Core views
24Q1 revenue was 1.905 billion yuan, -3.76% year on year, and net profit attributable to shareholders was 256 million yuan, up 11.18% year on year; excluding the adjustment effect of accounting standards on non-recurring profit and loss, the company deducted +44.68% of non-net profit. The company's gross margin increased by more than 2 pct year-on-year in the first quarter. It continued to focus on high-margin categories and products, while cleaning up low-margin categories and channels. The gross margin structure showed a marked increase. At the same time, the company's expense ratio declined significantly during the period. On the one hand, the pace of cost investment changed year-on-year, and at the same time, strict cost control by the new division led to a marked improvement in profit. The company's Baby Beauty Division took the initiative to reduce inventory offline and strengthen content delivery and brand marketing online. The second quarter is expected to gradually increase sales efforts in line with new products. 618 will become a major verification window. From the perspective of the Personal Care Division, the company is strengthening price management and actively expanding new online and offline channels. The gradual launch of new products will also help steady revenue performance.
occurrences
The company announced its 2024 quarterly report: 24Q1 revenue of 1.905 billion yuan, -3.76% year on year, net profit attributable to shareholders of 256 million yuan, up 11.18% year on year; after deducting non-net profit of 293 million yuan, up 29.17% year on year. Excluding the adjustment effect of accounting standards on non-recurring profit and loss, the company deducted +44.68% of non-net profit.
Brief review
Focusing on high-margin products, the sales pace recovery cost rate dropped significantly by 63.27%, and the Q1 company's overall gross profit margin was +2.07pct. All categories increased. The company continued to focus on high-margin categories and products, while cleaning up low-margin categories and channels, and the gross margin structure showed a marked increase. Q1 The company's sales expense ratio was 37.21%, and the management expense ratio was 6.51%. After the division was restructured, some of the company's back-office personnel were adjusted to the front-end division, causing expenses to shift from management to sales. In total, the two cost rates were considered, and the year-on-year decrease was significant -6.09pct. In early 2023, in order to quickly make up for obvious sales expenses, the company resumed a normal marketing rhythm this year. At the same time, the new division system actively controlled fees, and channel marketing expenses were drastically reduced.
Offline inventory continued to improve, with online content delivery and brand marketing Q1 inventory falling 36%, turnover days falling 38 days, and net operating cash flow of 570 million yuan, +25% year-on-year. The company continues to clean up offline Baicao's social inventory and has reached a relatively healthy level. The brand focuses on the Taiji core series. At the same time, the brand plans to launch a new high-end anti-aging series in the second quarter, which is expected to gradually improve revenue. Liushen still achieved basic flat performance under overall pressure from offline channels in the first quarter. Among them, the new pistol pump mosquito repellent flower lotion market sold 270,000 bottles+ in the same month, and is expected to continue to launch new online products in the second quarter, adding co-branded products to help growth. The company's offline channels relied on new retail, community group buying and commercial channels to make up for the pressure on physical stores, and the channel transformation effect was outstanding.
Profit forecasting and investment suggestions: After the company officially launched the division system in October last year, various categories of channels formed a closed loop, which clearly helped price control and business management. The decline in the Q1 cost ratio has initially reflected the advantages of the new structure. The Q2 company is expected to gradually increase its marketing investment in domestic and foreign business and balance the relationship between revenue and profit. It is expected that 618 sales will become an important observation window period. Considering the Q1 situation, we revised the expense ratio down and raised the profit forecast. The company is expected to achieve net profit of 6.20/7.38/833 million yuan in 2024-2026, corresponding to PE of 20/17/15 times, maintaining an increase in holdings rating.
Risk analysis
1. Risk of increased competition in the industry: The increasing number of entrant brands intensifies competition, which has an impact on the company's business expansion; rapid changes in the industry, consumer preferences and e-commerce platform operations are changing rapidly, affecting the company's marketing and marketing, and there is a risk that customer acquisition costs will increase.
2. Risk that consumer marginal consumption tendencies may decline and consumption recovery falls short of expectations: Consumer consumption perceptions and habits may change. Although the economy is in the process of recovery, there is also a possibility that marginal consumption tendencies will decline, and consumption recovery will not have as much impact on the company's performance as expected.
3. Risk that the implementation of the company's strategy falls short of expectations: The degree of completion of the company's strategic plan is impressed by various uncertainties such as specific implementation and the external economic environment and competitive environment, and there is a risk that it will not meet expectations.