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Caixin Media, October 23rd (Reporter Luo Yichen) - Since its listing in 2020, the leading sun protection company Nanjing Cosmos Chemical (300856.SZ) has been favored by the market due to its impressive performance. However, in the third quarter of this year, the company's performance saw a rare significant decline, with a year-on-year drop of about 50% in net income attributable to shareholders for the quarter, casting a shadow on the full-year performance expectations.

Tonight, Nanjing Cosmos Chemical released its third-quarter report, during the reporting period, the company achieved revenue of 1.858 billion yuan, a year-on-year increase of 4.69%; net income attributable to shareholders was 0.514 billion yuan, a year-on-year decline of 4.11%. Looking at each quarter, the company's performance maintained double-digit growth in the first half of the year, but the situation changed dramatically in the third quarter, with a 22.46% quarter-on-quarter decline in revenue, achieving a net income attributable to shareholders of less than 0.1 billion yuan, a halving year-on-year.

Regarding the sudden change in performance, Nanjing Cosmos Chemical explained in the performance report that it was mainly affected by factors such as downstream customers digesting previous inventory and increasing industry competition, leading to a shrinking revenue scale. Meanwhile, the company adjusted product prices, causing the main business gross margin to decrease, further dragging down the company's profit performance.

Previously, brokerage institutions had relatively high expectations for Nanjing Cosmos Chemical's full-year performance targets, with expected growth rates for revenue and net income attributable to shareholders around 20%. With the third quarter performance turning sour, it is now difficult to be optimistic about whether the company's full-year performance can meet market expectations.

Caixin Media reporters have learned that as a global leader in sun protection raw materials, Nanjing Cosmos Chemical's performance growth over the past two years has mainly benefited from the increased penetration rate of sun protection products. Taking the domestic beauty market as an example, sun protection products were once a popular category in recent years, with many brands entering the field and launching various sun protection products. However, starting from 2023, the competition in the sun protection product market has intensified significantly. Some midstream contract manufacturers interviewed mentioned that the market for sun protection products has shown signs of decline, indicating a possible temporary overcapacity in the release of sun protection raw materials.

Throughout this year, the overall downturn in the global beauty market has been even more unfavorable for Nanjing Cosmos Chemical. Taking the beauty leader L'Oréal as an example, its sales growth rate has slowed down in the first three quarters of this year, with a 3% year-on-year decrease in sales in the North Asia region. Domestic beauty consumption data is also not optimistic; according to data from the National Statistics Bureau, from January to September this year, the retail sales of cosmetics were 306.9 billion yuan, a 1% year-on-year decrease, performing worse than most other retail goods in society, indicating a very challenging industry situation.