Introduction to this report:
The company has accelerated its strategic transformation and achieved a high increase in e-commerce channels under the operation of its own team. At the same time, the company has invested in various beauty and medical aesthetic projects such as basic research, VNK, Medical and Aesthetic International, etc., and multiple business development can be expected in the future.
Key points of investment:
Investment suggestions: The company actively undertakes channel and brand strategy transformation, and invests in multiple beauty and medical aesthetic projects to broaden the track, maintain the 2021-2023 EPS of 0.63/0.80/0.96 yuan, the target price of 25.09 yuan, and maintain the increase in holdings rating.
Performance fell short of expectations, and short-term cost investment increased profitability. The revenue/net profit of the 2021/H1 company was 512/053 million yuan, compared with +0.48%/+10.30%, after deducting non-net profit - 0.06 million yuan. The non-recurring profit and loss was mainly due to changes in the fair value of unlisted shares held by Lafang Pinguan, which benefited 57.15 million yuan. 2021Q2's revenue/net profit attributable to the parent company was 261/036 million yuan, +10.16%/+13.54% over the same period last year, after deducting non-net profit of -22 million yuan. Increased cost investment reduced profitability. The gross margin of 2021H1 company increased by 2.49pct to 53.40%, mainly due to brand and product structure optimization; sales expense ratio +15.45pct to 45.27%, mainly due to increases in sales promotion expenses, e-commerce platform expenses, etc. during the period; the management expense ratio was +2.66pct to 6.92%, mainly due to the increase in equity incentive expenses and employee remuneration shared during the period.
New brands have doubled, and e-commerce channels are growing at an impressive rate. On the brand side, the three pillar brands Lafang, Yujie, and Meidos achieved operating revenue of 436 million yuan, accounting for 86% of revenue; distributing the import brands Riboxi, and the new domestic brands Suante and T8 achieved revenue of 181.1, 361, and 8.05 million yuan respectively, with growth rates exceeding 100%, and new brands are emerging. On the channel side, the company's e-commerce and retail channel revenue was 155 million yuan, +151.83% year on year, and the revenue share rose to 31%; distribution and supermarket channels were -2.17% and +16.13% respectively, and the effects of channel strategy adjustment were prominent.
R&D/talent innovation can be expected, and a diversified business matrix is expected to gain strength. The company's R&D management and incentive mechanism have been continuously improved, and Guochao's ability to incubate new products continues to improve. At the same time, the company subscribed to 7% of the shares of Medical International (AIH.O) in the first half of the year, and the business layout is expected to continue to be rich.
Risk warning: Industry sentiment is declining, market competition is intensifying, and new brand development falls short of expectations.