation, product R & D strength and flexible marketing ability. We are optimistic about three main lines: 1) we are optimistic about high potential tracks such as professional skin care and make-up: according to the high prospect of Frost & Sullivan professional skin care market, the compound growth rate in 16-20 years is 30.3%. Local brands rely on product innovation Professional channel precipitation and flexible marketing form advantages; The cosmetics market is in the ascendant. According to eurui consulting, the compound growth rate in 15-20 years is 18.7%. The benchmark global developed markets are in the low allocation stage, and local cutting-edge brands seize the mass domestic market; 2) Optimistic about companies that continue to improve product power: new regulations will be implemented to improve the industry access threshold. In the future, brands that continue to consolidate R & D strength, strengthen product innovation and focus on building best-selling products are expected to cross the industry cycle and increase their share; 3) tiktok traffic differentiation, promising brand marketing: 21 year tiktok and other short video platforms become important engines of growth. According to the fruit set, 21 months 4-8 months, GMV is more than 22% of the Amoy system, the big domestic products are decorated and the layout is higher, and Proya Cosmetics Co.Ltd(603605) and Winona brands are two.
Investment suggestion: the cosmetics industry maintains a high outlook. From January to November of 21, the growth rate of quota society is 15.3%, which has great potential for overseas growth; In recent years, domestic brands have been catching up with product improvement, flexible marketing and brand precipitation, and the concentration of local brands has increased. In the future, we are optimistic about leading brands of subdivided high diving tracks and companies that continue to consolidate product R & D strength and traffic operation capacity, Highlight Yunnan Botanee Bio-Technology Group Co.Ltd(300957) (leading brand of Dermatology skin care track, effective polishing of new products and new channels, and new brands can be expected), Proya Cosmetics Co.Ltd(603605) (continuous improvement of product power, effective strategy of large single products, and flexible response of new channels), Bloomage Biotechnology Corporation Limited(688363) (leading brand of functional skin care track, leading product power), Lushang Health Industry Development Co.Ltd(600223) (functional skincare racetrack with deep R & D precipitation and high growth of cosmetics business is expected), Shanghai Jahwa United Co.Ltd(600315) (old domestic cosmetics daily chemical enterprise, product, marketing and channel reform under the 123 policy has gradually taken effect). It is suggested to pay attention to the unlisted targets of high potential subdivision racetrack, such as Fu Erjia, Mao Geping, etc.
Risk factors: declining industry prosperity, deteriorating competition, less than expected promotion of new products, continuous rise of traffic cost, etc.
