The overall growth of the cosmetics industry is highly deterministic. From the perspective of the industrial chain, the brand end is the core investment target, and the supervision is stricter, so the upstream leading enterprises are expected to benefit; With the diversification of online operations, agent operating enterprises also usher in opportunities.
Key points supporting rating
Overview of the cosmetics industry: the cosmetics industry has many segments, including skin care, make-up, hair care, oral care, infant care, bath, skin care, beauty protection, sun protection and perfume. From the perspective of the industrial chain, it is divided into four links: raw material suppliers, manufacturers, brands and channels, and the final products to consumers.
Brands: the scale of the industry is growing rapidly, and the national brand is rising continuously. The rapid growth of China's cosmetics market ranks second in the world. The high growth of the industry is mainly driven by supply and demand: 1) supply: China's industry has developed for more than 70 years, and the brand layout has continued to inject fresh blood into the market. At the same time, the channels are constantly changing, the online proportion is rising rapidly, the barriers to brand entry are reduced, and the product supply is becoming more and more diversified. 2) Demand: the steady rise of per capita disposable income lays the foundation for consumption upgrading. At present, consumers choose to be more rational, superimpose diversified channel layout, and domestic brands break through quickly. Cosmetics upstream: brand growth drives upstream demand. 1) OEM Enterprises: high growth in scale and scattered competition pattern: the scale of the cosmetics industry is increasing rapidly, while the brand has insufficient production capacity. Therefore, a large amount of production demand has promoted the rapid development of OEM / ODM business. Despite the rapid growth of the OEM industry, the competition pattern of the OEM market is relatively scattered, mainly small and medium-sized enterprises. 2) Raw material manufacturers: the raw material supply is mainly divided into cosmetic raw materials and plastic packaging raw materials. Its profitability is not high, and it is greatly affected by the price fluctuation of upstream purchased materials and the demand of downstream orders. The continuous growth of raw material suppliers needs to be further realized through the improvement of capacity utilization or capacity expansion, as well as the improvement of customer richness. Downstream of cosmetics: diversification of online channels leads to generation operation business. 1) E-commerce is located at the outlet of the industry, and the flow shows significant differentiation: at present, the online trend of the cosmetics industry is significant, the emerging e-commerce is rapid and large-scale, and the online flow is in the process of decentralization. We selected tiktok tiktok sales and share of sales of the tramway tiktok platform, and found that the overall sales of the platform sales fluctuated upward in 21 years. 2) At that time, with the diversified online operation, the brand agent operation business grew rapidly: from 2014 to 2019, the scale of China's e-commerce agent operation market increased from 223.46 billion yuan to 113551 billion yuan. Due to a certain degree of maladjustment of international major cosmetics brands to the changeable channels, there was a high demand for international brand agent operation, driving the penetration rate of e-commerce agent operation of beauty brands to continue to increase.
Follow the industry trend and grasp the high-quality target of the industrial chain. 1) The industry scale growth is highly deterministic, and the Matthew effect under strong supervision continues to highlight: it is expected that the scale of China's cosmetics industry will reach 134.77 billion US dollars in 2025, with a CAGR of 12% from 2020 to 2025. Since 2020, the regulatory policies of the cosmetics industry have been continuously strengthened. We believe that the strong regulatory policies covering the whole industry chain have raised the entry threshold, accelerated the withdrawal of non-conforming enterprises, promoted the positive development of the industry and optimized the competition pattern of the whole industry. 2) In terms of the investment priority of the industrial chain, we believe that the brand end is the core investment target of the industrial chain; Secondly, we are optimistic about upstream raw material enterprises, mainly due to the pressure on small and medium-sized enterprises under the strengthening of overall policy supervision, and the upstream leaders are expected to obtain a higher market share. In addition, the agency business of the brand is expected to usher in more opportunities under the diversified operation on the Internet.
Key recommendation
Key recommendation: leading skincare products of Dermatology grade with differentiated product layout Yunnan Botanee Bio-Technology Group Co.Ltd(300957) ; Focus on the strategy of large single products and continue to expand the series of large single products Proya Cosmetics Co.Ltd(603605) . Suggestions: focus on the integrated layout of the industrial chain, extending from raw materials to Bloomage Biotechnology Corporation Limited(688363) ; The layout of multi brand strategy, the continuous improvement of Shanghai Jahwa United Co.Ltd(600315) , and the two wheel drive of independent brand and brand agent operation show an upward turning point of Syoung Group Co.Ltd(300740) .
Main risks of rating
The expansion of new products is less than expected; Industry competition intensifies; Product safety risk.
