The market share of toothpaste in the anti-sensitive field continues to increase

In the anti-sensitivity segment, the offline retail market of Cold Acid has a market share of over 60% in the past 5 years, and is the leading brand in the anti-sensitive toothpaste market in China. The company's oral care business focuses on the field of anti-sensitive functions, actively laying out an anti-sensitive 3.0 technology matrix with the Chinese invention patent “biomineralization anti-allergy technology” as the core; created a “1+X” core technical barrier with anti-tooth sensitivity technology as the core, and expanded the market for strongly related products based on anti-sensitivity as the core to comprehensively meet the diverse and differentiated needs of consumers for whitening, gum protection, sugar resistance, and fresh breath.

As of June 2024, Dengkang Dental's main brand, Cold Acid Toothpaste, had an offline retail market share of 8.57%, entering the top three in the industry, and maintained steady and continuous growth. The company will continue to adhere to the strategy of focusing on dentistry, continue lean management, and continuously expand its brand and market potential.

Pay attention to the development of business formats in emerging channels

Through continuous construction and optimization, the company has formed a multi-channel operation model for efficient collaborative development, formulated a sales channel strategy of “intensive distribution, strengthening KA, e-commerce and new retail, and expanding new channels”, forming a good trend of online and offline multi-channel collaborative development.

Based on insight into the development of the offline retail industry and changes in consumer shopping habits, the company adjusts marketing strategies in real time, and enhances the offline shopping scene experience and O2O online home business expansion through activities such as large product portfolio promotion, category linkage, promotion of key holidays, and new product promotion, etc., to enhance product reach and sales transformation.

In the future, the company will continue to comprehensively deepen the construction of a global three-dimensional marketing network and innovation in marketing models, rely on customers, intensive distribution, deepen the integration of KA, e-commerce and new retail, expand new channels, continue to expand channel advantages, and enhance the company's overall competitiveness.

The development of a new oral health business can be expected

The company has now developed and marketed Class II Medical Device Cold Acid Dental Desensitizer and Oral Ulcer Rinse, Class 1 Medical Device Cold Acid Dental Brush, and Oral Hygiene Products such as Oral Antibacterial Cream, Oral Antibacterial Solution, etc., and is actively developing new dental smart products; at the same time, it has carried out relevant cooperation and layout in the field of OTC pharmacies across the country, and is actively steadily expanding the enterprise's strategy to high-end manufacturing and dental care and oral aesthetic service industries.

The company is currently actively carrying out industry-university-research cooperation projects with domestic stomatology experts. It will actively and steadily promote the enterprise's strategic expansion to high-end manufacturing, dental care, and oral beauty service industries, and is committed to becoming a leader in the oral health and beauty industry.

Maintain profit forecasts and maintain “gain” ratings

The company follows the main line of “Oral Health” and actively develops four major business segments, including oral care, dental care, oral beauty, and dental capital management.

In the field of oral care: On the brand side, promote brand value upgrading, build a global multi-brand matrix, and accelerate the transformation to global digital marketing, promote brand communication and innovation and iteration; in terms of products, expand and strengthen the main track for oral cleaning products such as toothpaste, toothbrushes, mouthwash, etc., while increasing investment in R&D, and actively expanding professional oral care products such as electric toothbrushes, oral antiseptic mouthwash, and dental desensitizer. From the field of oral cleaning and care to the fields of electric oral care products, oral hygiene products, and dental medical devices, etc.

We expect the company's 24-26 operating income of 1.53/1.76/2.05 billion yuan, net profit to mother of 0.161/0.193/0.227 billion yuan, corresponding EPS of 0.94/1.12/1.32 yuan/share, and PE of 34/28/24x, respectively, to maintain an “incremental” rating.

Risk warning: industry competition intensifies; sales fall short of expectations; risk of losing key talent