\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 315 Shanghai Jahwa United Co.Ltd(600315) )
Key points supporting rating
A century old cosmetics enterprise with full category layout and rich brand assets. The company's business layout is comprehensive, covering skin care products, personal care products, mothers and infants, etc., and its brand matrix is rich. From its establishment in 1898 to June 2020, it has gone through three changes of leadership and continued to accumulate its own strength. Based on its perfect brand matrix, rich channel resources and solid R & D strength, its market share remains stable in the environment of increasingly fierce competition in China's cosmetics market. From 2016 to 2021, the company's revenue / net profit CAGR was 4.2% / 21.6%, and in 2021, the revenue / net profit was 7.65 billion yuan / 650 million yuan, an increase of 8.7% / 50.9%.
The cosmetics industry is developing rapidly, and the competitive factors are diversified. In the past five years, the CAGR of China's cosmetics industry has reached 10%, and the market scale reached US $81.13 billion in 2021. In the development of the industry, with the rapid development of the Internet and the emergence of diversified marketing methods, the sales channel based on transmission content is expected to become the driving direction of the sales channels of various brands in the industry; In addition, the continuous growth of brands driven by product power will also be the general trend. In terms of future development: 1) in 2021, China's dermatology grade skin care products market surpassed the United States and ranked first in the world, with a scale of US $4.388 billion, an increase of 17% at the same time. Based on the large number of sensitive muscle consumers in China (about 246 million people) and the gradual enhancement of consumers' awareness of skin health management, the sensitive muscle skin care market is expected to rise; 2) As consumers become more rational, the demand for functional products continues to increase, promoting the continuous excavation of product components and driving the steady upward trend of functional skin care market.
Timely strategic adjustment of layout, focusing on resources, skin care brands are expected to drive growth. In June 2020, Mr. Pan Qiusheng, the new commander, took office to solve the past development problems one by one and adjust the product and brand strategy in time. The company pays more attention to skin care products and grasps the rapid growth dividend of the industry: 1) Yuze: the sensitive skin care market continues to grow. Based on the big data operation system, the company continues to build explosive products and drive the brand repurchase rate upward. In 2021, the repurchase rate of tmall flagship store increased 6pct to 42.6%, and is optimistic about the future growth of Yuze under this mode. 2) Baicaoji: start brand rejuvenation in 2021, adjust brand and product positioning, streamline inefficient stores, and accelerate the transformation of youth. With the settlement of past problems and rapid adjustment according to market changes, baicaoji shows a good trend. 3) Diancui: independent operation from baicaoji, focusing on CS channel, focusing on high efficiency and high technology, positioning generation Z and second and third tier people. Driven by the demand for effective skin care and clearer brand positioning, it is expected to continue to improve in the future. 4) Shuangmei: brand restart, pilot brand new image offline stores, brand marketing efforts are improved, which is more in line with the high-end positioning of the brand and is expected to be recognized by more consumers.
Subdivide champion brands and leading categories, deeply tap consumer demand, and continuously improve and enhance. 1) Subdivided champion brand: Liushen: the brand continues to adjust, moving towards multi scene youth, and the user population expands from home crowd to multi crowd; Qichu's products provide personal care and skin care products for products of more ages; Carding and simplifying Goff's product line to increase the proportion of high-end products. 2) Subdivide into leading categories: MAXAM started to consolidate and improve facial skin care products in 2020; Jiaan focuses on consumer demand and strengthens the launch of new products.
Valuation
It is estimated that the company's revenue from 2022 to 2024 will be 8.16/91.2/10.16 billion yuan, and the net profit attributable to the parent company will be 7.7/9.6/1.1 billion yuan, corresponding to 28 / 23 / 20 times of PE respectively. The company focuses its resources on core brands and categories, continues to improve product structure and enhance brand competitiveness, and can be expected in the future. For the first time, the company will give an overweight rating.
Risk tips
The expansion of new products is less than expected; The epidemic situation repeatedly affects sales; Industry competition intensifies
