Report guide

Asian sanitary products leader, paper product structure optimization, personal care business volume, e-commerce channels to maintain a high growth, broad room for commercial development, sufficient driving force for medium-term growth.

Main points of investment

The leader of sanitary products in Asia, driving the growth of many kinds of products together.

Vinda International was founded in 2013 and listed in Hong Kong in 2007. From 1985 to 2016, it acquired and integrated the Asia-Pacific business of SCA, the global leader in sanitary products, covering four categories: household paper, baby care, women's care and adult incontinence products. It has eight well-known brands such as Depot, Vinda and Vail, and is one of the leading household paper in Asia. Up to now, the company has 14 production bases with an annual production capacity of 1.25 million tons.

From 2016 to 2020, the company's revenue increased from HK $12.056 billion to HK $16.512 billion, with CAGR of 8.18%; net profit increased from HK $653 million to HK $1.874 billion, with CAGR of 30.24%.

Industry: focus on high-end, diversified competition pattern

(1) Household paper: the structure tends to be high-end, and the pattern is expected to be optimized. In terms of subdivision, the performance of high-end paper products is beautiful, and Vida International and Zhongshunjie, which focus on middle and high-end paper products, outperform their competitors in the market share; under the high pulp price, the clearing of small and medium-sized production capacity is accelerated, and the pattern is expected to focus on the leaders with wood pulp stock and strong financial strength. (2) individual care: the market of female sanitary products is mature, the pattern is relatively scattered, and the products tend to subdivide the functional high-end products; baby diapers focus on product upgrading and channel change (e-commerce, mother and infant growth rate is faster); adult diapers are still in the market introduction period, the competition pattern is scattered, and the market is dominated by cost-effective products.

The structure of household paper is optimized, and the personal care business can be expected in the future.

(1) Household paper: the company focuses on developing high-end paper products (from 13.1% in 17 years to 30.6% in 20 years). Depot has beautiful growth, three-dimensional beauty / wipes volume, and smooth overseas business development, which strongly supports the rise in income and profits of living paper. (2) Naturalization of Libresse Vale is progressing smoothly, online channels are beautiful, offline shared tissue channels are expected to maintain rapid growth. Baby diaper Drypers is the number one brand in Malaysia, with steady growth; adult diapers focus on the middle and high end, making up for the gap in domestic middle and high-end products, while the overseas business performance is solid.

The brand image is deeply rooted in the hearts of the people, and the marketing style is different.

(1) the "super tough" brand image is deeply rooted in the hearts of the people, and the multi-brand strategy achieves full coverage of consumer groups. Vader insists on strengthening the brand image with "tenacity" as the core, achieving full coverage of consumer groups and strengthening user stickiness through multi-brands and multi-series. (2) Marketing style overseas quick elimination bibcock. Backed by Essity, the company is the leader of sanitary products with the most overseas genes and style in the industry, using all-star endorsements, innovative marketing of product-effect integration, values output and other means to create marketing style differentiation.

E-commerce channels are outstanding, and there is a broad space for commerce and sales.

(1) the absolute leader of e-commerce, the most leading and meticulous way of playing. The company has the first e-commerce market share for many years in a row, and the volume of online sales far exceeds that of its peers (20 years of Vida, Hengan and Jierou e-commerce income is 5.9 billion Hong Kong dollars, 4.3 billion yuan and 1.9 billion yuan respectively). Vader has firmly established its position as a leader in the industry by means of deep binding of high-quality platforms, new retail, online and offline drainage, and sound member incentive mechanism. (2) the blue sea market for commercial sales is broad, and the development of high-quality customers is smooth. With the upgrading of consumption and the improvement of health standards, the domestic commercial market expanded rapidly, and the market size increased from 6.33 billion yuan to 26.484 billion yuan in 2006-2020 (CAGR is 11.06%, compared with 1.14% in the United States in the same period). In terms of per capita consumption, China and the United States are US $2.50 and US $13.8 per person respectively, and China has broad room for development. Vida's Duokang and Vinda Professional are in the leading position in the industry, among which Dokang has won a large number of high-quality customers relying on high-quality products and one-stop solutions, such as Daxing Airport, Shangri-La Group, etc., and is expected to continue to sell volume in the future.

The current round of anti-cyclical strength is strengthened, and the medium-term growth space is still broad. We think that the current round of Vida's anti-cyclical strength is strengthened. (1) Wood pulp stock is available for June +, effectively locking in cost; price increase of 10-15%; (2) high-end share is significantly increased; profitability is enhanced; (3) high gross margin is supplemented by protective products. In the medium term, Vinda International still has broad room for growth. (1) 70% + high-end share of Standard Jie soft. Vinda's high-end share still has a lot of room for improvement; (2) the domestic health care business relies on high-quality products and marketing bonus is expected to quickly increase profitability; (3) after the landing of the Southeast Asian regional center, overseas business is expected to make efforts again and contribute to incremental performance.

Profit forecast and valuation

The company is a leading company of sanitary products in Asia, with steady development of domestic tissue business and rapid expansion of personal care business; smooth expansion of overseas tissue business and steady development of individual care, and overseas business is expected to develop again after the completion of the Southeast Asian Regional Center. In 21-23, the company's operating income is expected to be HK $199.65, HK $211.75 and HK $22.374 billion, up 20.92%, 6.06% and 5.66% over the same period last year, and its net profit is HK $20.88,23.16 and HK $2.517 billion, up 11.42%, 10.92% and 8.66% respectively over the same period last year. The current market capitalization corresponds to 14.02X/ 12.64X/ 11.64X respectively. Considering the improvement of the company's anti-cyclical strength and smooth growth logic in the medium term, the company will be given a "buy" rating for the first time!

Risk hint

The increase in pulp price is higher than expected, overseas business development is not as expected, and personal care business development is not as expected.