\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
Event:
Proya Cosmetics Co.Ltd(603605) release the annual report of 2021 and the first quarterly report of 2022. In 2021, the revenue will be 4.633 billion yuan / + 23.47%, and the net profit attributable to the parent company will be 576 million yuan / + 21.03%. 2022q1 achieved a revenue of 1.254 billion yuan / + 38.53%, and a net profit attributable to the parent company of 158 million yuan / + 44.16%, close to the upper limit of the previous performance pre increase announcement.
Key investment points:
The strategy of large single product has been successfully promoted, and the gross profit margin has stepped into the track of improvement. After 2020h1 company launched the strategy of large single product, the overall gross profit margin has entered a continuous upward track. The gross profit margin of 2021q1 / 2021 / 2022q1 reached 64.4% / 66.5% / 67.6% respectively. In 2021, the company firmly promoted the strategy of large single product. The annual total of large single products accounted for Proya Cosmetics Co.Ltd(603605) of the main brand, which was 25+% (Ruby essence / double anti essence ratio respectively 18+%/16+%), which accounted for about 60% of Tmall platform. The gross profit rate of the large single products is higher, such as essence / eye cream / face cream / sunscreen gross profit rate is 75%+/75%+/70%+/70%- respectively, and the large single product is higher than the gross margin level of the Proya Cosmetics Co.Ltd(603605) brand around 70%. In 2022, the main brand Proya Cosmetics Co.Ltd(603605) will continue to promote the strategy of large single products, with the exception of ruby / double cream essence and eye cream, such as source essence, feather feeling sunscreen and bowling blue bottle.
Maintain high-speed growth online and make phased adjustments offline. According to different channels, the online / offline revenue in 2021 was 3.9 billion yuan / 700 million yuan respectively, with a year-on-year increase of 50% / – 38% respectively. 1) In terms of online channels, direct sales / distribution reached RMB 2.8 billion / 1.1 billion respectively, with a year-on-year increase of 76.2% / 8.6% respectively. The proportion of direct sales continued to increase, with the gross profit margin of tmall flagship store reaching about 70%. The tiktok / Jingdong accounts for 45+%/15+%/10+% respectively, according to the platform. 2) In terms of offline channels, daily chemical / other (such as supermarkets) achieved revenue of RMB 500 million / 190 million respectively, with a year-on-year increase of – 40.5% / – 30.5% respectively. We expect the offline network to decline year-on-year. On the one hand, the network is still adjusting. At present, the number of CS is about 12000 / – 15%, and the number of supermarkets is 600 + / half lower than that in 2021h1. It is expected that in the future, the company will focus on entering systems such as Chongqing Department Store Co.Ltd(600729) , Yintai department store and Tianhong Department store, take the initiative to remove inventory and adjust product structure.
Caitang has achieved rapid growth, and or and yuefuti are expected to gradually develop. By brand, private brands achieved a revenue of 4.48 billion yuan / + 26.6% in 2021, of which Proya Cosmetics Co.Ltd(603605) / Caitang / other brands achieved a revenue of 3.83/2.5/410 billion yuan respectively, with a year-on-year increase of 28.3% / 103.5% / – 6% respectively. The agent brand achieved a revenue of 136 million yuan / – 34.0%. Among the sub brands, Caitang’s revenue side performed well, with a gross profit margin of 70%, and achieved a loss of about 10 million in the whole year. At the beginning of 2022, Caitang achieved a good upgrade on the product side, and Q1 is expected to be profitable. In terms of other brands, Yuefu Ti has doubled its growth in 2021 (with a low base), and the or has gradually started to increase. It is expected that after 1-2 years of cultivation, the development prospect is expected, and the company’s brand matrix is expected to be gradually improved.
Profit forecast and investment rating: it is expected to achieve revenue of 5.98/76.4/9.61 billion yuan in 2022 / 23 / 24, with a year-on-year increase of 29.3% / 27.8% / 25.7%. The net profit attributable to the parent company was RMB 730 / 9.3 / 1.15 billion, with a year-on-year increase of 27.0% / 26.7% / 24.3%, maintaining the rating of “overweight”.
Risk tips: 1) substantial increase in flow cost; 2) Overseas brands cut prices to seize market share; 3) Product quality problems; 4) Stricter supervision leads to the new products being less than expected; 5) The rapid rise of cutting-edge brands intensifies competition; 6) If relevant materials and data are inconsistent with Proya Cosmetics Co.Ltd(603605) announcement, the announcement of the company shall prevail.
