\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 315 Shanghai Jahwa United Co.Ltd(600315) )
The century old daily chemical leader has experienced changes and precipitation, and the new management has steadily created a new situation Shanghai Jahwa United Co.Ltd(600315) as the first listed enterprise in the cosmetics industry, it has a deep accumulation of brand culture. After taking over in 2020, pan Qiusheng established the “123” strategy for the pain points, introduced business backbones such as R & D / digitization / market, and gradually reformed and upgraded from brand / Channel / organizational process. In 2020 / 2021, equity incentives were successively promulgated to deeply bind the core management. The effect of strategy promotion and adjustment is becoming more and more obvious. In 2021, the revenue is about 7.65 billion yuan (YoY + 8.7%), and the net profit attributable to the parent company is about 650 million yuan (YoY + 51%). The operating indicators such as inventory / accounts receivable have been significantly improved, and the performance has gradually entered a virtuous circle. By category, the revenue of skincare / gejiaqing / mother and baby was 2.70/24.1/2.16 billion yuan respectively, an increase of 22.2% / 0.4% / 4.2% at the same time. By channel, the online / offline revenue was 3.21/4.43 billion yuan respectively, an increase of 7.9% / 9.3% at the same time. After taking office, President pan reorganized the positioning of his brands and divided them into three categories: high-speed growth (Yuze / baicaoji / Diancui, etc.), subdivided Champion (Liushen / Goff / Qichu), subdivided leader (MAXAM / Jiaan, etc.), and determined differentiation strategies to jointly build a high ceiling. Among them, the proportion of revenue of high-speed growth skin care products with strategic focus increased by 4pcts to 35% in 21 years, effectively driving the improvement of the overall gross profit level.
The brand is renewed and upgraded to drive long-term high-quality development. The brand matrix continues iterative optimization, with clear positioning and upgrading. Product innovation pays more attention to high quality, streamlines the long tail and actively digests inventory. The number of listed SKUs is reduced, but the creation of a variety of explosive products has achieved good results. In addition, the aggregation degree of head products rises to 71% in 2021. In addition, the R & D system framework is gradually formed, and the marketing means are flexible and innovative, so as to jointly promote brand upgrading and rejuvenation and expand the circle of young consumer groups. Among the key brands: 1) Yuze: positioning efficacy skin care and adhering to the joint creation of medical research, it has increased by about 20% in 21 years (we expect the revenue to be about 1 billion yuan). Under the overweight of R & D, it has continued to deepen the professional barriers in the field of barrier repair in 22 years, and the newly listed macromolecule baijindun sunscreen and subsequent new products are expected to contribute new growth points; 2) We are expected to continue to build high-quality products such as Taiji herbal products / products with high efficacy of about RMB 2.2 billion in seven years, and continue to improve the revenue of about RMB 2.2 billion in five years around the optimization of Taiji herbal products / products with high efficacy of about 2.2 billion in five years; 3) Liushen: continue to launch new creative toilet water products, such as portable clothes, and make efforts to extend the application scenarios of shower gel categories, focus on creating Elite Series in e-commerce, and continue to maintain its position and steady growth; 4) Others: Goff continues to strengthen high-end rejuvenation and reduce price conflicts between channels. MAXAM and Jiaan maintain the leading position in segmentation, promote new progress in differentiation, and extend the popular models to high-quality series. For example, MAXAM launched yeast series, focusing on young people, and mainly promoting online channels with good results.
The channel side is diversified and advanced, and the whole region cooperates to improve quality and efficiency. After long-term accumulation, the company has established an omni channel layout including online (e-commerce, special channel), offline (supermarket, department store, CS) and overseas. 1) Online: in 2021, the online revenue was 3.211 billion yuan (YoY + 7.9%), of which China’s e-commerce / special channel were 1.936 billion / 565 million respectively, accounting for 25.3% and 7.4% of the total revenue respectively. The number of online operation shops on various platforms increased to 82 (mainly self operated). E-commerce continued to strengthen fine operation and reduce its dependence on super head. The repurchase rate of Yuze / baicaoji increased to 42.6% / 41.6% respectively; Tequ focuses on increasing the proportion of retail part to enhance controllability and optimize product supply structure. In 2022, we will focus on building omni-channel online business integration, define four front office business lines of platform e-commerce / social e-commerce / interest e-commerce / special channel, and build middle office empowerment, which is expected to continue to drive high performance growth in the future; 2) Offline: in 2021, the offline revenue was 4.427 billion yuan (YoY + 9.3%), of which China supermarket / department store / CS were 2.541/4.73/330 billion yuan respectively, accounting for 33.3% / 6.2% / 4.3% of the total revenue respectively. The company streamlined and optimized the offline channel structure, reduced 111 to 866 department stores and turned losses into profits. CS strengthened the Watson / Sephora layout and promoted the online promotion of new retail. In 2021, the offline revenue of new retail accounted for more than 10%, effectively mitigating the impact of the decline in traffic. In 2022, we will optimize and improve the efficiency of supermarkets / department stores / CS and other channels from multiple dimensions such as strategic cooperation / smart retail / model innovation / fine operation / private domain operation, and continuously precipitate consumer assets, so as to lay the foundation for opening up the private domain. In 2021, the Omni Channel private domain has precipitated more than one million consumers, promoting the user life cycle value to increase by 16%, becoming an important core competitiveness of the company in the medium and long term.
Profit forecast and investment suggestions. The company adheres to the 123 strategic policy, the implementation effect of various plans on the product / marketing / channel side has initially appeared, and the business quality has been continuously improved. We expect that the revenue from 2022 to 2024 will be RMB 8.45/95.3/10.79 billion respectively, with an increase of 10.5% / 12.8% / 13.2% respectively, and the net profit attributable to the parent company will be RMB 8.3/10.6/1.29 billion respectively, with an increase of 27.7% / 27.3% / 22.5% respectively. As the company covers a wide range of categories, based on the growth of sub businesses, we adopt segment Valuation: 1) skin care business. After split calculation, it is estimated that the revenue in 2022 will be 3.29 billion yuan and the net profit attributable to the parent company will be 520 million yuan, giving 48 times PE in 2022, corresponding to the target market value of 25.2 billion yuan; 2) For other businesses, it is estimated that the revenue in 2022 will be 5.17 billion yuan and the net profit attributable to the parent company will be 300 million yuan, giving 28 times PE in 2022, corresponding to the target market value of 8.5 billion yuan. To sum up, the company’s total target market value is 33.7 billion yuan, corresponding to the target price of 49.6 yuan, and is rated as “buy”.
Risk tip: the epidemic repeatedly affects offline sales, the adjustment process does not meet expectations, and the promotion effect of brand or new products does not meet expectations.
