The company publishes annual reports and quarterly reports

The company's 24Q1 revenue was 400 million yuan, an increase of 5%; the amount due to the mother of 0.4 billion was increased 16%; after deducting the sum of 0.3 billion yuan, the same increase of -0.4%; the revenue of 23A was 1.4 billion, the same increase of 5%, and after deducting non-110 million, the same increase of 2%; of these, the revenue of 23Q4 was 400 million, up 17%.

By the end of 2023, the offline retail sales market share of Cold Sour Ling toothpaste had risen to 8.04%, ranking fourth in the industry. The offline retail sales market share of Cold Sour Toothbrush bucked the trend and increased to 5.29%, ranking fourth in the industry.

A high-quality development model to improve quality and efficiency has been fully launched online. The profitability of central e-commerce continues to increase, and the share of self-operated e-commerce businesses has increased; new retail has grown rapidly and has become the leading brand in the industry.

Focusing on the new oral health concept of “one brush, two passes, three strokes”, the company vigorously expands new dental categories such as mouthwash, dental floss, electric toothbrush, and dental irrigator to provide the public with overall oral health and beauty solutions; vigorously expands emerging channels, new retail channels and e-commerce businesses, continues to cultivate distribution channels, optimize the intensive cultivation of KA channels, and help achieve sustainable growth in sales revenue.

Looking at revenue by product in 23 years, adult toothpaste revenue was 1.1 billion, accounting for 78%, an increase of 2%; adult toothbrushes accounted for 11%; children's toothpaste was 0.7 billion, up 0.6%; children's toothbrushes were 0.3 billion, the same increase was 21%, and electric toothbrushes were up 129%; and dental care and eye care were 0.3 billion, accounting for 2% of the total, an increase of 48%.

By sales model, distribution was 1 billion, with a gross profit margin of 42%, an increase of 1.4 pct; e-commerce of 300 million, an increase of 14%, a gross profit margin of 46%, and an increase of 10 pcts.

The 24Q1 company's gross profit margin was 48%, an increase of about 7 pct; the net profit margin was 10%, an increase of about 1 pct.

Multi-brand matrix layout to meet differentiated needs

The company implements a multi-brand, multi-category and multi-variety development strategy, develops a multi-level brand matrix with personalized, differentiated and accurate brand positioning, collaborates and complements each other, and enhances brand market share and user coverage.

Currently, the company has the core brands “Dengkang” and “Cold Acid”, as well as the high-end professional oral care brand “Medical Research”, the children's oral care brand “Bellerock”, and the high-end infant oral care brand “Sprout”, forming four major product matrices, including basic adult oral care products, basic children's oral care products, electric oral care products, dental care and beauty care products, to provide consumers of all ages with specialized and personalized high-quality oral care products.

Three-dimensional marketing network to achieve broad and in-depth distribution

The company has a well-structured and comprehensive sales network system. According to the channel operation policy of “relying on customers, moving the business forward, reducing focus, strengthening distribution, and serving the market”, we have achieved coverage of hundreds of thousands of retail terminals through distributors distributed in 31 provinces, autonomous regions, municipalities directly under the Central Government, and more than 2,000 districts/counties across the country.

Among them, especially for the largest county and township market, the company uses a unique county development model to build Dengkang's third- and fourth-tier channel barriers to ensure that the company can continue to reap the dividends of China's urbanization development in the future.

Efficient channel operation model to promote multi-channel collaborative development

The company formed a multi-channel operation model for efficient collaborative development, forming a good trend of online and offline multi-channel collaborative development, thus better satisfying the changing shopping habits of consumers from “to the store” to “to the store+to the home”, and achieved the accumulation of channel provider and consumer data assets through full-link digital management.

The company formed a two-level channel management system through distributors and built a county development and operation model; established a professional retail management model in the KA channel, combined with the development of new retail to form an integrated online and offline marketing channel operation system; in e-commerce channels, it used the two major platforms of central e-commerce and interest e-commerce to build an e-commerce product matrix guided by “top-level design, strategic development, and fine implementation”. Through refined operation and deep integration of platform resources, user asset pool accumulation, accurate C-end user operation, and effective connection of “people to the warehouse” are achieved through user accumulation and marketing transformation, forming the company's second growth curve and boosting new sales and profit growth.

Adjust profit forecasts to maintain “gain” rating

In 2023, the company improved its product structure in three areas: diversification of product categories, diversification of product functions, and improvement of product value. (1) Continuously enhance product value and enhance brand profitability. In 2023, the company met user needs. Driven by both technology and marketing, product innovation was recognized by more users. The company strengthened its efforts and promotion of high-end products, driving the company's profitability growth; (2) In addition to toothpaste and toothbrush categories, the company continued to cultivate various categories such as electric toothbrushes and mouthwash to provide users with richer oral care choices. The company provided users with comprehensive oral care solutions, which helped improve market competitiveness. Considering that the offline retail market is still growing weakly and adjusting profit forecasts, we expect the company to return to the mother of 1.6/1.9/220 million yuan in 24-26 years (the value was 1.9/220 million yuan respectively 24-25 years ago), EPS was 0.93/1.10/1.30 yuan/share, respectively, and the corresponding PE was 26/22/19x, respectively.

Risk warning: increased market competition; fluctuating raw material prices; R&D and new product development; accounts receivable management risks, etc.