Matters:
On April 19, 2022, L’Oreal Group released the financial report of the first quarter of 2022. In the first quarter, the group achieved sales of 9.06 billion euros (about 62.545 billion yuan), an increase of + 13.9% and a combined increase of + 19.0% at a fixed exchange rate. Among them, the Chinese market is expected to achieve double-digit growth and still achieve strong performance under the background of the rebound of the epidemic, the pressure of the consumption environment and its own high base.
Guosen retail view: according to the financial report performance of L’Oreal Group in the first quarter and the change trend of industry environment, we summarize the following market trends and characteristics: 1) the beauty market as a whole continues to be tenacious and has anti cyclical development toughness. According to the prediction of L’Oreal Group, the global beauty market in 22q1 increased by about 8%, maintaining a growth rhythm similar to that of last year. The negative macro environment has little impact on the beauty market. From our previous analysis of the beauty market in mature countries, the cosmetics industry has long-term anti cyclical development toughness; 2) Under the influence of multiple factors, the market accelerated to show a partial trend. Since the beginning of this year, China’s repeated epidemic, rising raw material costs and tight supply chain have brought great uncertainty to the operation and development of enterprises in the industry; In this context, the industry has entered the accelerated reshuffle period, and a large number of small and medium-sized brands with weak anti risk ability have been cleared, but the leading effect of head brands is becoming prominent. In the first quarter of this year, the zero growth rate of China’s cosmetics agency was + 1.8%, while L’Oreal Group still achieved double-digit growth in the Chinese market, and the trend of head to tail partial growth has been further confirmed; 3) Efficacy skin care and high-end skin care products continue to maintain a high boom. Since 2019, the active cosmetics department of L’Oreal Group has been the fastest growing Department of the group, with a year-on-year growth rate of + 18.0% in Q1 of 22 years; In addition, the high-end skin care products sector also achieved a high growth rate of 17.5%. With the more rational and professional consumers and the further maturity of the beauty market, the efficacy and high-end development of skin care has become an irreversible trend. Under this trend, the iteration of brand product upgrading and the implementation of large single product strategy will also be particularly important.
Based on the analysis of the above characteristics, we believe that China’s leading beauty companies, which have strong brand power and actively make efforts in product upgrading, channel expansion and multi brand layout, also have strong business toughness. At present, in the first quarter of this year, under the short-term impact of adverse factors such as the pressure of the consumption environment and the rebound of the epidemic, some Chinese top enterprises still achieved beautiful growth much better than the industry, which verified their business strength through the cycle. Key recommendations: Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Proya Cosmetics Co.Ltd(603605) , Shanghai Jahwa United Co.Ltd(600315) , Syoung Group Co.Ltd(300740) , etc.
