Report guide
E-commerce revenue growth increased to 46% in a single quarter, the performance was further repaired, and the acquisition of cutting-edge makeup brand VNK.
Main points of investment
What happened: the company announced that in the third quarter, Q2 single-quarter revenue increased by 4.5% to 249 million yuan, with a net profit of 34.39 million yuan (compared with 10.1 million yuan in the same period last year). The excellent performance of Q2 narrowed the decline in income in the first three quarters to 6.2%, while the net profit returned to the home increased by 43%.
E-commerce business takes the lead, the distribution market is stable, and the future development is concentrated on the line. Split by channel:
E-commerce continues to lead the way in the growth of the epidemic: revenue grew by more than 20% in the first three quarters, and Q3 grew by 46% in a single quarter. the high increase comes from the expansion of brands such as Lafang Yujiemidos in new channels such as Pinduoduo, the healthy growth of acting imports, and the incremental contribution of young care brands T8 and skin care brands launched this year. The company announced the equity incentive plan, focusing on encouraging online business personnel, and put forward an assessment index at the departmental level of 66.67% growth in online income in 2020 to 552 million yuan in 206, demonstrating the determination to develop e-commerce business.
Offline distribution recovered well: offline, the distributor channel with the highest proportion was active in picking up goods, and the volume of delivery in the first three quarters was nearly the same as that in the same period last year, with Q3 increasing by a high number of units in a single quarter; KA due to the decline in channel flow affected by the epidemic, the company took advantage of the opportunity to cut back on investment, and its income fell by more than 30% in the first three quarters, but Q3 also narrowed naturally compared with the first half of the year.
The investment has improved efficiency, profits have rebounded, and cash flow has increased significantly compared with the same period last year, showing sound operational strength. The profit level of the company in 2019 was significantly lower than that in previous years, but after 20 years of reorganizing the channel strategy, the company shrank the investment of KA expenses, focused on e-commerce channel operation, and attached importance to ROI evaluation. The sales expenses in the first three quarters decreased by 110 million yuan compared with the same period last year, resulting in a sharp rebound in profitability. The return net profit in the first three quarters reached 82.16 million yuan, and the scale of superimposed company inventory and accounts receivable were effectively controlled. In the first three quarters, operating cash flow increased by 15% to 114 million yuan compared with the same period last year, showing good report quality.
Profit forecast and valuation: Lafang, as a 20-year-old private-funded daily chemical group, has mature product development capabilities and rich production supply chain reserves. In 2016, through its industrial fund gold, it actively laid out cutting-edge makeup, mother-and-child brands and high-quality MCN,2020. The company began to focus on e-commerce channels and the brand was younger and gradually landed. During the year, the company has incubated cutting-edge brands such as T8 and Ji Ante. And in October officially completed the acquisition of the local inexpensive cosmetics brand VNK, the future with the continuous cultivation of its brand growth volume, performance growth is worth looking forward to. We expect the company's revenue to grow by 5% in 2020-21-22 compared with the same period last year. The company's revenue will increase by 19% to $1.35 billion, with a net profit of 1.02 million and 1.36 billion, corresponding to PE 3325, which maintains a "buy" rating.
Risk tips: the epidemic affects the retail environment; the expansion of new brands is not as expected; the development of e-commerce is not as expected.