The company published its annual report for the year 23. In '23, we achieved revenue of 2,226 million yuan/yoy +28.52%, net profit due to mother of 259 million yuan/yoy +48.93%, net profit of 188 million yuan/yoy +38.16%; 23Q4 achieved revenue of 689 million yuan/yoy +17.20%, net profit of 86 million yuan/yoy +57.99%, net profit of non-return mother was 0.31 million yuan/yoy -34.13%; net profit for both 23 and 23Q4 fell below the lower limit of previously announced performance forecasts.
23Q4 fair value change income+investment income+other income was $106 million. If this portion is excluded, 23Q4 operating profit is negative. We believe that the pressure on 23Q4's performance may be due to a sharp increase in marketing expenses during the Double 11 promotion period. 23Q4's sales expenses ratio was 58.49% /yoy+5.52pct.
By brand: ① Marumi achieved revenue of 1.56 billion yuan/yoy +11.63% in '23. The company carried out a series of marketing activities around big products such as Xiaohongbi Eye Cream, Xiaojin Slicing Eye Cream, Double Collagen Eye Cream, and Butterfly Eye Mask. Among them, Xiaohongbi Eye Cream and Xiaojin Needle Retouch Essence all had annual GMV sales of over 200 million yuan; ② PL Love Fire achieved revenue of 643 million yuan/yoy +125.14%. PL Love Fire created core single bottom products such as “invisible”/“can't be rubbed off” foundation Make up your mind and expand your powder, air cushion, and powder based on this In categories such as cake, GMV sold over 100 million yuan throughout the year, the 5 products that can't see foundation, can't see powder, can't see air cushion, can't rub off foundation, and can't rub off air cushion, and the brand's upward momentum is strong.
By channel: ① Online channels achieved revenue of 1,871 million yuan/yoy +50.40%, gross profit margin of 72.92% /yoy+2.50pct, revenue growth stemmed from the good performance of Douyin (+106.29%) and Tmall (+35.62% year over year) channels, and the rapid development of Kuaishou Auto and Love Fire brands; ② Offline channels achieved sales of 354 million yuan/yoy -27.17%, gross profit margin of 58.95% /yoy-4.44pct, which fell short of expectations. below, The department store channel was clearly affected by the decline in passenger traffic.
By product: ① Eye products achieved revenue of 429 million yuan/yoy -1.48%, gross profit margin of 72.28% /yoy+3.55pct; ② Skincare products achieved revenue of 925 million yuan/yoy +16.46%, gross profit margin 69.94% /yoy+1.81 pct; ③ 23 years of skin cleansing products achieved revenue of 221 million yuan/yoy +7.06%, gross profit margin 66.13% /yoy+0.31pct; ④ 650 million yuan/yoy +121.38%, gross profit margin 72.30% /yoy+1.57pct.
Among them, the rapid increase in revenue from beauty and other products is mainly due to the PL Lianhuo brand's growth rate of over 100%.
The company's comprehensive gross profit margin in '23 was 70.70% /yoy+2.25pct. The increase in gross margin was mainly due to product structure optimization, the share of sales revenue for high-price skincare products (such as restructured double collagen series) and new beauty products; the period expense ratio was 60.90% /yoy+3.28pct, of which the sales/management/R&D/finance expense ratios were 53.86%/4.89%/2.80%/-0.65%, respectively, +5.0/-1.54/0.26/0.08pct, respectively. This is due to the company's vigorous promotion of online transformation and the increasing cost of online traffic; however, the total income from changes in fair value plus investment income plus other income in '23 was 134 million yuan, which in turn led to an increase in net interest rate to 11.66% /yoy+1.60pct.
The company published its quarterly report for '24. 24Q1 achieved revenue of 661 million yuan/yoy +38.73%, net profit of 111 million yuan/yoy +40.62%, after deducting net profit of 104 million yuan/yoy +40.80%.
By category, revenue from eye products was 113 million yuan/yoy +19%, revenue from skincare products was 281 million yuan/yoy +40%, revenue from skin cleansing products was 67 million yuan/yoy +64%, and revenue from beauty products was 191 million yuan/yoy +45%. Revenue growth was mainly due to an increase in the average sales price of products.
24Q1's comprehensive gross profit margin was 74.61% /yoy+5.93pct, mainly due to the increase in product sales prices and the increase in revenue share of restructured collagen products with higher sales prices; the period cost ratio was 55.36% /yoy+6.51pct, of which the sales expense ratio was 50.29% /yoy+7.77pct; overall, 24Q1's net profit margin was 16.73% /yoy+0.23pct.
The company is determined to transform online. Actively participated in activities on platforms such as Tmall's Little Black Box and Douyin's “The Amazing Chinese Component 3” for 23 years, created the release and dissemination of female emotional attitude films such as “Are You Wrong?” and “Girls Don't Be Afraid to Be Too Conspicuous”, and launched a series of short dramas such as “May You Shine Brighter” on the Douyin platform. We expect the company to continue to make efforts to transform online channels in 24, but increased marketing and promotion will cause the company's sales expenses ratio to continue to be high. Follow-up suggestions are to continue to observe the changing trends in sales expense investment efficiency and profit margins during the transformation process.
Profit forecast: According to Wind's agreed expectations, the company's net profit to mother in 2024-2026 was 3.82/475/600 million yuan, respectively, and PE corresponding to the closing price on April 26 was 30/24/19X, respectively.
Risk warning: Online channel transformation falls short of expectations; online traffic dividends are declining; new product sales fall short of expectations; macroeconomics affects consumer confidence; competition in the cosmetics market is fierce, etc.