Key points of investment:
The company released 24Q1 financial report, and the performance was in line with market expectations. 24Q1 revenue was 1.905 billion yuan, down 3.8% year on year; net profit to mother was 256 million yuan, up 11.2% year on year; net profit after deducting non-return to mother was 293 million yuan, up 29.2% year on year. After deducting non-profit, if the 23Q1 non-net profit base is adjusted according to the latest accounting standards in December 2023, the 24Q1 deducted non-net profit increased by 44.7% year-on-year.
The company's profitability improved in 24Q1, and the net gross margin both increased. 1) 24Q1 gross profit margin was 63.3%, up 2.1 pct year on year, net profit margin was 13.45%, up 1.8 pct year on year; sales expenses ratio was 37.2%, down 3.5 pct year on year; management expense ratio was 6.5%, down 2.6 pct year on year; R&D expense ratio was 1.8%, up 0.2 pct year on year. 2) Accounts receivable were 1.06 billion yuan, down 10.2% year on year; inventory was 680 million yuan, down 36.4% year on year.
The expansion of the personal care category successfully responded to growth, and the maternal and child category gradually absorbed the influence of overseas markets and welcomed double-digit growth. By category, 24Q1:1) The revenue of the skincare category was 340 million yuan, down 17.2% year on year, accounting for 19.05%; 2) the personal care category's revenue was 1.11 billion yuan, up 4.2% year on year, accounting for 58.3%; 3) the mother and child category's revenue was 390 million yuan, up 11.6% year on year, accounting for 20.5% of revenue; 4) Other partner brands had revenue of 60 million yuan, up 2.9% year on year, accounting for 3.2% of revenue.
Continuing brand innovation and product innovation, the benefits of 24Q1 products from various brands spread frequently. The new Liushen brand pistol pump mosquito repellent flower lotion sold 270,000 bottles in the same month +; the Meijiajing brand's sunscreen small gold bottle upgraded single product Q1 +100%; Baicaoji brand layout consolidated the core Taiji family, and the Taiji series added a new member, Taiji Milk, promoted by brand spokesperson Tan Jianji, inheriting the advantages of the Taiji series and improving the family member matrix; Shuangmei brand reproduces the first bottle of perfume 100 years ago and was selected as a new Tmall perfume; Kaichu brand pure physical sunscreen is more stable and safer Storewide TOP3 link; Yuzawa brand hires figure swimming world champion Jiang Wenwen The sisters spoke for the brand and successfully created the topic of a new oil sensitive cream. The World Champion X Tamazawa brand topic was hotly debated.
The 24Q1 company adheres to the strong online marketing strategy, and also welcomed the high growth of interested e-commerce. The US and Canada Jinglao Baby Delivery Group set a new fan/GMV record and successfully broke the circle and sparked a buzz. The topics and likes once ranked at the top of the Douyin list, becoming a successful example of the company's e-commerce operation side. The company's online marketing enabled brand searches to increase 23% year over year through planting herbs, and the precise term yeast rice whitening increased 29% year over year; driving sales of small gold bottles of sunscreen to enter the list. Douyin Double Care Sunscreen Popularity List TOP1 and Douyin Double Care Sunscreen Top 2.
The company has a rich history over 100 years, adheres to differentiated brand development strategies, actively integrates all channels, and steadily survives the test of the epidemic. The company adheres to the operating method of “multi-channel layout, talent matrix construction, refined operation, and product differentiation”, and is expected to enhance cost investment efficiency and new product capabilities in the next 24 years. Maintaining the original profit forecast, net profit due to mother for 24-26 is estimated to be 6.5/7.8/870 million yuan, respectively, corresponding PE is 19/16/14 times, maintaining the “increase in holdings” rating.
Risk warning: Changes in overseas markets, new product sales falling short of expectations, declining consumer income expectations, high traffic risks for superanchors, high channel costs, and exchange rate fluctuations.