\u3000\u3000 Lushang Health Industry Development Co.Ltd(600223) (600223)
Main points:
The differentiated competitive advantage is highlighted, and the brand strength drives the breaking volume
The company's Freida Pharmaceutical Group has excellent skin care brands such as Dr. yu'er and Yilian, and the product strength is recognized by consumers. Among them, Dr. yu'er focuses on micro ecological skin care, conquers seaweed fermentation technology, and the new ingredient brown algae fermentation has strong antibacterial and antioxidant properties. The unique micro ecological skin care positioning and good efficacy improved customer stickiness. In July 2020, Dr. yu'er was selected into the top 8 of the re purchase increase sector of the beauty industry in the "growth category health list" released by tmall express and Ali data. Yi Lian is the main champion of hyaluronic acid skin care, spray large single products become the 2021 double eleven full screen hyaluronic acid spray category champion. By the end of Q3 in 2021, from Q1 to Q3 in 2021, the cosmetics sector had achieved an operating revenue of 993 million yuan, with a significant year-on-year increase. The cosmetics business is expected to become a new performance growth point of the company.
The successful introduction of war investment and the promotion of brand voice can be expected
In November 2021, the company introduced strategic investors. The consortium composed of five companies, including Guangxi Tencent venture and Hangzhou zhongdayuan, increased the capital by 738 million yuan. After the capital increase, the total shareholding ratio was 16.90%. Among them, Guangxi Tencent venture and Hangzhou zhongdayuan are Tencent and Hangzhou Onechance Tech Corp(300792) subsidiaries respectively. Hangzhou Onechance Tech Corp(300792) has rich generation operation experience, and has successfully operated such cosmetics brands as gazelle, Olay, P & G and Arden. The company is expected to use its excellent agent operation ability to empower the company's existing and subsequent new brands to achieve a win-win situation in product incubation and online sales expression.
The new brand Baifu is released, and the raw material business is expected to expand rapidly
In 2019, the company acquired focus Freda, expanded its raw material business, opened up the company's raw material end and brand end, and realized the coordinated development of the whole industrial chain. Focus Freida currently focuses on cosmetic grade and food grade hyaluronic acid. The annual production capacity of hyaluronic acid raw materials is 420 tons, ranking second in the world. In addition, the company established baifuxin brand at the beginning of 2022 and simultaneously launched three new raw materials: cosmetic grade sodium hyaluronate, revitalizing small molecules and ergotathione. With the launch of new raw materials with high added value, such as ergot thione, the company's raw material business is expected to maintain rapid expansion.
Investment advice
The company is positioned as a leading comprehensive operator of large health industry in China and implements a two wheel drive strategy in the two sectors of ecological health industry and biomedicine. The real estate development business is mainly stable, and the proportion of non real estate business has increased, especially the cosmetics business. Dr. yu'er and Yilian, who focus on micro ecological skin care, have gradually broken the circle. After the introduction of Freida biology into the war investment, the participation of the previous generation operation of Hangzhou Onechance Tech Corp(300792) and other lines is expected to empower the company's brand marketing end and accelerate the incubation of the company's cosmetics business brand. We expect that the company's EPS from 2021 to 2023 will be 0.74, 0.90 and 1.11 yuan / share respectively, corresponding to 18, 15 and 12 times of the current share price PE respectively. For the first time, give a "buy" rating.
Risk tips
New product promotion is not as expected; Industry competition intensifies; The epidemic situation is repeated.
