\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
The company released its 2021 annual report and the first quarterly report of 2022. The net profit attributable to the parent company for the whole year was 576 million yuan, an increase of 21% at the same time; 22q1 net profit attributable to the parent company was 158 million yuan, an increase of 44.16%. The company’s main brand large single product series continues to expand, and Caitang brand is rising rapidly. It is expected to jointly drive the company’s high growth and maintain the buy rating in the future.
Key points supporting rating
Since 2021, the company’s large single product strategy has been continuously promoted, and Caitang has accelerated its layout, driving the company’s revenue performance to continue to rise. In 2021, the company’s revenue was 4.633 billion yuan (+ 23.47%), and the net profit attributable to the parent company was 576 million yuan (+ 21.03%); 22q1 revenue of 1.254 billion yuan (+ 38.53%), net profit attributable to parent company of 158 million yuan (+ 44.16%). 1) In terms of sub brands, Proya Cosmetics Co.Ltd(603605) main brand achieved revenue of 3.829 billion yuan (+ 28.25%) in 21 years, and the large single product series continued to expand from the original Ruby series and double resistance series to Yuanli repair series, bowling throw series and whitening series, which continued to drive the company’s revenue; The foundation make-up brand Cai Tang earned 21 yuan in revenue in the past 246 million years (+103.48%). The brand focused on the bottom makeup products, the product matrix was complete, and the hot products included the dressing table, makeup milk, concealer, foundation and so on, becoming the driving force of brand growth. 2) tiktok is the main channel for the company’s sustainable development. The total revenue of online channels is 3 billion 924 million yuan (+49.54%) in 21 years, including 2 billion 803 million yuan (+76.16%) in direct channel revenue. The company has implemented multi platform layout on the online channel, including Tmall, jitter, Jingdong, vip.com, Kwai Fu, and many other platforms, and the multi platform co drive the online growth.
Large single products drive the company’s gross profit margin upward. With the company increasing brand investment, the profitability remains stable. In 2021, the gross profit margin was 66.46% (+ 2.91 PCT) and the net profit margin was 12.02% (-0.02 PCT). In terms of expenses, the sales rate was 42.98% (+ 3.08 PCT), the management rate was 5.12% (-0.32 PCT) and the R & D rate was 1.65% (-0.27 PCT); 22q1 company has a gross profit margin of 67.57% (+ 3.16pct) and a net profit margin of 13.50% (+ 1.70pct). In terms of expenses, the sales rate is 42.37% (+ 0.65pct), the management rate is 5.16% (- 2.57pct) and the R & D rate is 2.39% (+ 0.44pct). Under the continuous layout of large single products, the gross profit margin of the company showed a significant upward trend; In terms of cost investment, the company’s main brand investment was basically maintained, increased the investment in Caitang brand, and paid attention to R & D investment. Under the guarantee of the increase of gross profit margin, the company’s net profit margin maintained a steady upward trend.
With the continuous layout of multiple brands and categories, the leading cosmetics enterprises have a wide space. In the future, the main brand will continue to increase the layout of single product series, form strong series matrix products, continuously optimize offline channels and strengthen the refined layout online, which is expected to drive the continuous high growth of the main brand; Caitang brand continues to lay out its makeup products. In the future, based on the improvement of brand strength, it can ensure the continuous improvement of Caitang brand; Other brands, including or, yuefuti and other brands, are performing well. With the continuous increase of the brand, it is expected to further open the development space of the company.
Valuation
It is estimated that the company’s revenue from 2022 to 2024 will be RMB 5.865 billion / 7.219 billion / 8.667 billion respectively, and the net profit attributable to the parent company will be RMB 7.3/9.03/1.089 billion, corresponding to 53 / 43 / 36 times of PE respectively. Maintain buy rating
Main risks of rating
The loss of online traffic affects sales, the expansion of large single products does not meet expectations, and the expansion of new brands is less than expected
