Core focus
Shanghai Shangmei submitted a prospectus to be listed in Hong Kong. The company is the leader of domestic cosmetics with nearly 20 years of operation experience. In the current industry structure, overseas beauty leaders L'Oreal, Estee Lauder and Shiseido have built a relatively complete and diversified brand matrix. Most local leading groups are still in the transition stage from successfully cultivating a core brand to building the second growth curve. Since the launch of Han Shu in 2003, Shanghai beauty group has successively cultivated head brands in three segments. The market share of the company has increased significantly since expanding the brand matrix in 2014 In 2021, it ranked fourth in the market share of domestic daily chemical companies. This paper analyzes its core competitiveness and discusses the transformation and upgrading of traditional domestic goods through the development path of the three major brands of FuPan, Hanshu, Yiye and red elephant.
Basic conclusion
Leading local multi brand beauty leaders. Shanghai Shangmei has Hanshu / Yiye / red elephant and other brands, covering skin care / mother and baby / washing care. For 15-20 consecutive six years, the retail sales of domestic brands ranked the top five / mother and baby care brands ranked the first, 1-3q21 domestic skin care brands ranked the third, and domestic cosmetics companies ranked the fourth. 1-3q21 revenue / net profit of 2.6 billion yuan, + 13% / 45%. IPO fund-raising is mainly used for brand building (24%) / investment and M & A (23%) / production and R & D (15%) / sales network (13%).
History: the company accurately grasped Category & Channel & Marketing bonus to achieve breakthrough.
Skin care: in 21 years, the scale of skin care in China was 309.6 billion yuan and cagr5 was 13%. In terms of pattern, the concentration of brands and companies is low, with Cr5 of 21% / 35% in 20 years, and the share of domestic skin care products is 43%, lower than 68% / 81% in Japan and South Korea. The growth path of the tiktok brand is the precise grasp of the TV shopping (2008) / online (2014) / jitter and other live broadcast business (2019) dividends, which is named as the popular variety / TV series, and the rapid increase of the explosive products. A leaf relies on the mask category bonus to create "fresh water" brand label, brand launch is bound to star red deer harvest fan economy.
Infants and children: the daily chemical scale of infants and children in China in 21 years was 32.8 billion yuan, with a compound increase of 14% in 16-21 years. With the new generation of parents after 80 / 90 becoming the main consumer, they put forward higher requirements for composition / safety / efficacy, and prefer professional evaluation bloggers / content grass planting / e-commerce live broadcast and other new marketing / new channels. The red elephant is able to break through the demand side, and is mainly targeted at natural formula mild, non sensitized, targeted skin products / scalp oil production problems, launch targeted products, vibrato / cooperative dad tiktok, etc.
Future: brand transformation, product & R & D & marketing strategy upgrading, opening a new round of growth. In the long run, Hanshu / yiyezi have transformed from the early explosive product strategy to the large single product strategy and improved the brand matrix. Hanshu has a clear anti-aging positioning and yiyezi has transformed its skin care efficacy. The supervision under the new regulations has become stricter. The company's Sino Japanese R & D base + star scientists have built R & D barriers, and some achievements have been applied to its products. The star anti-aging formula double bacteria fermentation ingredient tiracle, which has been developed for 7 years, has been applied to 385 products such as Han Shugao muscle energy. As of 3q21, self-developed products contributed 97% of revenue. The marketing side shifted from aggressive large screen launch to precise TOC operation, and the sales rate of 1-3q21 was -2.3pct, and the reform effect was initially shown. The brand matrix extends from Volkswagen to medium and high-end / high-end, hoping to benefit from the growth dividend of high-end skin care (16-21 high-end / Volkswagen skin care cagr30% / 12%).
Investment advice
After nearly 20 years of development, Shanghai Shangmei has experienced a period of rapid growth, brand precipitation adjustment and transformation and upgrading, and entered a new stage of development. 22 years is the first year of the new cosmetics regulations and the year of multi-channel prosperity. We are optimistic about the company's R & D empowerment, marketing efficiency improvement and brand reform to build long-term barriers.
Risk tips
The transformation of main brands / incubation of new brands is less than expected, and the turnover of inventory / accounts receivable slows down.
