Reliable shares are the leading brand of adult incontinence products in China, taking the lead in the market and showing a growing trend. China has entered a moderate aging stage, but the penetration rate of adult incontinence products is still far behind that of overseas mature markets. With the introduction of supporting policies, economic development and the promotion of consumer awareness, the industry will enter the growth period from the introduction period. The company will build a "dynamic elderly" IP to establish a brand image, promote the development of the industry, and is expected to continue to strengthen brand promotion, enhance brand and category awareness, and lead the channel layout. It is expected to give priority to benefit from the growth of the industry. In the short term, the release of cost pressure, exchange rate positive stack impairment provision is relatively sufficient, profitability improvement can be expected.

The long-term growth momentum of the adult incontinence industry is sufficient, and the scattered pattern is expected to give birth to the leader. The number of people over 65 in China is about 5.5 times that of Japan (2021) and 3.5 times that of the United States (2020), but the market size of Chinese mainland's adult incontinence products in 2022 is only 7.6 billion yuan (CAGR11% in the past five years) accounting for 48% of the Japanese market and 25% of the US market. The total population of our country is large, and the elderly population provides a wide range of consumer groups for the rapid development of the adult incontinence industry market in the future. At present, the penetration rate of adult incontinence products in China is still low compared with other mature market countries, with the world average reaching 12%, while China's is only 3%. Reviewing the development of overseas markets, we can find that the increase in the penetration rate of adult incontinence products is mainly driven by policy support (diversified pension channel system and old-age insurance system), economic improvement and brand consumer education. The future three factors are also applicable to the Chinese mainland adult incontinence products market, in which reliability will play an important role. Mature markets are generally highly concentrated, with dominant companies dominating. According to Euromonitor data, the share of Top1 companies in several developed markets remains above 40%, while the share of Top1 companies in China remains below 20% in the corresponding time interval. Market competition is becoming increasingly fierce, a large number of companies dominated by cost-effective products have entered the market to compete for market share, reliable latecomers have become the first in the mainland market share, and the 22-year advantage has been further expanded to 10%. In the future, leading companies are expected to stand out as "long-distance running champions" with the help of large-scale production, innovative research and development, channel layout and other advantages.

Reliable channel layout is leading, brand image is deeply rooted in the hearts of the people. There are typical characteristics of "separation of purchase and use" in the consumption of goods for the elderly. the special channel can quickly win the trust of the consumer groups in a limited range, capture the "private" consumer demand for adult incontinence products, and the e-commerce channel is also growing day by day. Reliability leads in the layout of Tetong and e-commerce channels. In addition, reliable cooperation with China and China to create "Super Old Man" IP image to help brand upgrade to break the circle, this move is to start the "reliable!" The first shot of the brand detonation plan is also a clarion call to subvert and change the dynamic image of the new generation of Chinese elderly.

The predicament is over and improvement can be expected. Nearly 80% of the company's operating costs come from raw materials, mainly fluffy pulp, polymers and nonwovens. The prices of raw materials which have been at a high level for 22 years have dropped significantly, and the company has also invested in setting up a fluff pulp factory in Guangxi. help the company smooth the fluctuation of raw materials for a long time.

In recent years, the income of the production line of masks and baby diapers has declined, the company's asset provision for impairment is relatively adequate, and the impact of further impairment is relatively manageable.

Profit forecast and investment rating. We expect the company to achieve a return net profit of 0.64 PE in 23-25 to RMB 1.27 / 169 million, respectively, with a year-on-year turnround / + 100% Universe 33% Magi 16-day share price corresponding to 23 Universe 24-year PE of 55max 28X, giving a "highly recommended" rating for the first time.

Risk hints: the risk of large fluctuations in raw material prices, the risk of large fluctuations in exchange rates, the risk that market development is not as expected, the risk that policy promotion is not as expected, the risk related to impairment, the risk of large fluctuations in stock prices.