Event: Profit side under pressure in 2023, overall 2024Q1 operations picked up
The company released an annual report and a quarterly report: in 2023, it achieved revenue of 5.522 billion yuan (+10.1%) and net profit to mother of 757 million yuan (-28.0%); 2024Q1 achieved revenue of 1,097 million yuan (+27.1%) and net profit to mother of 177 million yuan (+11.7%). Considering the intense competition on the sensitive skin circuit, we lowered 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 10.00 (-6.81) /12.66 (-8.40) /1,570 billion yuan, corresponding EPS is 2.36 (-1.61) /2.99 (-1.98) /3.71 yuan, and the current stock price is 23.4/18.5/14.9 times. The leading brand matrix for sensitive skin care continues to improve, steady growth can be expected in the future, the valuation is reasonable, and the “buy” rating is maintained.
The main brand Winona performed steadily in 2023. The results of 2024Q1 cost reduction and efficiency were initially shown by brand. In 2023, Winona/Winona Baby achieved revenue of 51.92/150 million yuan respectively, +6.3%/+47.5% year-on-year respectively. In addition, Aikaman/Ji Rui/Pomei contributed 0.36/0.90/0.14 billion yuan in revenue respectively. By channel, in 2023, online/offline/OMO channels achieved revenue of 35.52/14.27/523 million yuan, respectively, -0.4%/+48.9%/+10.3% year-on-year; among online channels, Ali/Douyin achieved revenue of 1,762/631 million yuan respectively, -14.5%/+47.1% year-on-year respectively, and Douyin performed better. In terms of profitability, the company's gross margin for 2023/2024Q1 was 73.9%/72.1%, respectively, and -1.3pct/-4.0pct year-on-year respectively. The gross margin declined due to increased costs of product upgrades and promotional policies. In terms of expenses, sales/management/R&D expenses were 47.3%/7.5%/5.4% in 2023, respectively, and +6.4pct/+0.6pct/+0.3pct, respectively; 2024Q1 was 46.7%/6.9%/3.0%, respectively, and -0.9pct/-0.8pct/-1.0pct, respectively. The results of cost reduction and efficiency were initially evident.
Start a new era of 2.0 skin health, leading the way for sensitive skin, and strengthen core competitiveness. The main brand: Winonat Cream 2.0, an upgraded version of the celebrity product, was launched. The company will simultaneously enter a new 2.0 skin health era, sort out and streamline product lines and strengthen omni-channel price control to enhance the main brand's potential. Other brands: In addition to the main brand, many brands such as Winona Baby, Aikesong, Ji Rui, and Pomei work in parallel, and the brand matrix continues to improve the certainty of long-term growth. Channel: In 2024, on the one hand, the company will develop offline channels such as OTC and explore the sinking market. On the other hand, it is also expected to open a new chapter of internationalization through the brand going overseas (Southeast Asia and other regions).
Risk warning: New brand expansion falls short of expectations, channel expansion falls short of expectations, and industry competition intensifies.