Matters:
The company announced the performance of its brands during the 618 promotion period. Among them, Kefu Mei's online omni-channel full-cycle GMV increased 60% + year-on-year, and Creekin's online omni-channel full-cycle GMV increased 100% + year over year.
Guoxin Retail's view: Relying on years of accumulation on the collagen circuit to enable rapid industrialization development, the company has now established a deep recombinant collagen brand mentality. The continued outstanding performance of the 618 promotion also confirms the company's strong brand potential. The continuous iteration and release of subsequent new products is also expected to drive steady growth in the cosmetics business. The approval of future medical and aesthetic injectable products will also contribute a new engine to the company's medium- to long-term growth. Considering the excellent performance of the company's 618 promotion and the continuous iteration of new products driving up the company's annual performance, we raised the company's net profit from 2024-2026 to 18.37/23.18/27.78 (original value was 17.47/22.45/26.90) billion yuan, corresponding PE was 24/19/16 times, maintaining the “better than market” rating.
Commentary:
The company's 618 promotion record is excellent, and the competitiveness of large single products continues to be consolidated. According to the 618 war report published on the company's official WeChat account, the main brand Kefumei continued to perform excellently, and the online omni-channel full-cycle GMV increased 60% + over the same period last year.
By channel, Tmall, Douyin, JD, and Vipshop achieved a year-on-year growth rate of 50% +/ 65% +/ 100% +/ 200% +, respectively, and ranked in the top 3 domestic cosmetics on Tmall and the top 5 in the Douyin skincare domestic products list.
By product, classic products continue to gain strength, and iterations of new products reinforce the brand's leading collagen mentality. Recombinant collagen dressings are still the core cornerstone of Kefumei, continuing to rank as the TOP1 in the Tmall wound dressing category, consolidating the deep collagen brand mentality for Kefumei; the core single collagen stick continued to perform well, ranking first in the Tmall facial essence category and Douyin liquid essence in the domestic product category; since the launch at the end of March, the new product Focus Cream has deeply reached young consumers with its effects on subhealthy skin such as fatigue and dullness. TOP1, Douyin Collagen Cream Popularity Top 1.
Clekin achieved rapid growth under a low base, and the 618 online omni-channel full-cycle GMV increased 100% + year over year. By channel, Tmall, Douyin, JD, and Vipshop achieved year-on-year growth rates of 70% +/300+%/ 200% +/ 170% +, respectively. By product, the classic single products, Collagen Daifang, continued to perform steadily. GMV increased 100% +/ 60% + year-on-year during the 618 period, while the film eye cream launched at the end of last year and the collagen cream launched in March of this year continued to gain strength. Among them, film cream ranked in the top 4 of the Tmall firming cream new product list, and collagen eye cream ranked TOP1 in the Douyin collagen eye cream popularity list. In the future, film eye cream is in the top 1 of the Douyin collagen eye cream popularity list. The product became the brand's second growth curve.
At the same time, we have noticed differences between the data standards of the previous third party and the company's official campaign report. According to our understanding, there may be the following 2 main reasons: 1) Third parties mainly track skincare categories when performing data statistics, but Fumei includes two major categories. Relatively speaking, the growth rate of skincare products is higher than the growth rate of dressings, resulting in differences between actual war reports and previous third-party statistics; 2) The company did not participate in the shopping credit campaign on the Tmall channel this year, and participation in the same period last year led to a higher base impact. Overall, based on the bonus period of the collagen circuit and the company's first-mover advantage as a leader, the company's 618 promotion performance continued to be impressive this year. At the same time, the company's overall return rate remained stable this year, which is expected to consolidate the company's mid-report performance.
Investment advice
Relying on years of accumulation on the collagen circuit to enable rapid industrialization development, the company has now established a deep recombinant collagen brand mentality. The continued outstanding performance of the 618 promotion also confirms the company's strong brand potential. The continued release of subsequent new products is also expected to drive steady growth in the cosmetics business. The approval of future medical and aesthetic injectable products will also contribute a new engine to the company's medium- to long-term growth. Considering the excellent performance of the company's 618 promotion, which led to an increase in the company's annual performance, we raised the company's 2024-2026 net profit to 18.37/23.18/27.78 yuan (original value was 17.47/22.45/26.90) billion yuan, corresponding to PE 24/19/16 times, maintaining the “better than market” rating.
Risk warning
Macro environmental risks, new product launches fall short of expectations, and industry competition intensifies.