\u3000\u3000 Syoung Group Co.Ltd(300740) (300740)
Event:
Syoung Group Co.Ltd(300740) released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company in 2021 will be 230-265 million yuan, with a year-on-year increase of 64% – 89%. Excluding the impact of amortization expense of share based payment of RMB 26 million, it is expected that the net profit attributable to the parent company in 2021 will increase by 82.5% – 107.4% year-on-year, and the lower limit of profit will also exceed the equity incentive target in 2021.
Key investment points:
The equity incentive target of 2021 is completed, and the profitability is expected to improve year-on-year. It is estimated that the net profit attributable to the parent company in 2021 will be 230-265 million yuan, with a year-on-year increase of 64% – 89%. If the impact of share based payment amortization expense of 26 million yuan is excluded, it will increase by 82.5% – 107.4% year-on-year, and achieve the equity incentive target in 2021. Looking at Q4, the parent company’s profit was 83-118 million yuan, a year-on-year increase of 22.5% – 74%. We expect the company’s annual revenue target of 5 billion in 2021, and its profitability will increase year-on-year in 2021, mainly due to the improvement of gross profit margin driven by the improvement of product structure.
The independent brand has developed in a balanced way through all channels, and the gross profit margin is expected to be further improved. Yunifang achieved positive growth in 2021. Tmall channel is expected to account for 20% +, and other channels are relatively balanced (about 10% offline). In terms of brand structure, it is expected that the proportion of water cream cream with higher gross profit margin of the main brand will be increased, and the gross profit margin of non sticking mask will also continue to rise, leading to a rise in the gross profit margin of the main brand. In the future, the company will adhere to the mask as the core, constantly enhance the brand power, and continue the rhythm of the core crowd optimization.
The agency brand has broad space and its profitability is expected to be improved. We expect that the growth rate of Acting brands will be slightly faster in 2021, among which the growth rate of acting Johnson & Johnson brand is stable and the contribution of acting new brands is incremental. It is expected that doctors in Chengye will grow rapidly throughout the year, and Kiko and zelens will achieve rapid growth. In addition to the fast growth of revenue, we expect that the profitability of some overseas brands outside Johnson & Johnson system is expected to improve after incubation by the company for 1-2 years.
Profit forecast and investment rating: the company’s independent brand and agency brand are driven by two wheels, and the “overweight” rating is given for the first time. The company’s independent brand and agent brand are driven by two wheels. In 2020, the main brand / other independent brands / agent brands will achieve revenue of RMB 1.38/8.5/1.49 billion respectively, of which the gross profit margin of the main brand yunifang will reach 68.6%. The brand name of the Johnson brand is expanding tiktok’s overseas brand and upgrading its DP capability. It is estimated that the company’s revenue in 2021 / 2022 / 2023 will be 5 / 64 / 8 billion yuan, with a year-on-year increase of 35.0% / 27.6% / 25.7%. The net profit attributable to the parent company is expected to be RMB 232 / 345 / 464 million, with a year-on-year increase of 65.71% / 48.71% / 34.49%. For the first time, it will be rated as “overweight”.
Risk tips: 1) the flow cost has increased significantly; 2) Overseas brands cut prices to seize market share; 3) Product quality problems; 4) Stricter supervision leads to new products that are less than expected; 5) The rapid rise of cutting-edge brands intensifies competition; 6) If the relevant information and data are inconsistent with the Syoung Group Co.Ltd(300740) announcement, the announcement of the company shall prevail.
