Incident: On June 26, the company held the 2023 Annual General Meeting of Shareholders. A resolution was passed at the meeting to elect Mr. Lin Xiaohai as a non-independent director of the 8th board of directors of the company. On May 15, Chairman Pan Qiusheng resigned as CEO and General Manager. The new CEO Lin Xiaohai served as CEO of Gaoxin Retail, Vice President of Alibaba, General Manager of Retail Connect Division, and President of P&G Greater China Marketing.
The new CEO empowers the company's brand side and channel side. On the brand side, the company will form a brand matrix in a hierarchical manner. The first tier is Rikushen and Yazawa with clear brand positioning and clear user values. The goal is to become big brands in small categories with market segments; the second tier is Baicaoji and Meijiajing, which aim to occupy a place in large categories with the ultimate cost performance ratio. On the channel side, on the basis of multi-platform and multi-channel operation, the company will complement its e-commerce interests while breaking through offline, and will also base its channel strategy on the brand's value positioning. For offline channels, the company will redefine offline value, and offline channels will gradually return to experience. On June 25, the Global Immersive Cultural Experience Center built by Shuangmei and the Shanghai Museum held an opening event. This year, the company plans to turn the museum into an important new retail location.
The division continues to optimize the organizational structure and focus on increasing market share. Based on the division structure, the company will continue to adjust and optimize its internal structure, enhance decision-making agility, and at the same time strengthen its central office capabilities. Empowering e-commerce channels requires a shift in thinking from CEO to business department head to brand manager. E-commerce organizations will also involve organizational and structural adjustments, and the company will also promote the reconstruction of incentive mechanisms. The company's growth target for the second half of the year will focus on increasing market share. The goal is for the personal care category to increase in market share and revenue, and for the beauty category to increase.
Investment advice: The company is actively expanding its e-commerce and new offline retail channels. Brand matrix and organizational structure optimization are expected to accelerate breakthroughs in online capabilities. The new CEO has a rich work history and is expected to further empower the company's marketing side and online and offline channel side. We expect the company's 2024-2026 revenue to be 72.86/82.26/9.425 billion yuan, and net profit of 533/656/822 million yuan. The corresponding PE was 23/19/15 times, respectively, maintaining the “gain” rating.
Risk warning: Consumer demand for beauty products is insufficient, new product launches fall short of expectations, and industry competition increases risks.