\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
The performance side grew well, and the gross profit margin increased steadily to 67.6%. In 2021, the company's revenue was about 4.633 billion yuan (YoY + 23.47%), the net profit attributable to the parent company was about 576 million yuan (YoY + 21.03%), and the net profit not attributable to the parent company was about 568 million yuan (YoY + 20.89%). The company's annual gross profit margin increased by 2.9pcts to 66.46%, mainly due to the continuous improvement of online proportion / large single product proportion / self broadcast proportion, the sales rate increased by 3.09pcts to 42.98%, mainly due to the increase of image promotion investment, the management rate decreased by 0.33pcts to 5.12%, the overall parent net profit margin was about 12%, and the operating cash flow at the end of the period reached 830 million yuan (YoY + 150.24%). In the first quarter of 2022, the revenue was about 1.254 billion yuan (YoY + 38.53%), the net profit attributable to the parent was about 158 million yuan (YoY + 44.16%), the net profit deducted from the non parent was about 147 million yuan (YoY + 36.21%), the gross profit margin increased by 3.16pcts to 67.57%, and the net profit deducted from the non parent was about 12%. Based on 201 million shares, the company plans to distribute cash dividends of 8.60 yuan (including tax) for every 10 shares and increase 4 shares with capital reserve. It is expected to distribute cash dividends of 173 million yuan and increase 80.4 million shares.
The main brand continued to fission and upgrade, and the incubation effect of new brands began to show. The revenue of skin care category of the company is 3.978 billion yuan (YoY + 22.7%), accounting for about 86%; The revenue of cosmetics increased by 33% to 618 million yuan. In terms of specific brands, 1) main brand: Proya Cosmetics Co.Ltd(603605) revenue is 3.829 billion yuan (YoY + 28.25%), accounting for 82.87%. The large item matrix is expanded in a rolling manner to strongly improve the profitability. According to our tracking judgement, the sale of large single products accounts for Proya Cosmetics Co.Ltd(603605) brand 25%+, which accounts for about 60% of Tmall platform, and the ratio of ruby + double anti essence income exceeds 30%. The classic ruby / double anti series series revolves around the high Maori category such as essence / eye cream, and promotes the growth of new brand products, such as source essence / blue bottle throwing / sun protection, etc. 2) New brand: Caitang has a revenue of 246 million yuan (YoY + 103.48%). It has successfully built star categories such as cosmetic sector, which is expected to continue to increase in the main track of bottom makeup in 22 years; Other new brands have been cracking down on Star products and significantly improving their earning capacity, such as OR shampoo, yiftei Jie Yan MI, and Ke Fu Fu pore essence. The company has long practiced the strategy of large single products, and the main brand has been upgraded and expanded in an all-round way. According to the differential positioning of crowd portraits, the new brand has laid out potential growth points in multiple sub circuits, such as professional makeup, scalp care, young people's skin care, problem skin and so on.
The online platform optimizes the goods and production structure, and upgrades offline outlets to boost brand strength. By channel: 1) online channel revenue was 3.924 billion yuan (YoY + 49.54%), accounting for 84.93%, including 2.803 billion yuan (YoY + 76.16%), accounting for 60.66%, and 1.121 billion yuan (YoY + 8.56%) in distribution. The commodity structure of online platforms continues to focus on high gross profit and large single products. Tmall / jd.com deepens the fine operation of high-quality traffic pool, and buffeting and other emerging platforms are overweight and self broadcast to grasp the traffic dividend. In addition, strengthen digital marketing and optimize the delivery efficiency of each platform to improve the production ratio; 2) The offline channel revenue is 696 million yuan (yoy-38.03%), of which the daily chemical revenue is 503 million yuan (yoy-40.52%), which is mainly due to the simplification, adjustment and de inventory of outlets, the reduction of the number of CS outlets by 10% to about 12000. Under the pressure of offline traffic, strengthen the optimization of terminal service capacity and improve the output of single stores; The revenue from other channels was 194 million yuan (yoy-30.50%), of which the number of supermarkets was reduced, but the focus was on building high-quality department store systems such as Yintai and Chongbai, and upgrading the brand strength through the adjustment of counter and store image.
Strengthen the layout of basic research + functional raw materials, and cooperate with industry, University and research to support long-term development. The company's revenue generation and profitability have been steadily improved, which strongly supports the overweight of R & D layout to cope with long-term competition. In 2021, the company spent 77million yuan (yoy+6.1%) on R & D and obtained 19 national authorized invention patents during the period. Based on the original R & D and innovation center, the International Academy of Sciences was established to focus on basic research in the field of skin. In addition, the research on functional raw materials was strengthened to promote new reserve support points for follow-up products, and cooperated with research institutions and raw material suppliers such as Institute of Microbiology of Chinese Academy of Sciences, Ashland and DSM. In 2022, it is expected to further increase the investment in R & D, systematically upgrade the R & D system, arrange R & D laboratories at home and abroad, and integrate industry, University and research to support long-term development. The company has announced strategic cooperation with Zhejiang Pai peptide and will cooperate in many fields, such as innovative peptide R & D, green peptide synthesis, raw material production and supply.
Profit forecast and investment suggestions: the company implements the long-term large single product strategy, the main brand continues to upgrade, and the vitality of multiple brands is renewed. With organizational coordination and efficient channel operation, it is expected to build a new generation of platform cosmetics group. Based on the performance of the annual report and the first quarterly report, we adjusted the company's revenue from 2022 to 2024 to be RMB 5.971/76.07/9.452 billion respectively, with the same increase of 28.9% / 27.4% / 24.2% respectively, and the net profit attributable to the parent company to be RMB 742 / 9.48/1.180 billion respectively, with the same increase of 28.8% / 27.7% / 24.5% respectively. The current market value of the company is RMB 36.5 billion, corresponding to 49 times of PE in 2022, maintaining the "overweight" rating.
Risk warning: industry competition intensifies; New product promotion / sub brand incubation fails to meet expectations; Product quality management risk.
