Incidents:
Bosideng April 18, 2024 News: Bosideng was invited by the 14th Beijing International Film Festival Organizing Committee to hold a sunscreen fashion show in Beijing.
Investment highlights:
Lay out sunscreen categories to further enrich the product matrix. On April 18, 2024, Bosideng was invited by the Organizing Committee of the 14th Beijing International Film Festival to hold a sunscreen fashion show in Beijing. On April 12 of the same year, Bosideng and French luxury fashion designer Christelle Kocher began their first cross-border collaboration on sun protection clothing and released a sunscreen capsule series to create a sunscreen that combines style and professionalism. Since 2020, Bosideng has been designing and developing professional sunscreen clothing that meets the needs of Chinese people. Through continuous exploration and experimentation with fabrics, technical functions, and wearing comfort, it has successfully solved the pain points of consumers' sunscreen needs. In 2022, Bosideng and Guangzhou Inspection Group drafted high quality sun protection clothing standards and launched a series of professional sunscreen products. In 2024, Bosideng will launch the “2.0 era” of sunscreen clothing, breaking the traditional single form of sunscreen clothing and further driving sales. Bosideng Hot Sun 3.0 third-generation sunscreen sells more than one million pieces a year, and the company's investment in the sunscreen category will further enrich its product matrix.
The Group is benefiting from increased demand for sunscreen clothing, and the sunscreen category may supplement revenue during the summer off-season. As people's awareness of sunscreen increases, China's sunscreen market is showing a steady growth trend. According to data from the “White Paper on China's Sun Protection Industry Standards” report published by iResearch, China's sunscreen market is expected to reach 95.8 billion yuan in 2026, and the 2024E-2026E market size is 9.6%/8.9%/8.2% year-on-year growth respectively, with the sun protection market accounting for more than 50%. It is estimated that in 2026, China's sunscreen market will reach 55.4 billion yuan.
According to iResearch data, the proportion of people active in lightweight outdoor activities increased from 67.1% in 2023 to 80.9% as of March 2024, and the increase in outdoor share further drove the increase in demand for sunscreen clothing in the market. We believe that the company's increase in the sunscreen category may provide a new supplement to the off-season revenue of summer down jacket sales.
Profit forecast and investment rating: Considering the low base of FY2023 and the continuous promotion of the company's products, we raised the profit forecast. The company's FY2024-FY2026 revenue is 216.2, 250.4 and 28.79 billion yuan, up 28.9%, 15.0% year on year; net profit to mother is 28.9, 33.8, and 3.9 billion yuan, up 35.0%, 16.9%, and 15.6% year on year.
Corresponding to the closing price of HK$4.08 on April 18, 2024, PE was 14, 12 and 11X.
We are optimistic that the company's long-term brand value will further gain more consumer recognition under category expansion and product upgrades, achieve impressive revenue and performance growth, and maintain a “buy” rating.
Risk warning: Store expansion falls short of expected risk; product market response falls short of expected risk; risk of developing new categories falling short of expected risk; risk of insufficient recovery in downward economic demand; risk of increased market competition and deterioration of the competitive landscape.