Event: On May 9, 2024, Imperial Clay Shop held the “18th Anniversary Brand Upgrade Conference” to launch the “2+3 Oriental Skin Formula” and a new black ginseng collagen bottle exclusive to Oriental Skin.

Based on the different needs of Oriental skin, Imperial Clay has proposed a new skincare methodology, the “2+3 Oriental Skin Equation”, to provide skincare solutions for Oriental skin from the root. Since its establishment in 2006, the Yunifang brand has continued to inherit Oriental culture; on May 9, 2024, Yumifang held the “18th Anniversary Brand Upgrade Conference” to launch the “2+3 Oriental Skin Formula” Oriental skin care solution that took 6 years and was refined in a targeted manner. Among them, “2” refers to Oriental history and Oriental skin, which is the foundation of Imperial Clay; “+” refers to the brand's many years of exploration in consumer needs, Oriental women's insight, etc.; “3” refers to the brand's many years of exploration in terms of consumer needs, Oriental ingenuity, and Oriental aesthetics. The one that actually came to fruition when Oriental solutions came into effect Three aspects. The “2+3 Oriental Skin Formula” is a new brand system derived from Oriental history and based on Oriental skin characteristics and selection of Oriental rare products. It inherits Oriental ingenuity and conveys Oriental aesthetics as values. It differentiates and positions the characteristics of the Unifang brand and refreshes the brand's growth path. In addition, Yunifang has also accurately extracted the four-dimensional key elements (ingredients, fragrance, skin feel and technology) of skincare products from the six traditional Chinese methods to create a new “Oriental Skin Four-Dimensional Formulation System” (4D-ESFS, that is, Oriental ingredients+Oriental fragrance+Oriental skin feeling+Oriental technology), and has built microfluidic control technology, AI fragrance technology, skin feel module map technology, surface activation and intelligent cleaning technology, nano-formulation technology, innovative emulsification technology, innovative packaging materials, and “eight innovative technologies” of green technology, making “2 Oriental Skins+3 Oriental Skin” “Program” From systematic R&D to scientific From formulations to intelligent production, empowering brands and providing all-round services to Oriental consumers.

Yunifang developed a unique new ingredient and released the first bottle of the “Black Ginseng Collagen Bottle”, an anti-aging essence specially developed for Oriental skin, improving the competitiveness of the brand's product matrix. The Yunifang Ingredients R&D team began laying out rare Oriental ingredients 13 years ago, selecting 22 from 37,000+ Oriental raw materials for research. After more than 10,000 experiments, black ginseng extract was created; in October '23, black ginseng extract was officially registered as a new ingredient by the State Drug Administration, making it the world's first black ginseng anti-aging ingredient, filling the gap in research on black ginseng anti-aging in the global international raw materials market. According to data from Yunifang Laboratory, compared to the top three Western anti-aging companies, the average binding power of black ginseng extract to the collagen gene in Oriental skin is 42.24% higher. The effect of promoting type I collagen is 68.25 times that of bosene, the anti-wrinkle effect is 1.59 times that of bosene, and the firming effect is 1.31 times that of bosene, and the raw materials have strong anti-aging properties. In addition, Yunifang has developed a new product of black ginseng collagen bottle anti-aging essence based on black ginseng essence; the black ginseng collagen bottle contains a 30% concentration of black ginseng extract, which is unique and deeply meets the needs of Oriental skin, and can directly promote the six major collagen proteins related to anti-aging in Oriental skin, solving the problem of collagen loss from the root; at the same time, blending recombinant type III collagen can directly supplement collagen from the outside of the body. The product's anti-aging strength is efficient and accurate, and the competitiveness of the Yunifang product matrix has been optimized and improved.

Brand adjustments and upgrades are progressing in an orderly manner, and we look forward to the launch of Imperial Clay Shop after adjustments. Sales of the Yunifang terminal have been under pressure for 23 years. Since 23H2, the chairman of the company has personally taken over the responsibility of the Yunifang brand to promote brand adjustment and upgrading in an orderly manner. On the 18th anniversary, the brand launched a new brand system and research results. Brand adjustments are progressing steadily, and we expect brand adjustments and upgrades to bring marginal improvements in performance.

Investment suggestions: The company's “four-double strategy” continues to be implemented, and the main brand, Yunifang, is progressing in an orderly manner, and the performance of the brand after completion of the 24-year brand adjustment and upgrade is expected to further complement the brand matrix; the agency business “1+5+N” strategy is progressing steadily, and the basic market continues to grow. We expect the company's net profit to be 4.01/4.77/544 million yuan respectively in 24-26, with year-on-year growth rates of 36.3%/19.0%/13.9%, respectively. Corresponding PE is 19X/16X/14X, respectively, maintaining the “recommended” rating.

Risk warning: Industry competition increases risk; brand adjustments fall short of expectations; new product development falls short of expectations.