Incident: The company disclosed its quarterly report for '24, and deductions did not exceed expectations:
24Q1: Revenue of 1,905 million yuan (-3.76%), net profit attributable to mother of 256 million yuan (+11.18%), net profit of non-return to mother of 293 million yuan (+29.17%). Due to changes in regulations, net operating cash flow of 570 million yuan (+25%) was steadily improving after deducting non-net profit of +45% according to the same caliber.
Revenue split: Mei Jiajing and Shuangmei increased; Baicaoji and Yuze showed steady growth of 1.39 million (-17%) of which Baicaoji's offline department stores are expected to continue to be under pressure. Online performance is expected to be impressive. According to the General Staff Officer and Mama Cicao, Baicaoji Q1 Tao+GMV +37%, Yuze Q1 and DougMV +40%, Shuangmei is expected to increase by three digits.
2. Personal Care Home Clearance's revenue was 1.11 billion (+4.2%). According to the General Staff Officer and Mother Chan, the US Jiajing Q1 Auction+GMV +295%, and the omni-channel estimate is a high double digit increase. Among them, the US and Canada Net adjusted to the Personal Care category starting at 24Q1.
3. Maternal and child income of 390 million (-11.6%), cooperative brands of 61 million (+2.9%).
Profit splitting: focus on high gross profit, high growth rate and high brand strategy to boost gross profit margin, and cost optimization exceeds expectations to disrupt performance
Gross profit margin: 24Q1 gross profit margin of 63.27% (+2.1ct). The purchase price of main raw materials declined, and the product structure optimization focused on high-margin high-margin brands in premium categories, while speeding up channel adjustments.
Expense rate: 24Q1 sales, management, and R&D rates of 37.21% (-3.5pct), 6.51% (-2.6pct), and 1.83% (+0.2pct), the company's sales & management expenses all ushered in significant optimization, mainly due to ① profit restructuring, reducing some losses and expensive businesses; ② increasing price control and channel profit considerations, and reducing investment in promotional discounts; ③ 23Q1. ④ After the division was adjusted, some management expenses were transferred to sales expenses; ③ Central and back-office expenses were strongly controlled, and the budget dropped significantly.
Net interest rate: The net profit margin for 24Q1 was 13.45% (+1.8pct), of which 15.4% (+3.9%) of non-return net profit margin was deducted, increasing the main gross margin and decreasing sales and management rates.
Outlook Q2: Brands can be expected to actively launch Q2
Baicao Collection: In April, a national Baicao traceability tour was held to strengthen the mentality of rare herbal ingredients in the Taiji series; Q2 launched a new anti-aging and high-end anti-aging series, pioneering the use of ginsenoside's specific structure to work together to fight aging.
Yuzawa: In April, it was officially announced that Huayu World Champion Gemini x Repair Gemini is a cross-name collaboration, and it is expected that Q2 will target new medical restorative dressings and secondary applications in post-medical art scenes to strengthen the mentality of an authoritative scientific skincare brand with recombinant collagen as the core ingredient.
Meijiajing: Old Baby's potential continues, cooperating with 55 Shopping Festival, Oriental TV, and Traffic Star Live to enhance traffic acquisition. The Q1 Sunscreen Little Gold Bottle is +100% on all channels, ranking in the TOP1 Douyin Douyin Popularity List for Double Care and Sunscreen. The Q2 peak season is expected to explode.
Rikushin: Promoting the Forbidden City Cooperation Project, Q2 will launch a new double egg “Itch Relief Egg & Mosquito Repellent Egg”, and the Forbidden City Co-branded Year of the Ox Flower Dew. As the weather gets warmer in Q2, mosquito repellent products will be more flexible.
Investment suggestions: The division was adjusted and implemented, the company completed a comprehensive strategic transformation, and the organizational structure was more collaborative after completing the system switch. Q1 profit elasticity exceeded expectations, profit growth first ushered in an inflection point, and Q2 is expected to usher in an inflection point in growth with active and accurate marketing investment. Among them, Yuze consolidated the professional technology skincare mentality matrix “Dry Sensitive Cream+Oil Sensitive Cream” to promote high growth in new channels. Q2 is expected to launch a major new restructured collagen product; Baicaoji sorts out the product line, focuses on head resources to create explosive products, and the new spokesperson has achieved a new step in breaking the marketing circle; the successful experience of Meijia Jinglao Baby Douyin promoted rapid growth in Q4, and provided a low-cost and efficient operating benchmark for other brands, providing an effective methodology for the subsequent explosion of Liushen and Jia'an. Operating performance. The net profit for 24-26 is estimated to be 6.5, 750, and 83 million. The corresponding PE is 19, 16, and 15x, giving it a “Highly Recommended” rating.
Risk warning: Competition in the industry intensifies; investment in sales expenses falls short of expectations; downstream demand recovery falls short of expectations; disclosure of related relationships: According to the “Shanghai Stock Exchange Listing Rules” and “Implementation Guidelines for Related Transactions of Companies Listed on the Shanghai Stock Exchange”, Shanghai Jiahua is a related party of Fangzheng Securities.