Industry core view:
Recently, the operating data of some beauty leaders from January to February showed brilliant performance, and the 38 major promotion achievements were gratifying. From the supply side, since the implementation of the regulations on the supervision and administration of cosmetics in 2021, many departments have issued supporting regulations. Under the background of stricter supervision, small and medium-sized enterprises are under pressure, and compliance leading enterprises with strong R & D and management further seize the market. From the demand side, in the face value era, the year-on-year growth rate of beauty makeup continues to outperform that of social zero year-on-year. The improvement of beauty penetration and beauty consumption frequency will continue to drive the beauty market for the better. From the perspective of valuation, after some adjustment, the beauty leader has fallen into a reasonable valuation range. With the implementation of regulatory measures, the industry is expected to usher in healthy development after short-term pain. It is suggested to actively pay attention to the compliant beauty leading enterprises with the advantages of R & D, marketing and products.
Key investment points:
Recent situation: the operation data of beauty leaders are bright, and the results of 38 sections are gratifying. Some beauty leaders announced the main business data from January to February 2022, of which, Proya Cosmetics Co.Ltd(603605) revenue was + 30% year-on-year, and the net profit attributable to the parent company was + 35% year-on-year Bloomage Biotechnology Corporation Limited(688363) revenue + 55%, strong growth in functional skin care products Lushang Health Industry Development Co.Ltd(600223) cosmetics segment revenue + 146.7%. From the 38 tiktok data, Proya Cosmetics Co.Ltd(603605) main brand Proya Cosmetics Co.Ltd(603605) Tmall GMV over +200%, +200% GMV +100% above, early C A set, double anti essence, ruby essence, source essence, feather feeling sunscreen and other star products sales results are brilliant, color Tong brand GMV + 400% over year. According to Taobao data, Bloomage Biotechnology Corporation Limited(688363) its functional skin care brands have achieved gratifying results, and the Gmv of runbaiyan / kwadi / mibeier / BM live tmall's official flagship store is + 1% / + 187% / + 747% / + 525% year-on-year respectively; In addition, MARUMI / Winona / baicaoji were + 20% / + 25% / + 23% year-on-year respectively.
Supply side: a number of regulations have been issued intensively, the supervision has become stricter, the industry has been further standardized, and the compliance leading enterprises with strong R & D and management have been benefited. On January 1, 2021, the new regulations of the regulations on the supervision and administration of cosmetics issued by the State Council were officially implemented. Subsequently, the State Administration of market supervision and the State Drug Administration successively issued a number of supporting regulations. The key points of the regulations include: ① raw materials and products: A. classification: classify and manage cosmetics and cosmetic raw materials according to the degree of risk; b. Registration / filing management: special cosmetics and new cosmetics raw materials with high risk shall be subject to registration management, while ordinary cosmetics and other new cosmetics raw materials shall be subject to filing management; c. Efficacy claim: the efficacy claim of cosmetics should have sufficient scientific basis, and the registrant and recorder of cosmetics are responsible for the quality, safety and efficacy claim of cosmetics. ② (a) the people's Government of the province or municipality directly under the central government shall apply to the drug production and Management Department of the province or municipality where the cosmetics are produced; In case of entrusted processing, the enterprise entrusted with the production of cosmetics shall be responsible for the production activities; b. Management system: the registrant, filer and entrusted manufacturer of cosmetics shall establish a cosmetics production quality management system. ③ Supervision and management: A. The State establishes an adverse reaction detection system; b. The supervision department shall establish the credit files of cosmetics manufacturers and operators. We believe that for head cosmetics enterprises, they have the conditions to complete the registration, filing and efficacy declaration evaluation, reduce the corresponding cost, and have strong compliance of raw materials and products, the original production process and management norms, and are less affected by the regulations; For small and medium-sized enterprises, the promulgation of the regulations may bring cost and time pressure in terms of registration and filing, efficacy claim evaluation, establishment of standardized management and production system, and benefit compliance leading enterprises with strong R & D and management.
Demand side: in the face value era, beauty consumption is hot, and the development of the industry is still optimistic in the medium and long term. Affected by the epidemic, China's real economy has been impacted, consumption has been weak, and the growth rate of cosmetics retail sales has also slowed down. However, with the more accurate and effective epidemic prevention and the support of the "steady growth" policy, China's consumption is expected to return to the normal range. In the medium and long term, in the beauty age, the logic of driving the beauty market for the better remains unchanged with the improvement of beauty penetration (younger age, male consumption) and beauty consumption frequency (from "optional" to "mandatory").
Investment suggestion: after early adjustment, the valuation of some high-quality beauty companies has fallen into a reasonable range. With the implementation of cosmetics regulatory measures, the industry is expected to usher in healthy development after short-term pain. It is suggested to actively pay attention to compliant beauty leading enterprises with advantages in R & D, marketing and products.
Risk factors: the risk of repeated epidemic, the risk of intensified industry competition, the risk of new product expansion not meeting expectations, the risk of incorrect and incomplete statistics of Amoy data (if inconsistent with the company's official data, the official caliber shall prevail).
