Founded in 1972, Natural Beauty mainly manufactures and sells skin care products, beauty products, aromatherapy products, health food and cosmetics under the brand name "Natural Beauty". Product sales mainly come from joining spa, self-financing spa and department store counter. The company was listed on the Hong Kong main board in 2002.
Main points of investment:
The product line is rich and there are shops all over the country. At present, the company has more than 680 products, which are divided into four product series: NB-1, biochemical, Chinese and health food. By the end of 2015, the company had 1072 stores, including 1058 spas and 14 counters. Of these, there are 793 and 249 shops in Chinese mainland and Taiwan respectively, and 30 in other districts.
Revenue grew slightly in 2015, and gross and net profit margins continued to rise. In 2015, the company's turnover rose slightly by 0.2 per cent to HK $507 million, mainly due to an increase of HK $19 million in product sales, but the growth rate was significantly slower than in 2014. In 2015, the company's gross profit margin increased by 1.5 percentage points from 76.9% in 2014 to 78.4% in 2015, mainly due to an increase in the proportion of products with higher gross margins (mainly NB-1 series) in product portfolio sales.
Third-and fourth-tier cities will be the focus of future layout. Management plans to add 500 stores on Chinese mainland and 50-60 stores in Taiwan over the next five years. The new stores will all be in the form of franchises to avoid competition from direct stores to franchise stores. At present, the company's stores are concentrated in first-tier (242) and second-tier (525) cities, and will focus on adding new stores in third-and fourth-tier cities in the future. In addition, the types of stores will be more diversified in the future, including Premium Spa, Mini Spa and new concept stores.
New products bring revenue growth. The company plans to launch a new post-cosmetic care brand "Stremark Shumiaman" in Chinese mainland in June this year to open up new markets. In addition, new products such as whitening and anti-sensitivity will be launched one after another this year to further enrich the product line.
The beauty industry maintains rapid growth, and the scale of the industry is huge. The beauty industry has become one of the consumption hotspots of Chinese residents. According to the China Industry Information Network, the market size of the national beauty industry maintained an annual growth rate of about 15% for three consecutive years from 2012 to 2014, far exceeding the national GDP growth rate in the same period. According to industry estimates, the total annual output value of China's beauty industry will be 600 billion to 800 billion yuan in 2015.
Risk disclosure: the expansion of stores is not as fast as expected, and the market recognition of new products is low.