Recently, major domestic e-commerce platforms have all started their 2024 "Singles' Day" sales. Compared to the past, the starting time of major e-commerce platforms' activities has been further advanced this year. Taking the earliest opening activity on the Douyin platform as an example, its "Singles' Day" event lasted for as long as 33 days. The title of "the longest Singles' Day in history" was once again refreshed in 2024.
Looking at the marketing strategies of platforms such as Tmall, Taobao, JD.com, PDD Holdings, and others, compared to last year's "lowest price" strategy, this year's Singles' Day is more focused on relieving burdens for merchants, including reducing service fees, loosening refund constraints, expedited payments, subsidizing shipping costs, and other different means. Thanks to the policy incentives for replacing old appliances with new ones, home appliance sales this year are expected to be the main highlight of the shopping festival.
With the introduction of a package of financial support, real estate loosening, and consumer support policies in China, the domestic consumption environment has improved since the National Day, coupled with the further extension of consumer cycles, the 2024 Singles' Day is expected to exceed expectations in terms of the number of participants and consumption scale. As an important revenue segment every Singles' Day, cosmetics may deliver better than expected results in the next month, driving related consumer companies to welcome a "double-click" in market cap.
Extending the event period stimulates consumption, intensifying price competition in the beauty market.
The main feature of this round of Singles' Day is the long duration. Major platforms are locking in consumers and stimulating major promotional consumption by starting early and extending the activity period. For brands, especially cosmetic brands, the proportion of Singles' Day sales in Q4 has become higher, making the performance on Singles' Day more important for Q4 revenue compared to previous years. Therefore, whether domestic or international cosmetic brands, their stocking time has been advanced, and the enthusiasm for participating in the event is also high.
From publicly available information, in the 2024 presale Super Beauty Festival for Singles' Day, domestic cosmetic public companies like Proya Cosmetics, Juzi Biotechnology, Beta Nano, Chicmax, Lushang Freda Pharmaceutical, Bloomage Biotechnology Corporation Limited, Shanghai Jahwa United, and Guangdong Marubi Biotechnology have product links cooperations. Beauty influencers such as Li Jiaqi and Sinba have started their "work" early.
For example, on the Taobao platform, the beauty area of the Taobao platform is still one of the most popular sections. In the first ten minutes of the Singles' Day sales, 13 brands including Proya, L'Oreal, Xiu Li Ke successively surpassed one billion in sales, with 20 brands surpassing one billion within the first 30 minutes. Among them, in the first 30 minutes, 20 beauty brands on Tmall exceeded one billion in sales, with 8 individual products exceeding one billion. In terms of products, the Collagen Moisturizing Baton became the first product to exceed one billion in sales, selling over 0.2 million units in 10 minutes.
In terms of activities and discounts, major e-commerce platforms have reduced their profits from playing with the strategy of 'lowest price', so most major activities are mainly funded by brands. Brands mainly increase the value of gifts to indirectly reduce prices, including giving equivalent/excessive samples to attract users, especially domestic brands with relatively greater discounts. From the brand's perspective, the generosity and participation of beauty brands in providing gifts have differentiated, and the final prices are basically on par with the 2023 Singles' Day promotions.
Although the overall price competition within the industry remains fierce between domestic brands in terms of publicity and pricing, the advantage of local marketing and operations of domestic brands is expected to be better leveraged in the context of more intense promotional competition. In the medium to long term, the beauty industry, especially domestic brands, demonstrated strong growth resilience in the first half of this year and has the support for sustained growth under the trend of domestic brand substitution.
Overall, due to the slower-than-expected recovery of domestic consumption in the first half of the year, the promotional activities in this Q4 will be of significant importance to the cosmetic industry. The outstanding performance data may determine the annual performance, thus related sectors are expected to catalyze and bring bullish effects to related companies.
Consumer recovery boosts the upstream 'selling shovel' businesses, highlighting the valuation advantage of Global New Mat.
Thanks to the widespread use of pearl materials, a raw material widely used in the cosmetics industry, Global New Mat (06616) may become a potential beneficiary in this round of the Singles' Day consumer market trend. It is reported that the company is a leading enterprise in the subdivision of new materials - the pearl materials field; its mastery of the full set of synthetic mica processes gives it a strong voice in the high-end pearl material product domain. The company officially listed on the Hong Kong Stock Exchange in 2021 and subsequently on the Stock Connect the following year.
Pearlescent materials are pigments that exhibit different colors through the optical effect of surface metal oxide film reflection and interference. Cosmetics are the main application area for mid-to-high-end pearlescent materials, commonly seen in pearlescent powders, flakes, pastes, and are common materials in cosmetics such as lipsticks, eyeshadows, nail polishes, powders, eyebrow pencils, and moisturizers.
Due to the involvement of cosmetics in human health and safety, the management regulations for raw materials are strict, and the requirements for quality are higher. The pearlescent material made of high-quality synthetic mica has advantages such as non-toxicity, good weather resistance, stable physical and chemical properties, and high safety as well as skin affinity. It can provide cosmetics with delicate and natural luster effects, effectively enhance the aesthetics of cosmetics, and the unique product color can create a good visual effect, thereby attracting consumers to make purchases.
After experiencing the era of 'cost-effectiveness' in 2023, the weight of product quality in the brand's growth in the beauty market has been enhanced. The focus has shifted from heavy marketing to more emphasis on research and innovation. This also means that the importance of formulas and raw materials for beauty products will continue to increase, and high-end raw material suppliers will seize opportunities as domestic beauty brands undergo transformation.
The synthetic mica fused crystal smart control system independently developed by Global New Mat can effectively guarantee the purity of synthetic mica, while technologies such as wet grading and wet synthesis can reduce costs and increase efficiency. With the support of multiple technologies, the synthetic mica powder produced by the company already meets the standards set by the Japanese Department of Medicine for non-pharmaceutical ingredients and can be safely used in cosmetics.
Furthermore, from a financial perspective, Global New Mat achieved revenue of 0.775 billion yuan in the first half of 2024, a year-on-year increase of approximately 66.8%; gross profit reached 0.388 billion yuan, a year-on-year increase of 72.8%. EBITDA earnings were 0.267 billion yuan, representing a 63.1% year-on-year growth. The increasing proportion of high-end products is the main reason for the company's outstanding performance. As of the first half of 2024, Global New Mat has a total of 154 patents and 73 registered trademarks. The company currently offers over 2,100 types of pearlescent material products, with over 50% being mid-to-high-end products.
According to Frost & Sullivan data, in terms of revenue, Global New Mat ranked first domestically and fourth globally in the pearlescent material market in 2022. After completing the acquisition of CQV in 2023, its global market share for pearlescent materials climbed to third place, further increasing its market share. In July 2024, the company announced its acquisition plan for Germany's Merck surface performance materials business, a leading enterprise in the pearlescent material industry. If the acquisition proceeds smoothly, it will further solidify the company's position in the industry.
As of October 15th, Global New Mat's valuation in the Hong Kong stock market is 21.29 times earnings, positioning it at the 21st percentile. Compared to historical data, it is at an absolute low level. At the same time, the actual controlling shareholder, Suer Tian, continuously increased his holdings of the company's stocks by 5.275 million shares between October 2nd and 10th, spending over 22 million yuan. This reflects the shareholders' confidence in the company's prospects. With the recent market adjustments and institutional fund rotation, its investment value is starting to become attractive.
In conclusion,
As consumer market confidence rebounds and the atmosphere in the capital markets improves, it provides a price advantage for listed companies with low valuations, and recent shareholder shareholding/company repurchase matters also demonstrate the confidence of high-quality enterprises in their own prospects. The 2024 Singles' Day sales has just begun, giving consumers many opportunities to participate, but for secondary market investors, the duration of the existence of high-quality investment targets may be fleeting.
