\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
Event: the company issued the annual report for 2021. During the reporting period, the company realized revenue of 4.633 billion yuan, with an increase of 23.47%, net profit attributable to the parent company of 576 million yuan, with an increase of 21.03%, deducting net profit not attributable to the parent company of 568 million yuan, with an increase of 20.89% and EPS of 2.87 yuan. The company plans to pay dividends of 0.86 yuan per share (including tax) and increase 0.4 shares per share with capital reserve. Driven by two main businesses, the company’s performance in 2021 is in line with expectations. In 2021q4, the company realized revenue / net profit attributable to the parent company of 1.62 billion yuan / 212 million yuan, an increase of 10.9% at the same time; In 2022q1, the company realized a revenue / net profit attributable to the parent company of 1.254 billion yuan / 158 million yuan, an increase of 38.53% / 44.16% at the same time, maintaining a rapid growth rate under the high base.
Comments:
Core business drives steady growth in performance, and improves brand influence through all channels. The company is committed to building a new domestic cosmetics industry platform. Its own brands cover skin care, beauty care, washing and other fields, and its revenue will grow steadily in 2021. In terms of categories, the company’s skin care category achieved a revenue of 3.978 billion yuan in 2021, an increase of 22.70% at the same time. The company further optimized the product structure and deepened the “large single product strategy”. Based on the increasingly mature digital management of the whole product life cycle, the Proya Cosmetics Co.Ltd(603605) brand upgraded and expanded the existing single products and launched a new series of large single products, driving the steady growth of skin care business. In 2021, the revenue of beauty and make-up category reached 618 million yuan, an increase of 57.39% at the same time, which is mainly due to the company’s adoption of cost-effective and efficient delivery model to launch excellent products that meet the needs of consumers by expanding the reach range of large single product promotion, expanding from the vertical group of beauty makeup to all kinds of Pan American makeup groups. By channel, the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels of the company are parallel. In 2021, the revenue from online / offline channels will reach 3.924696 billion yuan, an increase of 49.54% / – 38.03% at the same time. The company’s online platforms operate synchronously, optimize the goods structure, consolidate the strategy of large single products, further strengthen the fine operation, and improve the popularity and repurchase rate of stores; The offline decline was mainly caused by the company’s adjustment of store structure and the repeated impact of the epidemic on offline passenger flow.
The gross profit margin reached a new high, and high sales Investment laid the cornerstone for the growth of new brands. The proportion of online self broadcasting revenue benefiting from the company’s high gross profit margin increased. In 2021 / 2022q1, the company’s gross profit margin was 66.46% / 67.57%, an increase of 2.91pct/3.16pct. In terms of expenses, the company strengthened the incubation and brand reconstruction of new brands such as Caitang, correctors and yuefuti. In 2021, the company’s sales expense rate increased by 3.08pct to 42.98%, of which the rate of image publicity and promotion fee reached 36.12%, which was the main sales expense; Benefiting from the scale effect, the company’s R & D expense ratio / management expense ratio decreased by 0.20pct/0.27pct to 1.65% / 5.12%. Overall, in 2021, the net interest rate attributable to the parent company decreased by 0.25pct to 12.43% and remained basically stable.
Adhere to the long-term principle, based on the “6 n” strategy, and consolidate the core competitive advantage. Guided by new consumption, new marketing, new organization, new mechanism, new technology and new manufacturing, the company has deepened the refined operation management system with “R & D, products, content and operation” as the main line to build competitiveness in all aspects. In 2021, the company continued to strengthen basic research and development, focusing on the development of cells, skin and raw materials, and strengthened the research of functional raw materials. It has newly obtained 19 national authorized invention patents. Taking Proya Cosmetics Co.Ltd(603605) main brand as the starting point, the company enables and incubates brands with high quality and efficiency to meet the different needs of consumers, and realizes the construction and improvement of multi brand matrix. In 2021, the core private brand Proya Cosmetics Co.Ltd(603605) achieved steady growth, contributing a revenue of 3.829 billion yuan, an increase of 28.25% at the same time; Beauty brand Caitang contributed 246 million yuan in revenue, an increase of 103% with a bright performance.
The long-term strategy remains unchanged, and the advantages of brand building, R & D system and refined operation will be continuously strengthened. Looking forward to 2022, the company will continue to accelerate the pace and strengthen the construction of multi category and multi brand matrix to meet the different needs of consumers. Build the company’s brand image and enhance the company’s brand spirit; In terms of the cosmetics brand Caitang, the company continues to strengthen the expansion and improvement of the sub classification purpose, seize the market share of mid-range cosmetics, further deepen the cooperation with KOL and convey the product differentiation advantages and professional attributes; In terms of or brand, the company will strengthen its offline breakthrough in the Japanese market, increase promotion and investment in the Chinese market, and seize the brand mind of professional scalp maintenance. In addition, based on the internationalization strategy, the company will continue to deepen its R & D advantages and realize the beautiful vision of enabling products with science and technology. Font color
Profit forecast and investment rating:
The company’s large single product strategy has achieved remarkable results, the brand matrix is constantly enriched, and there is great room for growth in the future. We lowered the EPS of 202223 to 3.70/4.67 yuan (the original value was 3.71/4.78 yuan), and estimated that the EPS of 2024 would be 5.72 yuan. At present, the share price corresponds to 49.01 times PE in 22 years. We are optimistic about the company for a long time, pay attention to basic and applied research, constantly improve the brand and category matrix, and meet the different needs of different groups. The new brand has strong growth, and is expected to bring the second performance growth curve to the company. The long-term competitiveness is expected to be further improved and maintain the “buy” rating.
Risk factors: the intensification of brand competition leads to the expansion of multi brand new channels falling short of expectations, the rise of online traffic costs affecting profits, and the decline of industry prosperity.
