Event: 618 has an impressive record, and all major platforms have more than doubled their growth. During the Freedom Point 618 period, Douyin, Tmall, Mao Chao, Pinduoduo, and JD platforms were 290%/120%/380%/230% respectively, ranking in the top 1 of the Douyin 618 promotion ranking, TOP2 in the Tmall Personal Care List (after HuShubao), the TOP1 of the Maocao Emerging Brand List, the TOP8 of the Pinduo Health Care Brand List, and TOP2 of the Pinduo Sanitary Napkin Brand List (second only to Hushubao). Our growth momentum continues to increase. The company's revenue is expected to be realized in 2024Q2 A year-on-year growth rate of over 40%.
The three core logics continue to be implemented to accelerate share growth and promote profit release. The share of Free Point Douyin has steadily risen. The share of platforms such as Tmall, Pinduoduo, and Maochao has rapidly increased. As Douyin draws new traffic, it gradually migrates to high-profit, high-consumption, and high-repurchase rate platforms such as Tmall, JD, Pinduoduo, and MaChao. At the same time, online traffic continues to empower offline peripheral markets with high net interest rates and high barriers, and the company's profitability is expected to reach a non-linear inflection point.
Volume and price rise sharply to enjoy valuation premiums, and medium-term profit inflection points & forward category expansion define the upper valuation limit.
Mirror overseas: Foreign-funded leaders P&G and Kimberly PE are stable at around 25X, and Unicharm is above 30X. Baiya focuses on the high-margin sanitary napkin business. The growth rate is fast, the growth logic is clear, and it enjoys a valuation premium compared to foreign leaders.
Benchmarking skincare products: Average price increase & domestic replacement as common logic. Common drivers are happy consumption & scientific concepts. Domestic brand shares are all increasing, and sanitary napkin brands are more concentrated.
1) Product side: Consumer demand-oriented R&D and large products are common competitive factors in the skincare and sanitary napkin industry; 2) Channel side: higher online cosmetics, faster iteration, deeper moat for offline sanitary napkins, lower gross margin than skincare products, but outstanding net margin; 3) Marketing side: Content marketing & emotional marketing are important measures to establish women's brand awareness and recognition. Therefore, the two valuations are comparable.
Profit forecast and investment rating: It is expected that in 2024, profit improvements in e-commerce & non-core markets will be further strengthened with the commissioning of new production lines & brand competitiveness, and the performance is expected to continue to be impressive. We expect net profit due to mother in 2024-2026 to be RMB 310 million, RMB 410 million, and RMB 530 million respectively. Corresponding PE is 32X, 25X, and 19X, respectively, maintaining a “buy” rating.
Risk warning: Nationalization falls short of expectations, production line launch falls short of expectations, and industry competition intensifies.