The company performed well in e-commerce during the 618 period

According to the 618 War Report, the Freedom Point brand had global exposure of 1.5 billion +, the 5A crowd surpassed 210 million+, and the A3 audience reached 71 million +, brand searches were +330% year-on-year; probiotic sanitary napkins sold a total of 1.4 million sets +, successfully creating a super single product.

By platform: 1) Douyin: Freedom Point climbed to the top of the list, with sales increasing 290% + year over year; 2) Tmall: Freedom Point ranked in the TOP2 personal care sales list, sales increased 120% + year over year; 3) JD:

On 5.27 and 6.14, it reached the top 1 of the personal care competition list twice, with sales up 230% + year on year; 4) Pinduoduo: Freedom Point achieved excellent results in the top 8 personal care brand sales list, ranking in the TOP2 sanitary napkin brand sales list, and sales increased 380% + year over year; 5) Tmall supermarket: Liberty Point reached the top 1 of the Cat Super Emerging Top 1, with sales growth of 270% + year over year.

Douyin improved marketing efficiency, set a category benchmark, and empowered other platforms, the 24Q1 Douyin platform to account for half of the company's e-commerce channel revenue, ranking first in the Douyin platform's sanitary napkin brand list for more than 23 consecutive months. The company has always maintained investment in the Douyin platform, gradually optimized its marketing strategy, increased planting and content promotion, improved overall marketing efficiency, and gradually improved the online business structure. Furthermore, through team organizational changes, the company changed from being driven by brand marketing to three drivers of content, operation and marketing to improve e-commerce platform acceptance efficiency, and we believe it is expected to maintain its leading position in the Douyin sanitary napkin industry.

The company's investment in brand resources and Douyin's scale potential have a spillover effect on other e-commerce platforms. Combined with the continuous iterative upgrading of different platforms' organizational practices, it boosts the sales share of each platform.

The rapid pace of product promotion enables e-commerce to grow rapidly

The sales share of probiotic products has continued to grow since their launch in mid-23. The company will continue to promote the probiotic single product strategy and launch new products to cover more consumer groups; probiotics PRO+ will be launched in May '24, and in addition, new camellia luxury products will be launched. We expect the rapid iterative upgrading of products to lay a good foundation for e-commerce growth.

Production capacity restrictions have been eased, and the five core provinces have made every effort to sprint

38 After the peak of the promotion season, the company's production capacity has returned to a relatively stable state. In the future, it will ensure that production capacity meets market demand by continuing to purchase production lines, transitioning to outsourced factories, and increasing the share of outsourced procurement of ordinary products. We expect the core market to achieve steady growth after capacity restrictions are eased.

Core markets during the 618 period 1) Chongqing: Full off-site promotion, with a total of 86 events implemented; 2) Sichuan:

Campus activities are being carried out vigorously; 3) Yunnan: Fully implement the internal purchase policy, store gambling, and all staff sell goods to ensure smooth delivery in Q2; 4) Guizhou: Successful demonstration of innovative interactive activities at top stores, KA outfield+offline Douyin joined forces to achieve the 6x goal in three days; 5) Shaanxi: Dealers take charge, and fully carry out charter activities at 40 stores in the Hanzhong region.

Companies in key peripheral regions are speeding up the pace of offline channel expansion, focusing on Guangdong, Hunan, Hebei, etc., and formulating different sales strategies. In addition to leveraging their original superior channel experience, they also pay more attention to emerging channels such as fast-growing instant retail channels, convenience store systems, and front warehouses. We expect peripheral provinces to continue to grow rapidly.

Maintain profit forecasts and maintain “buy” ratings

The company's health products are strong, new products are expected to contribute to growth, and the brand potential formed by Douyin continues to empower other e-commerce platforms and offline channel development. We expect net profit to be 3.2/40/50 billion for 24-26, respectively, and PE 32/25/20X respectively, maintaining a “buy” rating.

Risk warning: New product development falls short of expectations, peripheral expansion progress falls short of expectations, online competition intensifies, etc.