The current situation of the company
Recently, we invited Blue Moon management to participate in the CICC 2022 Investment Forum, during which we had in-depth exchanges on the company's recent business situation and future development strategy. As a leading brand of family cleaning care, the company has a stable dominant position of online multi-platform and initial results in offline channel management reform. It is suggested that we should continue to pay attention to the progress of the company's new product promotion and channel sinking.
Comment
1. "Singles Day" multi-platform performance is good, the new product is expected to promote the rapid growth of clothing cleaning business. The company's online multi-platform operation ability is excellent. According to our monitoring, during the "Singles Day" promotion period in 2022, Blue Moon's GMV on Tmall platform increased by about 6% compared with the same period last year, still achieving rapid growth under a high base. At the same time, the company ranked first in clothing cleaning sales on JD.com and Douyin, and the online lead was solid. The company continues to improve the layout of clothing cleaning products along the fine differentiation and effectiveness. Since 2021, the company has successively launched underwear detergent, sterilized deodorant detergent, sports detergent and so on. Since its launch, the new products have shown eye-catching performance and continue to promote the rapid growth of the company's clothing cleaning business. The company expects that the combined sales share of several new products is expected to further increase from 7% of 1H22 to 10% of 22 years.
2. The decline in raw material prices is expected to further release profit elasticity. Since June this year, the price of raw materials has fallen to a high, and the price of palm oil, one of the core raw materials, has returned to the level of the first half of 2021. From June to December this year, palm oil prices fell by more than 45% from their peak, according to flush data. In the context of the decline in raw material prices, we expect the full-year gross profit margin is expected to usher in month-on-month improvement, leading to a further improvement in the company's overall profitability.
3. Digital efficiency and empowerment, and the reform of dealer channels has achieved initial results. Since the second half of 2021, the company has continued to deepen dealer channel reform, with initial results in channel sinking and fine management. 1H22 dealer channel revenue has nearly doubled compared with the same period last year, and we expect that dealer channel will still achieve double-digit growth in the second half of the year, becoming an important engine for driving annual performance growth. ① channel sinking: the number of new stores in 1H22 third-to fifth-tier cities increased by 74.4% compared with the same period last year, and we expect the sinking market coverage to further increase for the whole year. ② digital management: the company continues to optimize the digital management system, with Blue Moon's partner system BCP fully put into use since the second half of 2021, the company continues to strengthen dealer inventory management, terminal mobile sales management, price system management and so on, so as to continue to promote the healthy and healthy development of offline channels.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 25 times 2023. Maintain an outperform industry rating and a target price of HK $6.50, corresponding to a price-to-earnings ratio of 31 times earnings in 2023, with 23.1% upside from the current share price.
Risk.
Intensified competition in the industry; fluctuation of raw material prices; weak promotion of new products; product quality problems.