As the "largest manufacturer of hyaluronic acid in China", Bloomage Biotechnology Corporation Limited(688363) ( Bloomage Biotechnology Corporation Limited(688363) . SH) has attracted much attention since its listing on the science and innovation board in 2019. Recently, Bloomage Biotechnology Corporation Limited(688363) released its annual report for 2021, which caused heated discussion in the market. Although the revenue and net profit both increased, the surge in sales expenses and other issues were put under the spotlight.
On the afternoon of March 14, at the performance communication meeting of Bloomage Biotechnology Corporation Limited(688363) on cost related issues, Zhao Yan, chairman and general manager of Bloomage Biotechnology Corporation Limited(688363) told 21st Century Business Herald and other media that in the initial stage of brand construction, the investment is relatively large, but with the gradual maturity of brand construction, the cost rate will gradually decline.
Taking runbaiyan, one of the four major brands in the functional skin care business, as an example, Zhao Yan said that the sales expenses of runbaiyan in 2021 will be lower than that in 2020, and will enter a period of benign development by 2023, and the income and profit will be gradually proportional.
sales net profit margin hit a new low in recent six years
According to the annual report, Bloomage Biotechnology Corporation Limited(688363) has raw material products in the three application fields of medicine, cosmetics and food, as well as medical end products and functional skin care products in multiple fields and lines such as orthopedics, ophthalmology and plastic surgery, opening up the whole industrial chain from upstream raw material products to downstream end products.
In 2021, Bloomage Biotechnology Corporation Limited(688363) achieved an operating revenue of 4.948 billion yuan, a year-on-year increase of 87.93%; The net profit attributable to the shareholders of the listed company was 782 million yuan, with a year-on-year increase of 21.13%; Excluding the impact of share based payment, the net profit attributable to shareholders of listed companies was 868 million yuan, a year-on-year increase of 34.33%.
Bloomage Biotechnology Corporation Limited(688363) explained in the annual report that the profit growth rate is lower than the revenue growth rate, which mainly comes from the company adhering to the long-term principle and attaching great importance to the strategic investment required for long-term sustainable development. "Strategic investment has little contribution to short-term performance, but it is of great significance for the company to broaden the moat, continuously consolidate its core competitiveness, continuously expand its leading advantages and obtain new strategic opportunities. It will gradually make a direct contribution to the operation in the next 2-5 years."
It is worth mentioning that Bloomage Biotechnology Corporation Limited(688363) 's functional skin care products achieved a revenue of 3.319 billion yuan, a year-on-year increase of 146.57%, becoming the main source of the company's revenue. Behind this brilliant "report card", the increase of sales Investment in the process of brand building is an important reason.
Bloomage Biotechnology Corporation Limited(688363) annual report indicates that due to the continuous increase of the proportion of functional skin care products business income in the company's overall business income, and the company's strategic investment in brand construction, channel construction and the introduction of key talents, the company's expense rate has increased to a certain extent.
In this regard, Bloomage Biotechnology Corporation Limited(688363) said that although the company will actively introduce a series of measures to strengthen rate control, the net profit margin of the company's overall business may still decline.
The 21st Century Business Herald reporter analyzed the net profit margin of Bloomage Biotechnology Corporation Limited(688363) sales and found that the net profit margin of the company's sales in 2021 was 15.67%, a new low in recent six years. From 2016 to 2020, the company's net profit margin on sales was 36.75%, 27.17%, 33.56%, 31% and 24.5% respectivelyp align="center" style="text-align:center;"> (picture: net profit margin of sales of the company in recent six years)
It is understood that the net profit margin of sales is the percentage of net profit in sales revenue, which reflects the net profit brought by each yuan of sales revenue and the income level of sales revenue. Industry insiders believe that the decline in net profit margin means that sales expenses are "eroding" net profit.
Moreover, compared with comparable listed companies in the same industry, Bloomage Biotechnology Corporation Limited(688363) also accounts for a high proportion of sales expenses and revenue, reaching 49.24%.
The annual report shows that in 2021, Imeik Technology Development Co.Ltd(300896) ( Imeik Technology Development Co.Ltd(300896) . SZ) had a sales expense of 156 million yuan, accounting for 10.81% of the revenue in the same period. In 2020, the sales expense of Shanghai Haohai Biological Technology Co.Ltd(688366) ( Shanghai Haohai Biological Technology Co.Ltd(688366) . SH) was 556 million yuan, accounting for 41.71% of the revenue Shanghai Jahwa United Co.Ltd(600315) ( Shanghai Jahwa United Co.Ltd(600315) . SH) the sales expense is 2.924 billion yuan, accounting for 41.58% of the revenue.
So, where did Bloomage Biotechnology Corporation Limited(688363) 's selling expenses go?
According to the annual report, in 2021, Bloomage Biotechnology Corporation Limited(688363) the sales expense was 2.436 billion yuan, with a year-on-year increase of 121.62%. Among them, online promotion service fee accounts for 53.91%, employee salary accounts for 18.92%, advertising fee accounts for 11.05%, market development fee accounts for 8.76%, and other projects account for less than 2%.
Further, in 2021, Bloomage Biotechnology Corporation Limited(688363) not only increased the promotion of Tmall and jitter, but also promoted the promotion of tiktok services through new media marketing methods, such as live broadcast, short video, search engine, social media, etc., which resulted in a substantial increase in online promotion services.
In terms of offline promotion, Bloomage Biotechnology Corporation Limited(688363) through cooperation with Focus Media Information Technology Co.Ltd(002027) and other media companies, participating in exhibitions, holding activities and other offline promotion forms, publicized the brand concept and image, resulting in an increase in advertising and market development fees.
In addition, Bloomage Biotechnology Corporation Limited(688363) also said that in 2021, in order to meet the needs of the company's sales business expansion, the increase of sales personnel led to the increase of employee compensation and performance rewards of sales personnel.
Adhere to the brand's "long-term doctrine"
"We emphasize that all brands should eventually return to products and brands, and brands should have long-term ideas. Therefore, in our development, we will have different positioning, different development stages and different investment in brand construction." Zhao Yan said.
According to the annual report, in the functional skin care products business segment, Bloomage Biotechnology Corporation Limited(688363) mainly includes four brands: runbaiyan, kuadi, mibel and BM Jihuo.
According to Zhao Yan, "the standard for defining the brand to enter the first year is that the sales revenue reaches the order of 500 million yuan, because there is no certain customer base to do brand construction, the effect is not good." When Bloomage Biotechnology Corporation Limited(688363) formulates brand strategy for each brand, it takes three years as the basic construction cycle of brand construction.
According to Bloomage Biotechnology Corporation Limited(688363) definition, 2020 is the first year of runbaiyan brand and 2021 is the first year of Cuddy brand. This year, mibel and BM muscle entered the first year of the brand one after another. In terms of revenue growth, the revenue of BM muscle in 2021 increased by 286.21% year-on-year, and the revenue of the other three brands also doubled.
According to Zhao run, the revenue of this year's Xiangrun will gradually decline in proportion to the sound development of its brand in 2023. According to the report, the revenue of this year's Xiangrun will gradually decline in 2023.
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Zhao Yan believes that brand building should adhere to the long-term principle and not only talk about short-term benefits. Only the brand can bring compound interest to the sustainable development of an enterprise, so we should increase investment on the basis of basic ability.
She also pointed out that in terms of new business layout, we should take into account the company's development in the next five years, 10 years or even longer, so we should make basic investment in R & D in advance and increase investment in synthetic biology at the same time. On the market side, Bloomage Biotechnology Corporation Limited(688363) also has a layout in new business areas such as functional food, mother and baby, washing and care. At the same time, the company has built the world's largest pilot conversion platform to expand production, learning and research.
21st Century Business Herald reporter noted that Bloomage Biotechnology Corporation Limited(688363) of the annual report, in fact, there are many surprises brought by R & D investment.
In 2021, the company's R & D investment was RMB 284 million, a year-on-year increase of 101.43%, and the proportion of R & D investment in revenue increased from 5.36% in 2020 to 5.75%. In the same period, the number of R & D personnel of the company reached 571, an increase of 194 compared with 2020, and 116 projects under research increased year-on-year.
In addition, the company also laid out in advance around synthetic biology technology. In December 2021, "Key Laboratory of synthetic biology of bioactive substances in Shandong Province (Preparatory)" was recognized by the Department of science and technology of Shandong Province. In addition, "synthetic biotechnology international innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) base" has also been settled in Beijing Daxing biomedical base and will be put into use soon.
This is also the most important work of Bloomage Biotechnology Corporation Limited(688363) this year. Zhao Yan said that in 2022, we should further lay a solid foundation for the company's R & D platform for synthetic biology, build high company barriers and widen moats, and get more bioactives through this platform.
In addition, Bloomage Biotechnology Corporation Limited(688363) advance the layout of new capacity and new platform. Its Tianjin plant will increase the production capacity of 300 tons of hyaluronic acid, and 30 pilot production lines will enable the industry to help transform scientific research achievements Bloomage Biotechnology Corporation Limited(688363) science and Technology Industrial Park started in Hainan free trade port. In the future, an international business center in the medical and American sector will be established.
