Introduction to this report:
The company's high performance increased in 2023 and 24Q1, mainly due to growth driven by Marumi's Douyin channel and sub-brand Love Fire. At the same time, gross margin continued to increase due to product structure optimization, cost reduction and efficiency improvement, etc., and profitability is expected to continue to improve in the future.
Key points of investment:
The investment proposal takes into account the continued rise in marketing investment expenses for the company's fast-growing online business. The 2024-25 EPS forecast was slightly lowered to 0.93 (-0.07) and 1.22 (-0.01) yuan, the 2026 forecast was added to 1.51 yuan, and the target price was maintained at 36.8 yuan, maintaining an increase in holdings rating.
The 2023 results fell short of forecasts, and the 24Q1 results exceeded expectations. In 2023, the company's revenue/attribution/deduction of non-net profit of 2,26/2.59/188 million yuan was +29%/+49%/+38% year-on-year, lower than previous performance forecasts. Among them, non-recurring profit and loss were mainly profit and loss of 94 million yuan from changes in fair value. In 2023, the company's gross profit margin was 70.7%, +2.3 pct year on year, thanks to sales and product structure optimization and continuous cost control; sales/management/R&D rates were +5.0/ -1.5/+0.3 pct to 53.4%/4.9%/2.8% year over year, and sales rate increase was mainly due to rising online traffic costs; net profit margin was 11.7%, +2pct year over year. 24Q1: The company's revenue/attribution/deduction of non-return to mother was $6.61/1.11/104 million yuan, or +39%/+41% year-on-year. The gross profit margin and net profit margin reached 74.6% and 16.7% respectively, reaching new highs in the past three years.
By brand: Marumi grew steadily, and Koihi doubled. In 2023, the company's main brands, Marumi and Koihi, had revenue of 1.56/ 640 million yuan respectively, +12%/+125% year-on-year, accounting for 70%/29% respectively.
Among them, the Marumi brand insists on implementing the big single product strategy. The GMV of the two major single products, Xiaohongbi Eye Cream and Little Gold Needle, has exceeded 200 million, and the product structure has been significantly optimized. PL Love continues to explode. The GMV of the 5 products exceeds 100 million. Of these, I can't see that foundation sold more than 1.5 million units, and the potential continues to improve.
Sub-channel: Online accounts for more than 80%, leading to growth. In 2023, the company's online/offline revenue was 1.887/350 million yuan, +50%/-27% year-on-year, and the online share increased to 84%. Among online channels, Tmall and Douyin increased by 36% and 106% respectively, becoming the main growth drivers.
Risk warning: Industry sentiment is declining, new products fall short of expectations, and online traffic costs are rising.