Beauty cosmetics grow in differentiation and gain momentum in evolution: summary and prospect of 2021 annual report and 2022 first quarterly report
In 2021, A-share brand beauty enterprises showed high growth and strong consumption resilience as a whole; In 2022Q1, under the influence of local epidemic, the growth and profitability of various companies intensified and differentiated, and Betani/Huaxi/Polaiya performed significantly better than the industry. Looking forward to the whole year of 2022, it is expected that research and development will enhance the product strength, and large single products will consolidate the moat; Digging deep into the channel stock and actively grasping the increment are the common efforts of the industry. Huaxi Bio, Polaiya, Betani, Kos and Jiaheng Jahwa are mainly recommended.
▍ In 2021, six A-share brand beauty companies:
The operating income all achieved positive growth, with the total operating income of+33.1% year-on-year, and the growth rate of Huaxi biological functional skin care products ranked first, with+146.6%, showing high growth and strong consumption resilience as a whole; The total attributable net profit was+8.8% year-on-year, and Bettini’s growth rate was the highest, at+58.8%; The gross profit rate is 58.7% ~ 79.0%, and the gross profit rate of Zhonghua Xi biological skin care products ranks first; The overall sales expense rate is on the rise, among which the promotion expense accounts for the largest proportion in the expense breakdown, and the promotion expense rates of Huaxi/Polaiya/Betani are 36.3%/36.1%/31.1% respectively; The R&D expense ratio is 1.7% ~ 5.7%, and Huaxi’s R&D expense ratio far exceeds the industry average. The net interest rates of Betaine/Huaxi (overall)/Marumi/Polaiya are 21.5%/15.7%/13.5%/12.0% respectively. 2022Q1: The income, profit growth rate and profitability differentiation of brand companies have increased, and Betani/Huaxi/Polaiya performed significantly better than the industry.
▍ China beauty market: low penetration rate, low concentration, large room for single brand growth, multi-brand and collectivization are still in the initial stage.
According to Euromonitor data, in 2021, the per capita consumption of beauty care in China is about 405 yuan, and that in the United States/South Korea/Japan/Europe is about 1,995/1,630/1,597/1,248 yuan respectively; In 2021, the retail sales of beauty cosmetics and personal care in China will be about 33.3%, while those in Korea/the United States/Japan/Western Europe will be about 49.8%/41.1%/36.8%/35.8% respectively. In 2021, the market sales of L ‘Oré al Group, Estee Lauder Group and Shiseido Group in China were about 69.8 billion yuan, 30.8 billion yuan and 19.9 billion yuan respectively, while the leading enterprises in China generally did not exceed the terminal scale of 10 billion yuan. From the perspective of single brand, in 2021, the retail sales of L ‘Oré al Paris, Lancome and Estee Lauder in China market will be 23.4 billion yuan, 17.8 billion yuan and 15.8 billion yuan respectively, while the multi-brand and collectivization of China’s beauty products are generally still in the initial stage; In the next five years, China beauty brands will go to sea as the general trend; In 2021, the global sales of L ‘Oré al Group and Estee Lauder Group were 349.8 billion yuan and 126.8 billion yuan respectively. The global sales of single brand L ‘Oré al Paris was 92.1 billion yuan, Lancome was 43.4 billion yuan and Estee Lauder was 35.9 billion yuan.
▍ China Beauty Evolution and Trend: R&D enhances product strength, and large single products tamp the moat; Dig deep into the channel stock and actively grasp the increment.
At present, the consumption upgrade has temporarily encountered a phased bottleneck, consumers are more rational in purchasing beauty products, and product strength plays a more important role in purchasing decisions; After several years of accumulation, the product strength of local brands has generally increased. Huaxi Bio and Betani have driven product innovation with raw material innovation in their respective tracks, gradually forming China beauty features and consumer minds; Huaxi follows the path of "science → technology → product → brand", and it is expected to maintain the R&D expenditure rate of about 6% in the future, or create its own "Bose Cause" and "Pitera" of China beauty brand; Bettini strengthens the geographical "franchise value" based on the characteristic plants of Yunnan alpine-it is difficult to imitate, and it is even more impossible to copy. Polaiya’s big single product strategy has entered the harvest period, and Betani Winona, Huaxi Runbaiyan /BM Muscle Activity and other big single products have achieved remarkable results in promoting sales, raising profits and fixing stickiness. In 2021, the proportion of online income is: Proya 85% > Betani 82% > Huaxi Bio * 78% > Marubi 60% > shanghai jahwa 42%. As far as Amoy Department is concerned, the volume of local brands is still far lower than that of international head brands. Digging deep into Amoy Department and grasping emerging channels such as Tik Tok are the common paths for local leaders to continue to increase their share.
▍ Risk factors:
Under the repeated local epidemic, residents’ willingness to buy declined, affecting optional consumption such as beauty; International brands make great efforts to promote sales through multiple channels, eroding the share of local brands; New product sales failed to meet expectations; Traffic, product promotion, etc. erode performance.
▍ Investment strategy.
Looking forward to the whole year of 2022, the local beauty industry chain in China will continue to evolve and move forward: although the growth rate of the industry has slowed down, the growth rate is still in the forefront of all kinds of consumer goods, and there is a broad space for a long time.
Main line 1: Relying on R&D and track product strength, strong operational capability, emerging channels and other factors, the differentiation will be further enhanced, and multi-brand and collectivization will also enter a new stage. Huaxi Bio (functional skin care products maintain high growth and profitability tends to improve), Polaiya (big single product strategy enters the harvest period, and the second brand Caitang grows at a high speed) and Betaine (main brand Winona has high barriers and is a new brand. It is suggested to pay attention to the development of Marubi and Lushang.
Main line 2: With the implementation of the new regulations, the beauty supply chain has greatly improved the industry threshold, and the concentration trend is upward. It is mainly recommended that Kesi shares, the beneficiary of the new regulations at the raw material end, and Jiaheng Jahwa, the beneficiary of the improvement of the competitive pattern.
This article comes from financial circles.
