\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 315 Shanghai Jahwa United Co.Ltd(600315) )
Key investment points
Introduction: after taking office, the new management put forward the “123 strategy”, combed it from multiple dimensions such as brand, channel, digitization and marketing, determined the brand differentiation development strategy, followed the context of “focus” and “simplification”, and was optimistic about the company in the medium and long term, straightening out the organizational structure, reducing internal costs and increasing efficiency, realizing the rejuvenation of Centennial domestication, and rated it as “overweight”.
Change 1: the management team is innovated, and the incentive plan shows the ambition of rejuvenation of Centennial domestication. Since the reform of Shanghai Jahwa United Co.Ltd(600315) state-owned enterprises, the company’s management has successively served as many chairmen. Jiahua has experienced trials and hardships. In June 2020, pan Qiusheng, who once worked in L’Oreal and Mattel, took over the banner of chairman and CEO. Many managers have background and rich experience in the cosmetics industry. At the beginning of taking office, he put forward the “123” strategy: adhere to the consumer-centered, based on the two basic points of brand innovation and channel upgrading, and take culture, system and process and data as three boosters. In the context of the rejuvenation of Jiahua, the company twice proposed equity incentive to deeply bind core executives in 2020 and 2021, and the improvement of 21-year assessment objectives highlights the rejuvenation ambition.
Change 2: brand innovation and upgrading, positioning and reshaping diversified development. In 2020, the company reorganized the brand, defined the three categories of high-speed development, subdivided champion and subdivided leader, and determined the differentiated brand development strategy. In the future, the company will focus on skin care products and follow the two strategies of focusing on head products and reducing long tail products. (1) Yuze: rely on differentiated positioning + strong basic support of medical research + big data empowerment + social media marketing to create barrier repair cream explosive products, and create multiple series of products in the mode of “Medical Research Co creation”; The channel side realizes Wuxi Online Offline Communication Information Technology Co.Ltd(300959) global layout, superimposes private fan communication, and achieves comprehensive coverage of diversified grass planting. (2) Baicaoji: rooted in the research of Chinese herbal medicine, 2021 is the “turning year” of the brand; ① Positioning: complete the transformation from “Chinese herbal medicine skin care rooted in traditional Chinese medicine” to “Chinese herbal medicine Superposition Technology”; ② Products: Streamline product lines, continuously focus on explosive products, and comprehensively upgrade existing products; ③ Image: promote a more modern and professional brand visual image; ④ Communication: adopt more accurate, younger and effective communication methods.
Change 3: promote digitization, channel change, focus on R & D and marketing innovation. (1) From the precision of “123 strategy” to “digital 123 strategy”, the transformation is made in four dimensions: brand, channel, marketing and organizational structure. At the same time, it cooperates with tmall TMIC to provide support in new product launch, explosive product creation and platform side, so as to realize “1 + 1 2”; (2) Channel: live channel adjustment + private domain operation, double round online transformation, actively develop new retail offline, shrink long tail inefficient stores and focus on head stores; (3) Long term high investment in R & D, strong binding of KPI between R & D team and brand team, construction of the whole chain through raw materials + technology + clinic, continuous marketing innovation and promotion of brand youth strategy.
Investment suggestion: the management is determined to forge ahead, re sort out from the brand, channel, digitization, marketing and other dimensions, straighten out the organizational structure, reduce internal costs and increase efficiency, and look forward to the Centennial rejuvenation of domestication. It is estimated that from 2021 to 2023, the revenue will be 7.67 billion / 8.65 billion / 9.59 billion, and the net profit attributable to the parent will be 655 million / 753 million / 914 million. As of March 14, the closing price of the corresponding company PE will be 37.8x/32.8x/27.1x respectively. “Overweight” rating is given for the first time.
Risk tip: the prosperity of the cosmetics industry is at risk of decline; The risk of intensified competition in the cosmetics industry; The risk that the strategic promotion is not as good as expected; The promotion of new products was less than expected.
