\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 315 Shanghai Jahwa United Co.Ltd(600315) )
Core view:
Events
In 2021, the company achieved an operating revenue of 7.646 billion yuan, a year-on-year increase of 8.73%; The net profit attributable to the parent company was 649 million yuan, a year-on-year increase of 50.92%; The non net profit deducted from the parent company was 676 million yuan, a year-on-year increase of 70.76%. The net operating cash flow was 993 million yuan, an increase of 54.34% over the previous year.
The company actively adjusted its operation so that the traditional advantageous skin care products returned to the main revenue, and smart retail promoted the substantial growth of offline sales
In 2021, the company achieved a total operating revenue of 7.646 billion yuan, an increase of 614 million yuan over the same period of last year; Among them, the main revenue of the daily chemical industry totaled 7.638 billion yuan, an increase of 610 million yuan over the same period last year. In terms of products, the company’s product sales increased across the board in 2021; Among them, the increase of hujiaqing and cooperative brand products is small, which is in line with the company’s differentiated layout model. It can also be seen that the impact of overseas business and special channel business is also mainly concentrated in the above two categories; As the largest category supporting the company’s revenue and the main driving force of the company’s revenue growth, the product upgrading of skin care products deserves attention; During the year, the company focused on improving the repurchase rate of products and consumer stickiness. The repurchase rate of leading brands such as Yuze and baicaoji increased by different ranges, which can be seen from the improvement of the market influence of the company’s core brands.
In terms of sub channels, the company achieved a main revenue of RMB 3.211 billion and RMB 4.427 billion respectively through online and offline channels in the whole year. Among them, offline channels in the Chinese market have become the main force of main revenue, accounting for 43.78% and 57.21% of the operating revenue in the Chinese market. The main reason is that the company has promoted the transformation of smart retail in offline channels, and smart retail has increased significantly. Affected by the persistence of covid-19 epidemic, the overseas market weakened, and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) dual channels achieved a total operating revenue of 1.793 billion yuan, accounting for 23.47% of the company’s total revenue. In terms of regions, the operating revenue in East China increased by 162 million yuan in 2021, which is still the main source of the company’s offline revenue, and central China achieved the largest growth (188 million yuan) in the year.
Under the background of consumption upgrading, with the gradual improvement of the epidemic situation, people’s consumption demand gradually recovers. The cumulative retail sales of cosmetics reached 14.0% in 2021, and the consumption environment gradually warms up. Compared with other categories, cosmetics are in a high boom development range. In terms of quarters, the company’s revenue increment decreased quarter by quarter and rebounded in the fourth quarter: in the first quarter, the company’s revenue increased rapidly, with a year-on-year growth rate of 27.04%, realizing a good start of the whole year; In the second quarter, it maintained a steady growth trend, with a year-on-year increase of 3.73%; In the third quarter, the revenue decreased slightly, which is expected to be due to the fact that it is in the middle of two rounds of e-commerce promotion, affected by less promotional activities and consumers’ desire to hoard and purchase, which is basically consistent with the trend of light and peak seasons before and after the epidemic. At the same time, the reduction of the company’s special channel sales scale has a great impact; The performance rebounded in the fourth quarter, with a year-on-year increase of 8.71%. Considering the release of consumers’ skin care needs in autumn and winter, and the consumption promotion effect brought by the “double 11” online promotion activities,
The trend of revenue scale is in line with expectations.
From the perspective of profit side, the net profit attributable to the parent company after deducting non profits has increased significantly. Non recurring gains and losses during the year were mainly affected by three items: ① government subsidies decreased by 6.2505 million yuan year-on-year; ② The investment income decreased significantly by 738523 million yuan year-on-year, of which the company realized a total investment income of 106 million yuan in 2021, an increase of about 22 million yuan year-on-year, due to its equity participation in four companies, including Zhangzhou Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) (49%), Shanghai Sephora (19%) and Beijing Sephora (19%), The main profits and losses are concentrated in the fund investment and share based payment (corresponding to the equity incentive plan within the year); ③ The impact of income tax decreased by 102201 million yuan.
The comprehensive gross profit margin increased by 2.84pct and the period expense rate decreased by 3.33pct
The company’s comprehensive gross profit margin for the whole year of 2021 was 58.73%. Since the company implemented the question and answer on the implementation of accounting standards for business enterprises issued by the Ministry of Finance on January 1, 2021, reclassified some transportation costs from sales expenses to operating costs, and retroactively adjusted the amount in the same period of last year. The gross profit margin increased by 2.84 percentage points compared with the same period of last year, realizing the first increase after three consecutive years of decline; The gross profit margin of the main beauty daily chemical business was 58.77%, an increase of 2.87 percentage points compared with the same period last year. On the one hand, the gross profit margin of the company’s main businesses (skin care / personal care / mother and baby) has increased by different ranges; On the other hand, the company actively adjusted the product structure, and the high gross profit and rapid development of skin care products brought about the structural optimization of the overall gross profit margin. From the perspective of production cost, the prices of main raw materials such as soap particles, grease and surfactants have increased by varying degrees, increasing the operating cost, but the optimization of gross profit structure covers the purchasing pressure of raw materials to a certain extent.
The company’s annual net profit margin in 2021 was 8.49%, up 2.37 percentage points year-on-year; The expense rate during the period was 51.18%, a decrease of 3.33 percentage points compared with the same period last year. The rise of gross profit margin and the reduction of expense rate during the period have jointly brought about the growth of the company’s overall profitability. In the expense side: ① the sales expense has increased by 222079 million yuan compared with that in the 2020 annual report. According to the disclosure in the 2021 annual report, the increase is 308 million yuan, mainly due to the increase of 249 million yuan in marketing expenses. Considering that the company will increase online marketing publicity in 2021, promote multi platform development and optimize the operation efficiency of e-commerce, Integrate supply chain and logistics and streamline offline store counters, and the investment in marketing is in line with expectations; ② The increase in administrative expenses was 702543 million yuan, mainly due to the increase of 422041 million yuan in the depreciation of use right assets under the new accounting standards, and the increase of 609944 million yuan in share based payment expenses due to the equity incentive plan.
Basic research, application innovation and product value shaping, three-dimensional realization of scientific and technological empowerment
The company insisted on increasing R & D investment, combined with the development characteristics of the industry, and realized scientific and technological empowerment from the three dimensions of basic research, application innovation and product value shaping. During the reporting period, 82 new patent applications were submitted, with a year-on-year increase of 68%. R & D involves three-dimensional levels of basic research, application innovation and product value shaping. In terms of basic research, the company deepens cutting-edge research and establishes its own leading edge around eight basic platforms: Medical Research Co creation, traditional Chinese medicine, cell biology, AI customization, safety evaluation, efficacy screening, packaging design and beauty instruments. During the reporting period, the company continued to promote cooperation with Huashan Hospital Affiliated to Fudan University and the dermatology department of Ruijin Hospital Affiliated to Medical College of Shanghai Jiaotong University, carried out research in the direction of skin immunity, skin barrier repair, stem cells and aging, skin imaging and customization, and upgraded products from multiple dimensions such as quality and function.
In terms of application innovation, relying on the advantages of upstream and downstream of the industrial chain and modern science and technology, a series of technological innovations are carried out from the aspects of raw materials, formula, process and packaging. The introduction of double cavity lock fresh technology and blue copper peptide with skin repair function is applied to Yu se Zhen An moisturizing essence. We successfully upgraded the patented technology of mild salicylic acid coated slow release technology, which was applied to the new Herborist salicylic acid mask. In terms of product value shaping, the company continued to explore the way of digital empowerment to achieve consumer insight. Together with tmall innovation center, the company digitally driven product development. The R & D cycle of new products was shortened from the average of 12 months in the past to 8.5 months now. Through this, the company created a variety of popular products and won many awards such as TMIC “new product innovation award” and the 7th tmall gold makeup Award “the most growing group in 2021”.
Consumer insight leads product research and development, innovation and joint marketing help the company’s long-term development
In terms of product innovation, the company used the new product development methodology dominated by consumer insight to deepen cooperation with tmall Innovation Center TMIC, improve product innovation ability and achieve preliminary results. All single products of baicaoji brand-new Taiji Jiyuan series entered the brand head sales SKU, and became the top five explosive products of brand e-commerce sales during the double 11; Yu Ze new product blue cabin essence listed GMV in the first week exceeded 10 million yuan, and in Tmall national tide day divides the national product beautiful makeup first place and the beautiful makeup class goal second. The launch of Liushen’s new jingcui shower gel has improved the brand’s competitiveness and young market penetration in the shower gel category; MAXAM’s new fermented rice series has driven the rejuvenation of the brand and the sinking of the consumer city level, and reversed the downward trend in the past few years. In addition, the company focuses on explosive products, streamlines SKUs, and pays attention to customer stickiness and brand vitality. During the reporting period, the number of customers and repurchase rate of major skin care brands baicaoji and Yuze in 2021 increased by 7.88% and 6.22% respectively. In terms of marketing innovation, ① the company achieved cross category innovation and brand value co construction through cross-border IP breaking new forces: Goff joined hands with animation IP “Doraemon” to create a brand image with high-tech attributes, with a total exposure of 180 million times. ② Establish a top-down word-of-mouth marketing matrix to make word-of-mouth the most important moat for recruitment and re purchase: at the top of the matrix, Yuze cooperates with professional medical research institutions to establish the brand gene of medical research; At the middle level of the matrix, KOL plays the role of leading trends and education through experts and heads, and builds momentum for brands and products; The bottom layer of the matrix attaches importance to feedback and maintains high interest consumers through Koc’s real user experience and grass planting. Third, by creating immersive live experience, we will set up a new benchmark for Industry: Herborist tiktok live room, through content creation, total total playback volume is over 13 million, and quickly create a benchmark for business.
Investment advice
The company has steadily promoted the effective implementation of the strategy. In terms of brand promotion, the company has determined a differentiated brand development strategy. Each fist brand in the brand matrix has certain advantages in influence and market share. In terms of channel innovation, the company strengthened its Omni channel operation capability, optimized the layout of traditional offline channels and developed emerging online e-commerce channels. In terms of R & D priority, the company improves R & D efficiency, grasps the pain points of market demand, and innovates and applies new technologies while ensuring product quality and safety. In terms of supply guarantee, the company’s new plant has been put into operation, achieving the seamless and non shutdown smooth connection between new and old plants. With the establishment of a new business policy, the gradual adjustment of brand management strategy and the improvement of its own business model, combined with the company’s own equity incentive objectives, we expect the company to achieve a corresponding revenue of 9.010/10.438/11.996 billion yuan and a net profit of 799/9.81/1.209 billion yuan in 2022 / 2023 / 2024; Corresponding to PS2 64 / 2.28/1.98 times, corresponding to EPS of 1.18/1.44/1.78 yuan / share, corresponding to pe30 / 24 / 20 times, callback to “recommended” rating.
Risk tips
The risk that the development of daily chemical industry is less than expected; Risks of intensified market competition and reduced industry concentration; The risk of brand channel promotion falling short of expectations.
