Key investment points:
Zhou viewpoint: the short-term epidemic has put pressure on optional consumption, but consumption upgrading is still the general trend, and the long-term growth potential of optional consumption can be expected; And the epidemic will eventually usher in an inflection point, waiting for the recovery of the consumer sector after the epidemic, and offline terminal retail may rebound. Therefore, the commercial trade industry is given a “recommended” rating.
1) cosmetics: since March, Shanghai, Guangzhou and other cities with relatively concentrated beauty industry have been affected by the epidemic. Factory shutdown, express shutdown and other phenomena have occurred from time to time, affecting the short-term growth of the industry. In April, Shanghai and other places are still affected by the epidemic, but usually April is the off-season for cosmetics consumption (zero sales of cosmetics agencies in April 20152021 accounted for 6.6% – 7.5% of the whole year). Therefore, if the follow-up of the epidemic can be controlled, the impact on the whole year is expected to be limited. In terms of sub brands, the differentiation continues, and some brands with excellent track segments and strong product strength still achieved brilliant growth in March. It is recommended that Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Bloomage Biotechnology Corporation Limited(688363) , Shanghai Jahwa United Co.Ltd(600315) , Syoung Group Co.Ltd(300740) . 2) Medical beauty: since 2021, the policy has focused on guiding “safe and orderly supply, reasonable and appropriate demand”. The medical beauty industry has entered a strong regulatory era, giving the medical beauty industry an opportunity for long-term standardized, sustainable and prosperous development. It is expected that under the regulatory policy norms, association organization guidance and continuous improvement of industry transparency, the medical and beauty industry is expected to usher in standardized and healthy development. For the medical and American sector, the long-term investment logic of the industry remains unchanged. Multiple forces such as regulatory fill, epidemic impact and consumer rationality will jointly accelerate the substitution of the compliance market for the illegal market. Legal compliance institutions and upstream leading manufacturers are expected to benefit from the compliance process. It has the ability of integrating hair care and ecological services (6 leading stores with strong growth potential). 3) Gold jewelry: the gold boom from the second half of 2020 to the second half of 2021 and the Spring Festival in 2022 has been driven by volume. The international situation and epidemic situation have a short-term impact. In the long run, the business model of jewelry franchise stores is good, the epidemic situation accelerates the clearance of the industry, and the radiation effect brought by gufajin and other new processes and leading stores drives the incremental demand, which is supported by long-term growth. It is recommended to pay attention to Chow Tai Fook and Chow Tai Seng Jewellery Company Limited(002867) .
Market review: 1) market performance of the sector this week: the beauty care sector rose by – 0.9% and trade retail rose by – 3.3% this week. Among the 31 Shenwan level industries, beauty care and trade retail ranked third and 11th respectively. 2) Year to date performance of the sector: year to date, the beauty care sector has increased by – 15.8%, and the commercial retail has increased by – 14.4%. Among the 31 Shenwan level industries, beauty care and commercial retail rank 12th and 10th respectively. 3) Commercial retail (including accessories): the weekly change of commercial retail sector was – 3.3%, with a yield of 0.9% relative to the CSI 300 index; Among the 10 internal sub sections, supermarkets (- 0.3%), multi industry retail (- 1.5%) and department stores (- 2.7%) performed better. 4) Beauty care sector: Weekly change – 0.9%, relative to the Shanghai and Shenzhen 300 and gem index, the yield was 3.3% and 5.8% respectively; The top gainers were Jahen Household Products Co.Ltd(300955) (+ 14.5%), Tianjin Yiyi Hygiene Products Co.Ltd(001206) (+ 8.0%) and Hangzhou Coco Healthcare Products Co.Ltd(301009) (+ 6.9%).
Industry dynamics: 1) the data of social zero is lower than expected: in the first quarter, the total amount of social zero increased by 3.3% year-on-year; In March, the total amount of social zero decreased by 3.5% year-on-year (expected to decrease by 0.8%) and 1.93% month on month; 2) In 2022, the standardized operation meeting of medical and American institutions was held, and the industry moved towards the “first year of compliance”; 3) the Kwai Yue electric supplier has issued a big announcement on the upgrading of beauty makeup, and 45 international brands have been listed in the management list.
4) Jialan takes the lead and welcomes the first batch of beauty enterprises to return to work in Shanghai.
Focus on individual stocks: Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Bloomage Biotechnology Corporation Limited(688363) , Shanghai Jahwa United Co.Ltd(600315) , Syoung Group Co.Ltd(300740) , Imeik Technology Development Co.Ltd(300896) , Yonghe medical, Zhou Dafu, Chow Tai Seng Jewellery Company Limited(002867)
Risk warning: regulatory policy changes beyond expectations; The epidemic situation worsened further, impacting terminal consumption; Traffic costs are rising; Focus on the uncertainty of the company’s future performance; Consumption habits and other uncertain effects; The company’s store expansion was not as expected; Medical risk accidents.
