Events:

The company publishes three quarterly reports for 2021.

Main points of the report:

Profit growth was good from January to September, and revenue growth slowed down due to the switching of brand cooperation mode. in the first three quarters, the company achieved revenue of 2.501 billion yuan, an increase of 1.49% over the same period last year, and a net profit of 261 million yuan, an increase of 36.45% over the same period last year, deducting 202 million yuan of non-return net profit, an increase of 24.14% over the same period last year.

In the third quarter alone, the company's revenue was 645 million yuan, down 2.15% from the same period last year, and its net profit was 56 million yuan, up 35.76% from the same period last year, deducting 41 million yuan from non-parent net profit, an increase of 4.73% over the same period last year. In terms of profitability, the gross profit margin in the first three quarters was 42.62%, up 3.7 Pct. year-on-year, and the net profit was 10.43% higher than the same period last year. 2.75Pct. On the expense side, the sales expense rate is 26.67%, which is 0.83Pct higher than the same period last year. The administrative expense rate is 3.22%, which is 0.56Pct higher than the same period last year. The period expense rate is 1.51Pct higher than the same period To 29.97%.

In the first three quarters, the brand cooperation of Ponzi, Vaseline and Etiquette House changed from distribution to service fee model, resulting in changes in income and profit structure. Q3 may be affected by some fees, and the growth rate of non-homed net profit slowed down.

The advantage of acting operation in the field of beauty makeup has been further strengthened. Douyin and other new channels have grown rapidly by business. In the first three quarters, the company's retail business / marketing services business income was 23.11 billion yuan, a year-on-year growth rate of-0.31% and 8.06%. From a platform-by-platform point of view, the revenue of other platforms such as Tmall domestic / Tmall International / Douyin in the first three quarters was 2.186 million yuan, representing a year-on-year growth rate of-5.24 percent. The revenue from Douyin channels exceeded 100 million, a year-on-year growth rate of 250.12 percent. The company's cooperation with core brands such as Sulwhasoo, Yayang, Furifang and Houhou is stable, and brand sales continue to grow. On the first day of pre-sale on Singles Day, the company's core brand Fulifang Tmall flagship store had a turnover of over 100 million in 14 minutes. For five consecutive years, Tmall Cleansing NO.1; Yayang's official flagship store sold more than the whole day of last year in one hour, and exceeded the whole of last year in five hours. In terms of brand and platform development, Q3 has cooperated with international luxury brands and added Burberry makeup and MARC JACOBS perfume Tmall flagship stores to operate on behalf of the flagship stores, thus further expanding the market advantage in the field of cosmetics. Douyin, the company to undertake the needs of old customers of beauty makeup, at the same time, expand the trend of food and other categories of new customers, such as fun many, and so on. By the end of September, the company had 147stores in operation, 57 more than at the end of last year, with Douyin having the largest net increase of 28.

Investment advice and profit Forecast

The company is the domestic beauty makeup head generation operator, e-commerce operation ability is strong. In 2021, the company actively expanded new categories such as luxury, food, mother and child, the number of cooperative brands increased steadily, and Douyin business grew rapidly.

We estimate that the company's 2021-2023 net profit will be 4.33x541 million, EPS will be 1.08x1.22max / share, and the corresponding PE will be 22max 20max 18x, upgraded to "Buy" rating.

Risk hint

The growth rate of the industry slows down, the competition intensifies, and the head brand withdraws the risk of acting operation rights.