Core views
The company achieved revenue of 765 million yuan/ +46.4% in 24Q1; net profit attributable to mother of 103 million yuan/ +28.1%; net profit after deducting non-return to mother of 98 million yuan/ +30.6%. On the product side, 24Q1's revenue from free point sanitary napkins was +54.6%, and the Big Health series accounted for about 40% of revenue. Rapid improvement in e-commerce channels and high-end products led to an increase in gross margin. Further upgraded probiotic series products will be launched in '24. On the channel side, the company's online channel revenue was +150.5% year-on-year. Among them, offline Sichuan, Chongqing, Yunguishan, and peripheral regions were flat, 20% +, and 54% year-on-year respectively. The company used live e-commerce to increase marketing and brand investment, and online and peripheral provinces grew rapidly. Q1 in the Sichuan and Chongqing region is still affected by shortages, and is expected to gradually ease from Q2.
occurrences
Baiya Co., Ltd. released its 2024 quarterly report. The company achieved revenue of 765 million yuan/ +46.4% in 2024Q1; net profit attributable to mother of 103 million yuan/ +28.1%; net profit after deducting non-return to mother of 98 million yuan/ +30.6%. Net operating cash flow was 98 million yuan/ -11.3%; basic EPS was 0.24 yuan/share, +26.3% year over year; weighted average ROE was 7.14% /+1.07pct.
Brief review
The product structure continues to be upgraded, and the proportion of 24Q1 health series products has increased to about 40%.
By product, 24Q1's Freedom Point products achieved revenue of 701 million yuan/ +54.6% (revenue of Liberty brand sanitary napkin products in '23), estimated that diaper products achieved revenue of about 31 million yuan/ -6%, and ODM business revenue of 0.3 million yuan/ +1%.
The company continues to optimize its product structure, and the 24Q1 health series products (including probiotics, sensitive skin, and organic cotton series) are estimated to account for about 40% of sanitary napkin revenue, driving up the unit price and gross margin of the company's sanitary napkin products. It is expected that in '24, the company will continue to launch new upgraded products around the Big Health series.
E-commerce continued to double in 24Q1, and peripheral market development accelerated. Looking at independent brands by channel, 1) Online: 24Q1, the company's e-commerce channel revenue was 296 million yuan/ +150.5%, and e-commerce business continued to double. Among them, Douyin channel revenue accounted for about 40%, Tmall official flag accounted for about 20%, and Pinduoduo accounted for about 15%. The revenue of Douyin and Pinduoduo platforms grew rapidly, and the three major e-commerce platforms all grew by more than three digits. In terms of profitability, the product structure upgrade has led to an increase in e-commerce gross margin. The company increased sales expenses while taking into account the efficiency of cost investment. We estimate that 24Q1 e-commerce will maintain a balance of profit and loss, and the e-commerce channel target will maintain medium to low single-digit profit margins throughout the year. 2) Offline: The 24Q1 company's offline channels achieved revenue of 436 million yuan/ +16.7%. It is estimated that Sichuan and Chongqing remained flat year on year, Yungui and Shaanxi increased 20% + year on year, and peripheral provinces increased 54% year on year. Q1 in the Sichuan and Chongqing region is still affected by some shortages. It is expected that as the company speeds up production line construction, the Q2 shortage situation is expected to ease. The company's development of peripheral provinces has achieved remarkable results. It is expected that in '24, more provinces will be included in key markets for development.
Gross margin increased sharply year over year, and sales expenses continued to be invested. 1) Profit margin: 24Q1 The company's overall gross margin was 54.4% /+7.5pct, and the net margin was 13.4% /-2.0pct. The rapid increase in e-commerce share and the increase in the share of high-end series led to an increase in gross margin. 2) Cost side: According to the established strategy, the company continues to strengthen brand building, increase marketing and brand promotion efforts, so as to continuously enhance brand influence and expand the consumer base. In 2023, the company invested 669 million yuan/ +69.4% (including 401 million yuan/ +126.8% in marketing promotion expenses), with a sales expense ratio of 31.2% /+6.7pct; 24Q1 the company invested 264 million yuan/ +120.7%, and the sales expenses ratio was 34.4%, +11.6pct year on month, down 4.4 pct from month to month; gross sales margin (gross margin - sales expenses ratio) was 19.94% in 24Q1, -4.08pct, month-on-month + 5.51pct
Profit forecast: Baiya Co., Ltd. is expected to achieve revenue of 2.77, 33.2, and 3.82 billion yuan in 2024-2026, up 29.3%, 19.6%, and 15.2%; net profit to mother will be 2.98, 3.58, and 430 million yuan, respectively, up 25.0%, 20.3%, and 20.1%; corresponding to the latest PE, it is 26.3x, 21.9x, and 18.2x, respectively, maintaining a “buy” rating.
Risk warning: 1) Risk of declining profitability: At the current stage of development, the company is paying more attention to increasing scale and market share, and increasing brand promotion and channel expenses. Although e-commerce channels and revenue growth in peripheral provinces are high, they contribute less to profits, and the company faces the risk of continued decline in profitability.
2) Risk of slowing e-commerce channel growth: Since 2020, the company has focused on restructuring e-commerce channels, and deployed omni-channels such as Tmall, JD, and Douyin to achieve rapid revenue growth. In the future, as marginal ROI efficiency declines, traditional e-commerce channel traffic declines, emerging channel traffic dividend period ends, and competition for other new e-commerce brands to enter the market intensifies, e-commerce channels may face the risk of slowing growth. 3) The development of peripheral provinces falls short of the expected risk: The company's own brands of sanitary napkins have developed from the southwest region to the whole country. Currently, the core regions of Sichuan, Chongqing, Yungui and Shaanxi have achieved high market shares, but as newly developed regions, peripheral provinces are facing competitive pressure from regional brands and international brands. 4) Risk of fluctuations in raw material prices: The company's raw materials are mainly non-woven fabrics, polymer materials, fluff pulp, etc., and fluctuations in raw material prices adversely affect the company's profits.