\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
Event: Proya Cosmetics Co.Ltd(603605) released the annual report of 2021 and the first quarterly report of 22 years. In Q1 of 21 and 22 years, the company achieved operating revenue of 4.633 billion yuan and 1.254 billion yuan respectively, with a year-on-year increase of + 23.47% and + 38.53% respectively; The net profit attributable to the parent company was 576 million yuan and 158 million yuan respectively, with a year-on-year increase of + 21.03% and + 44.16% respectively.
The effect of large single product strategy is significant, driving the high growth of revenue and providing core support for high R & D investment. The company has continued to deepen the “big single product strategy”. In the past 21 years, it has upgraded the ruby cream and the double anti essence to the 2 edition. It has launched new brand new products such as source repair essence, feather sunscreen and so on. In the past 21 years, the company’s sales of large single products accounted for more than 25% in total, up to 60% on tmall platform, and became an important engine driving Proya Cosmetics Co.Ltd(603605) main brand to achieve a year-on-year + 28.25% increase in revenue. At the same time, since the gross profit margin of large single products is 70% +, which exceeds the average gross profit margin of the company, the increase of its sales proportion has also led to the increase of the company’s overall gross profit margin of 2.91 PCT in 21 years To 66.46%, and Q1 further increased to 67.57% in 22 years. We believe that whether the beauty brand can successfully build a large single product and build a strong brand is very important, and the R & D strength is the bottom support. The effectiveness of the company’s large single product strategy has been shown. In the future, it plans to build more than 10 large single products and continue to promote the upgrading of large single products. The sales proportion of large single products is expected to further increase. At the same time, the company participated in lipotrue, s.l. (raw materials), Zhongke Xinyang (raw materials / Technology), genofil (skin 3D printing) and other companies through the mode of R & D Co creation in 21 years. In the first half of 22 years, the R & D structure was improved and Shanghai and Japan research institutes were established. In Q1 of 22 years, the R & D expense rate increased to 2.39%. The continuous increase of R & D investment will provide core technical support for the development and upgrading of large single products, The company’s product strength and brand strength are expected to be further improved.
Sub brands continue to hatch, and there is a large margin for improvement in profitability. The company continues to promote the incubation of sub brands and the construction of brand matrix. In the past 21 years, Caitang brand continued to break the circle through the penetration of new media, realizing a revenue of 246 million yuan, a year-on-year increase of + 103.48%. Off & relax (or), the main hot spring water scalp care brand, was launched in June 21. Relying on the advantages of Japanese professional R & D and manufacturing quality, Dr. Yang Jianzhong, the former chief R & D scientist of P & G, will strengthen the offline breakthrough in the Japanese market and the promotion and launch in the Chinese market in 22 years. The company continued to increase the R & D investment and image promotion investment of Caitang, yuefuti, youzilai and other new brands, resulting in a year-on-year sales expense rate of + 3.08 PCT To 42.98%. At present, all sub brands are still in the development stage and have been in a state of loss in 21 years, but Q1 has achieved small profits in 22 years. In the future, with the continuous maturity of sub brands, there is a large margin for improvement of profit level, which is expected to drive the double high growth of revenue and profit.
The growth of online channel is strong, and the new development of the tiktok platform is to add wings to the sale of large single products. The company has deeply cultivated online channels and achieved a revenue of 3.92 billion yuan in 21 years, a year-on-year increase of + 49.54%, accounting for 14.92 PCT To 84.9%, of which direct sales + 76.16% year-on-year, showing a bright performance. In 21 years, the company adjusted its offline outlets and took the initiative to destock, superimposing the impact of the epidemic on the channels. The revenue of offline channels was – 38.03% year-on-year. In the 22 years, Q1 tiktok, Jingdong, jitter and other channels grew at 40%-50%, and the growth momentum continued to be strong. It is expected to continue to be the core channel to boost sales growth in 22 years. The growth of 40%-50% is also a strong trend. The tiktok platform for the 21 year is mainly based on sales sets, and 22 years of training for large single products tiktok No. and has been initially successful, and will further increase the sales of large single products and increase gross margin.
Profit forecast: the main brand Proya Cosmetics Co.Ltd(603605) has developed into a domestic beauty head brand. Caitang, yuefuti, or and other new brands continue to break the circle, with a large margin of profitability improvement. The effect of the company’s “big single product strategy” has been shown. With the rapid increase of R & D investment, the company’s product strength and brand strength are expected to be further enhanced. Under the guidance of the “6 n” new strategy, the company continues to move forward in the direction of large single product strong brand multi brand matrix, with sufficient driving force for business growth. It is estimated that the net profit attributable to the parent company in 22-24 years will be 756, 946 and 1195 million yuan, and EPS will be 376, 471 and 594 yuan. The corresponding PE in 22-24 years is 48, 39 and 31 times, maintaining the “recommended” rating.
Risk tip: the incubation effect of new brands is less than expected, new industry regulations and policies change, and market competition intensifies.
