Beautiful countryside: China’s leading beauty and health service enterprise. The company is mainly engaged in providing physical, skin care and anti-aging medical services to C-end consumers. It has four store brands: meihuayuan, Belle poetry, xiuke’er and Yanyuan. By the end of 2021, in terms of retail sales, the company has developed into the largest daily facial and body care service provider in China and the second largest body and skin care service provider, with 177 Direct stores and 160 franchise stores. The scale of operating revenue / net profit is 1.781 billion yuan / 208 million yuan respectively, and the compound growth rate from 2019 to 2021 is 12.59% / 18.88% respectively.
Industry Overview: beautiful consumption is upgraded, and the market scale is growing rapidly. According to frost Sullivan, the scale of health and beauty management service industry will reach 1.15 trillion yuan in 2020, including 448.9 billion yuan in the body and skin care industry and 5.7 billion yuan in the anti-aging medical service industry. They are expected to maintain a compound growth rate of 10% and 20% respectively by 2025. In general, with the improvement of residents’ willingness to consume beauty and health and the optimization of consumption experience brought by the upgrading of supply side technology, the overall beauty and health industry has broad space for further development in the future, and relevant enterprises are expected to fully share the industry dividends.
Social zero data tracking: under the pressure of the epidemic, online retail maintained growth. In April 2022, the total retail sales of social consumer goods were – 11.1% year-on-year, of which the retail sales of goods were – 9.7% year-on-year; Catering revenue was – 22.7% year-on-year, which was affected by the frequent occurrence of epidemic diseases in the country as a whole. In terms of business division, online consumer demand continued to release. From January to April, the online retail sales of physical goods increased by 5.2% year-on-year, accounting for 23.8% of the total retail sales of social consumer goods, an increase of 0.6pct compared with January to March. In terms of categories, grain, oil, food and Chinese and Western drugs in the required categories performed steadily, and the optional categories were under pressure. Cosmetics / gold, silver and jewelry were – 22.3% / – 26.7% year-on-year in April, with a month on month growth rate of – 16pct / – 8.8pct in March.
Investment suggestion: affected by the epidemic, short-term consumption has been suppressed to a certain extent, but the leading enterprises further consolidate their industry position through good product force building, multi-channel flexible layout, good early stage display of channels and giving full play to the advantages of supply chain. We suggest to actively pay attention to the subdivided leaders with basic support. In the field of cosmetics, it is suggested to pay attention to the leading enterprises that continuously consolidate their competitive advantages based on brand strength + large single products + multi-channel flexible layout, and focus on 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; Yimei continues to pay attention to the upstream production enterprises with high business barriers, focusing on Imeik Technology Development Co.Ltd(300896) and Bloomage Biotechnology Corporation Limited(688363) with compliant products; Consumer demand for gold and jewelry is expected to be released after the epidemic eases. Leading enterprises share the two opportunities of demand recovery and concentration improvement, and focus on the first-line leading enterprises Zhou Dafu, Chow Tai Seng Jewellery Company Limited(002867) etc.
Risk warning: repeated epidemic situation; The enterprise exhibition shop is not as expected; Deterioration of market competition environment
