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「新暴利四杰」,挤去泡沫之后

“Four New Profiteering Masters”, after squeezing out the bubble

Tech星球 ·  Mar 27, 2021 22:05

Source: planet Tech

Authors: Yang Xiaohe, Qiao Xue

01.pngNiuniu knocks on the blackboard: the future story of the four heroes needs to be rewritten.

Traditional liquor, real estate and other fields were once profiteering industries in the eyes of the public. However, in the wave of new consumption, medical beauty, e-cigarettes and other races, also gave birth to a lot of very profitable enterprises. With a gross profit margin of 92% and a price-to-earnings ratio of more than 200 times, Aimeke, So-young International Inc, Angelalign Technology Inc. and RLX Technology Inc. (Yueke's parent company) vividly interpret the story of the "four heroes of the new exorbitant profits".

Among them, Emick is "the king of hyaluronic acid who is more profiteering than Maotai", Yue carved to build "an e-cigarette empire of 300 billion in three years", Angelalign Technology Inc. is becoming "the first share of invisible braces with revenue increased 10 times", and So-young International Inc is "the representative enterprise of appearance economy". Every enterprise is full of gimmicks.

From the start-up stage, they have been accompanied by the favor of investment institutions and the attention of the market, and they have also been sought after by the capital market after listing, and put on a good show that the stock price has increased several times. It is said that Li Lun, the founding partner of Panda Capital, suffered from insomnia that night after seeing Yueke listed with a market capitalization of more than US $40 billion. The next day, he shared "what it was like to pass by a project with a return of 5000 times." he said bluntly that "I had two meetings and was still Pass, very sad." "

Recently, however, the market value of the "new profiteering four" has fallen sharply under the influence of many factors, such as the new e-cigarette regulatory policy and the return to rationality of the capital market, as well as the weak growth revealed by various companies after the release of their financial reports.

RLX Technology Inc., who has just released results, saw Q4 revenue of 1.62 billion yuan in 2020 and a quarter-on-quarter revenue growth of 44.5 per cent, which allowed the share price to rise only slightly by 2 per cent and failed to pull back the 47 per cent that fell five days ago. Including Emick and So-young International Inc, the market capitalization of all three companies halved in 2021, and even the market capitalization of RLX Technology Inc. and Emick plummeted nearly 100 billion yuan from their highs.

After squeezing out the bubble, can the four heroes still tell the myth of sudden wealth?

The wave of new consumption spawned the "new profiteering four heroes"

In the stock market, there are two sectors that investors like most, one is consumption, the other is medical treatment, which is enduring. The reason is that when it comes to these two industries, it often means that there are valuations and ROE that surpass other industries.

According to the stock price statistics on March 26th, Emick's total market capitalization was 85 billion yuan, with a price-earnings ratio of 193. just before January, on February 18, the stock price hit a peak of 1331 yuan, with a market capitalization of nearly 160 billion yuan, and a price-to-earnings ratio of 336 times PE (price-earnings ratio). At present, RLX Technology Inc. has a total market capitalization of US $14.2 billion and a market profit of 1955, while So-young International Inc has a total market capitalization of US $1 billion and a market profit of 1177 US dollars.

This is an astonishing valuation in any market. The bubble price-to-earnings ratio given by the capital markets also stems from extreme optimism about the new consumer areas in which the four companies are located.

More and more research and data are proving to us that we do live in a good-looking society. Economists Daniel Hamermesh and Jeff Biddle have an interesting study in which a person with below-average looks earns 9 per cent less per hour, while those with above-average looks earn 5 per cent more per hour.

This is a beauty-loving era, appearance anxiety has become a worry for many people, and whether it is medical beauty, plastic surgery or e-cigarettes, they really hit the inherent "addiction" of human nature, and consumer services will be satisfied if there is user demand.

With the rise of enterprises under such demand, Aimeke is the leading enterprise of hyaluronic acid. In response to the demand for skin care, Angelalign Technology Inc. is the pioneer of domestic invisible braces, while So-young International Inc has built a medical and health platform, linking medical institutions and consumers. they all accurately cut into the small branches of the medical race track. Yueke is more like a trend rider in the iterative period of new consumption. Traditional tobacco has not had a big innovation in nearly a century, and young people puffing smoke need new ways to play cool.

And the four companies that took the lead in these new consumer areas also achieved the advantage of commodity pricing and achieved their own profiteering stories. According to the latest financial data, the gross profit of Emeike, Angelalign Technology Inc., So-young International Inc and Yueke is 92.17%, 70.8%, 85% and 42.5% respectively, while Guizhou Moutai, which is the "hard currency" of the stock market, has a gross profit margin of only 91.3%. The gross profit margin of Emeike is as high as 98%.

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At present, each family has basically achieved the position of king in the profiteering track. According to Angelalign Technology Inc. 's prospectus, Angelalign Technology Inc. 's market share is 41.3%, ranking first; Yueke's market share is 62%, swallowing most of the market share; Aimek's domestic market share in sodium hyaluronate injection products has reached 14.0%, ranking first in domestic hyaluronic acid; So-young International Inc's market share has reached 70% since 2017, and there are no comparable players in recent years.

The process of creating myths can never be separated from those who create myths.

Some of them have been in commercial layout for more than ten years. Among them, Angelalign Technology Inc. was founded in 2003 by Yan Yongnian, a professor of mechanical engineering at Tsinghua University (known as China's "father of 3D printing") and Wang Bangkang, dean of the School of Stomatology, Capital University of Medical Sciences. As soon as Angelalign Technology Inc. was born, he ran frantically with the halo of "domestic hidden beauty".

There are also emerging players, Yuejie founder Wang Ying was a UBER TECHNOLOGIES INC executive, the team is also a major Internet manufacturer, cross-border e-cigarette. Yueke has also developed a "361 plan" to open 10,000 stores through subsidies of 600 million yuan in three years. From its establishment in January 2018 to March 2020, there were nearly 10000 stores, faster and crazier than Ruixing, which created nearly 4000 stores in two years.

Buffett once said: "Investment is like a snowball, the most important thing is to find very wet snow and long slopes." "the long slope refers to the industry and the track, while the very wet snow refers to the company on the pinnacle of the industry. So, are the crazy running Emeike, Angelalign Technology Inc., Yueke and So-young International Inc such a perfect investment target?

The real profitability behind high gross margins

Behind the high gross margin, is the "new profiteering four heroes" a veritable money printing machine?

In terms of the rate of return on capital, the listing speed and market value performance of the "new profiteering top four" are undoubtedly successful investment targets for investment institutions. So-young International Inc used 2.764 billion yuan of financing to return the market value of 1 billion US dollars, RLX Technology Inc. used the amount of financing of about 9.5 billion yuan to return the maximum market value of 40 billion US dollars, Aimeke used 3.57 billion yuan to return the highest market value of 160 billion yuan, and Angelalign Technology Inc. used only 149 million yuan of financing to go public.

However, from the point of view of the enterprise itself, limited to the development of products, technology and high marketing expenses, it is also eroding the real profitability of each family.

RLX Technology Inc. is not only due to the impact of the 2019 ban on the online sale of e-cigarettes. Compared with Smoore International Holdings Limited in the upper reaches of the industrial chain, RLX Technology Inc. 's source of income is too single, mainly cigarette guns and bombs, Smoore International Holdings Limited also has a large number of To B electronic atomization equipment business; this also leads to a net interest rate of 20% for RLX Technology Inc., while Smoore International Holdings Limited's net interest rate is close to 30% in several reporting periods.

It should be said that RLX Technology Inc. 's real ability to make money still lags behind the head enterprise. The product is single, which is also related to RLX Technology Inc. 's previously low R & D expenses, accounting for only 1.5% of revenue in 2019 and 7.8% in 2020, although growth is only maintained at a low level.

Unlike RLX Technology Inc. 's low R & D expenses, although So-young International Inc's R & D expenses have reached more than 10%, he has also taken the initiative to reduce R & D expenses recently. So-young International Inc's Q4 expenditure rate in 2020 was 16.7%, lower than in the first three quarters of 2020.

Instead of making efforts on research and development, various companies spend a lot of money on marketing and sales expenses. The high promotion cost is also the core reason why the "new profiteering four" are unable to achieve high net profit behind the high gross profit.

In fiscal year 2020, RLX Technology Inc. 's sales expenses increased by 23.3% to 440 million yuan compared with 360 million yuan in the previous year. And large-scale expansion offline, although leading to a substantial reduction in its online marketing costs, but the heavy asset investment in opening a store also makes RLX Technology Inc. 's debt ratio high.

So-young International Inc is also increasing investment to ensure user growth, with marketing expenses rising 54.5% last year compared with the same period last year, mainly spent on brand building and marketing activities. So-young International Inc's sales and marketing expenses averaged more than 50% in four quarters in 2020. To put it simply, "advertising" swallowed up most of the company's profits.

Angelalign Technology Inc., who is about to appear on the market, is also working hard to do marketing. According to the prospectus, Angelalign Technology Inc. 's sales and marketing expenses (expenses) were 81 million yuan, 123 million yuan and 91 million yuan respectively in 2018, 2019 and the first three quarters of 2020, accounting for 16.7%, 19.0% and 15.2% of total revenue, respectively.

Among the "New profiteering four", at present, only Emick can be called a veritable banknote printing machine, with revenue of 709 million yuan in 2020, net profit of 440 million yuan and net profit margin of 62%.

Challenges and opportunities after the Bubble subsided

When will the bubble burst in the "new profiteering top four" with a high price-to-earnings ratio?

The sudden policy change took the lead in breaking RLX Technology Inc. 's myth of high market capitalization, and also opened the curtain for the market to re-examine the stock prices of the "new profiteering top four".

After e-cigarettes could not be sold online in 2019, the Ministry of Industry and Information Technology reported on March 22 that new tobacco products such as e-cigarettes would be regulated according to cigarettes. RLX Technology Inc. 's share price collapsed and plunged 47.84 per cent on that day. Since March 22, RLX Technology Inc. 's share price has halved and his market value has evaporated by more than 100 billion yuan in three trading days, a startling drop.

The change in the stock price reflects the market's concern about RLX Technology Inc. 's development prospects. Although analysts predict that the possibility of a complete ban on sales or a complete monopoly is low, it will also make RLX Technology Inc. 's large-scale offline investment face uncertain returns. And it is expected that the follow-up detailed rules of taxation on e-cigarettes will increase from 17% VAT to 56% tobacco tax, and RLX Technology Inc. 's future faces an unpredictable situation.

Recently, another company whose share price has halved is Emmett. On March 25, it was affected by negative factors such as the departure of Chief Financial Officer Zhao Shuanghong and the company's large-scale dividend. Emile's share price fell to 370 yuan from its previous high of 700 yuan. The stock price staged a roller coaster and lost 79.2 billion yuan in market value.

So-young International Inc, who recently released his financial results, also did not escape the fate of nearly halving his market capitalization. In 2020, total revenue increased by 12.4% compared with the same period last year, but spending on marketing, research and development and management expenses increased sharply compared with the same period last year, and So-young International Inc's net profit fell sharply last year.

So-young International Inc's share price fell 16.79% to $10.01after the earnings report. The market capitalization also shrunk to $1.069 billion from a high of $1.862 billion on Feb. 17, 2021.

Angelalign Technology Inc., who has just submitted a prospectus and has not yet been listed, is expected to be dominated by market panic and will not be able to enjoy the high valuation dividends that the other three companies once had. After all, American stock dentist SDC, a unicorn, has also been listed on the market to break.

The bursting of the bubbles of the "new profiteering four" is largely due to the fact that the capital market no longer believes that the very high gross profit margin and market share of new consumer products and services without technology and brand core barriers can be maintained. For example, with competitors such as Huaxi Biology becoming stronger and stronger, hyaluronic acid, which costs only 20 to 30 yuan, cannot always sell for 2000 to 3000 yuan. By the same token, the staggered competition between Angelalign Technology Inc. and Yinshimei, and the price of invisible braces will fall to less than 10,000 yuan in the future with technological progress, and high gross margins will no longer be maintained for a long time.

More importantly, after years of blindfolded running, the user growth of several companies has reached a bottleneck. According to So-young International Inc white paper data, So-young International Inc platform costs as much as 400 yuan per person, in order to maintain the growth of ordinary users and paying users, So-young International Inc also needs a longer period of high marketing investment.

The highlight moment of the "new profiteering four heroes" has passed, and the former demon stocks are also facing the return of value, and the future stories of the four heroes need to be rewritten by themselves.

Edit / isaac

The translation is provided by third-party software.


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