Core view: According to the official war report, during the “6.18” period, sales of the free point brands Douyin and Tmall increased by 290% +/ 120% +, respectively, and JD, Maocao, and Pinduoduo also made breakthroughs. We believe that behind “6.18” exceeding expectations, the upward resonance of the company's product strength, brand power and sales capabilities is reflected. Looking at the long term, the company's strategy is clear, e-commerce continues to exceed expectations, and the online to offline business model is gradually being formed in a closed loop. We are optimistic that the company will move from region to country, achieve rapid growth, raise profit expectations, and continue to make key recommendations.
Incident: The company revealed the “6.18” official battle report: During the “6.18” promotion period from May 20 to June 20, Freedom Point achieved the first place in Douyin sales in its segment, with a year-on-year increase of 290% +; second place in the Tmall Personal Care sales list, with a year-on-year increase of 120% +; the two powerful platforms consolidated their position and increased their share, exceeding expectations. At the same time, potential platforms such as MaoChao, JD, and Pinduoduo, which have increased investment in 2024, have also made breakthroughs: Maochao took first place in the list of emerging brands, with a year-on-year increase of 270% +; Pinduoduo ranked eighth in personal care brand sales and second place in sales of sanitary napkin brands, with a year-on-year increase of 380% +; and in JD, a year-on-year increase of 230% +. Behind “6.18” exceeding expectations, it reflects the upward resonance of the company's product strength, brand power and sales capacity.
Q2 launched the Probiotic Pro+ series, increasing the unit price range with iterative new products and strengthening product strength. During the “6.18” period, over 140W sets of large single probiotic sanitary napkins were sold during the 618 period. Following the success of the probiotic series in 2023, the company's product launch revolved around the probiotic series upgrade in 2024. Q2 launched the probiotic Pro+ series. Compared with basic probiotics, the Pro+ series is about 20% higher than the basic probiotic model; 2) At the product level, in addition to probiotics and surface layer upgrades, Pro+ mainly focuses on 250/290/430 in terms of specifications. In the first quarter of 2024, the gross margin of Liberty Point sanitary napkin products was 57.7% (+5.8pct.) We are optimistic that the iteration of the probiotic series will help Baiya further strengthen its product strength, and at the same time continue to implement the product structure upgrade logic to improve profitability.
Improve product promotion, deepen consumer awareness, and enhance brand mentality. According to the official war report, from May 1 to June 18, the global exposure of the Liberty Point brand was 1.5 billion +, the A3 audience exceeded 73 million, and brand searches increased 330% + over the same period last year.
Since 2023, the company has focused on the long term, invested heavily in building the core competitiveness of products and brands, valued product promotion value through new channels such as Douyin, and increased investment in e-commerce and peripheral marketing, driving deepening brand awareness on other platforms and offline markets.
Investment advice: In 2023, the company will focus on online channels, product strength & brand strength, and the peripheral market will expand steadily. Continued growth can be expected in 2024. We believe that the successful launch of the “Probiotics” series reflects the company's successful product upgrades and brand building, and the improvement of core competitiveness; in 2024, the company's strategy is clear, and online and offline go hand in hand, and we are optimistic that the company will move from region to country and achieve rapid growth. We expect the company to achieve revenue of 28.3, 35.3, and 4.37 billion yuan in 2024-2026, up 31.8%, 25%, 23.6%, and net profit to mother of 3.20, 4.16, and 529 million yuan (e-commerce performance is good, adjusted profit forecasts, 24-26 years ago were 3.01, 3.81, 481 million yuan), and EPS of 0.75, 0.97, and 1.23 yuan, maintaining the “buy” rating.
Risk warning: risk of large fluctuations in raw material prices, increased risk of market competition, risk of channel expansion falling short of expectations