Incident Overview
The company released its annual report for 23 years and a report for the first quarter of '24. In '23, the company achieved revenue of 8.905 billion yuan, +39.45% year-on-year, and net profit to mother of 1,194 billion yuan, +46.06% year-on-year. 24Q1 achieved revenue of 2.82 billion yuan, +34.56% year over year, and net profit to mother of 303 million yuan, +45.58% year over year.
Analysis and judgment
Maintain rapid growth online and actively adjust offline. By channel, online revenue in '23 was 8.274 billion yuan, +42.96% year-on-year. (1) The Tmall channel continues to deepen the big single product matrix strategy, optimize the product structure, improve the core category and core product ranking; comprehensively lay out products in each price segment and strengthen the mentality to further increase the brand customer unit price and market penetration rate; strengthen refined operation, optimize the delivery structure, reduce costs and increase efficiency, and strengthen the deep linkage between people inside and outside the site; and rely on the user operation system to increase the frequency of users to achieve repurchase growth. (2) Strengthen the global operation of Douyin, complete the transformation and efficiency of accounts, and use product lines to differentiate accounts and achieve crowd segmentation; Dabo has a keen insight into the market, expand more celebrity cooperation, and at the same time tap potential newcomers, and custom-match products and mechanisms according to talent attributes & fan characteristics to maximize explosion coefficient and UV value; use the commercial card platform to focus on generating more traffic and further increase sales share; fine crowd operation, optimize delivery structure, and improve efficiency. Offline revenue was 616 million yuan, +7.35% YoY. (1) Optimize the department store channel structure, replace stores with low yield and low potential, and promote the transformation of the head system to a direct management model. At the same time, we will continue to strengthen internal management, further improve the training system for counter consultants, and improve retail management skills to increase average counter sales. (2) The daily chemical channel stabilizes the channel stock and increases the cooperation intensity of major customers. At the same time, we are actively seeking market growth and expanding cooperation with new shopping mall collection stores. In the first half of 2023, the high-end anti-aging energy series and the mid-range anti-aging and elastic series will be promoted respectively to help retail stores increase customer unit prices and develop new users.
The main brand continues to be upgraded and optimized, and the number of sub-brands is being expanded one after another. By brand, the main brand Perea had revenue of 7.177 billion yuan, +36.36% over the same period. It continued to consolidate the “big single product strategy” and carried out comprehensive upgrades for the core products of the “Double Antibody Series” and “Ruby Series”. In the second half of 2023, it released the first patented new patented cyclic peptide ingredient in Chinese beauty, and applied it to “Ruby Cream 3.0.” Choi Tong's revenue was 1.01 billion yuan, +75.06% year-on-year. It continued to consolidate the major product matrix in the facial makeup category, pioneered new color categories in the first half of 23, and focused on the base makeup circuit in the second half of the year. OR's revenue was 215 million yuan, +71.17% year over year, continuously increasing the market penetration rate of core explosives and the volume of single products. At the same time, the Advanced Oil Control Series and the Anti-Release Series were launched. Yuefuti's revenue was 303 million yuan, +61.82% year-on-year, continuing to improve consumers' perception of the Yuefuti brand “Oily Skin Care Expert”.
Investment advice
We expect 24-26 revenue of 110.76/135.10/16.316 billion yuan, +24.39%/+21.97%/+20.77% YoY; net profit to mother of 15.31/18.77/2,276 billion yuan, +28.20%/+22.64%/+21.23% YoY. The corresponding EPS was 3.86/4.73/5.74 yuan/share; the corresponding PE was 28/23/19 times, maintaining the “buy” rating.
Risk warning
Industry competition risk; differences in the statistical caliber of third party data; risk of new product launches falling short of expectations; risk of product quality problems; risk of loss of core talent and technology.