Shanghai Jahwa (600315) 2018 Annual Report Review: 2018 Stable Ending 2019 Fully Awakens Herborist, Looking Forward to Brand New Life

Shanghai Jahwa (600315) 2018 Annual Report Review: 2018 Stable Ending 2019 Fully Awakens Herborist, Looking Forward to Brand New Life

18 years of income 10.

01%, of which the growth rate of Q4 has been improved. The company released the 2018 annual report and achieved 71 operating income.

38 ‰, gaining 10 in ten years.

01%, deducting non-net profit 4.

5.7 billion, an increase of 37 previously.

82%, net profit attributable to mother 5.

40 ppm, an increase of 38 in ten years.

63%, EPS0.

81 yuan, proposed to send 10 to 2.

5 yuan (including tax).

The company’s actual income and net profit growth rate in 2018 is lower than the 2018 fair incentive target (the company’s 2018 income incentive first period exercise performance is 2018 revenue growth rate not less than 23% or 2018?
19 years revenue growth rate is not less than 54%, and 2018 net profit growth rate is not less than 41% or 2018?
19-year net profit growth rate is not less than 92%).

18Q1-Q4 revenue increased by 10 respectively.

33%, 8.

24%, 9.

95%, 11.

66%, net profit attributable to mothers increased by 35.

92%, 45.

73%, 31.

68%, 42.


Among them, the fastest revenue growth in 18Q2 was mainly replaced by Vipshop channel dealers. Sales of Herborist and Gough were affected and special channel adjustments were made. However, government subsidies related to the replacement of new factories on the net profit side caused a higher growth rate.The double-digit growth shows that the influence of Vipshop’s dealer differences has gradually disappeared. At the same time, it has changed the sales of popular online celebrity products that sell beautifully and cross-border cooperation on Double Eleven E-commerce (such as the milk sugar flavor introduced by Meijiajing and Great White RabbitLipstick).

Herborist’s revenue declined slightly, Gough resumed a slight positive growth, and other brands continued to perform beautifully. In terms of brands, Herborist’s 2018 revenue and income declined slightly, and Liushen, US and Canada continued to maintain double-digit growth.
3 Revenue decreased slightly, and sales in 18Q4 helped to achieve positive growth in the next year. Qichu, Yuze, Jia’an and other revenue growth rates were above 40%.

Cayman A2, Ltd (the main brand of British infant and child feeding supplies Tang Meixing) was wholly-owned by the company at the end of 2016, and achieved revenue of 16 in 2018.

33 ppm, an increase of 12 in ten years.

85%, net profit 7528.

09 million yuan, an increase of 103 in ten years.

08%, continue to attach importance to exceeding its performance commitment (2018 net profit commitment is 2555.

99 million yuan).

Excluding the influence of Cayman A2, Ltd, the company’s own brand grew endogenously9.

20%, 15 before 2017.

The growth rate of 85% has improved, mainly due to Herborist, which was dragged down by Gough.

In terms of categories, the income of beauty skin care, personal care and home care increased by 3 respectively.

41%, 12.

27%, 41.

18%, of which the proportion of beauty skin care fell 2.
07PCT to 33.

03%, the proportion of personal care increased by 1.

35PCT to 63.
07%, the proportion of home care increased by 0.

72PCT to 3.


In terms of different channels, we estimate that the company’s online and offline revenues are expected to grow by about 38% and 3% in 2018, respectively. The e-commerce revenue share will increase by 5PCT to 25%.

The gross profit margin and the expense ratio have both fallen, and the inventory level is still high. The gross profit margin needs to be improved. In 2018, the company’s gross profit margin fell and fell.

14PCT to 62.

79%, which was mainly due to the new annual depreciation cost of about 65 million yuan, the increase in the cost of raw materials and the decrease in gross profit margin of the brand.

Among them, skin care 72.

62% (-4.

50PCT), personal care 58.

58% (-0.

03PCT), Home Care 46.

64% (-5.


By quarter, 18Q1?
4 Gross profit margins were 66.

72% (-5.

64PCT), 62.

41% (-5.

00PCT), 59.

02% (-9.

48PCT), 62.

79% (+4.

67PCT), of which 18Q1?
2 The decrease in gross profit margin was mainly due to the higher growth rate of raw material costs and lower brand profit margins. The decrease in gross profit margin increased in 18Q3, mainly due to the increase in costs in the context of the new plant’s commissioning and reduced capacity utilization (40%).

It is expected that the capacity of the new plant will increase in 2019, while depreciation and production cost sharing will be digested, and the company will strengthen the control of raw material costs, and the gross profit margin is expected to improve;The company’s gross profit margin is expected to show a general downward trend.

Expense ratio: In order to improve the brand competitiveness in recent years, the expansion of marketing has caused the expense ratio to increase rapidly.
During the three years of 2020, the cost rate will decrease by 1 PCT per year.

Short-term downgrade of the expense rate during 20182.

78PCT to 55.

97%, exceeding the company’s Air Force commitments, including sales, management + R & D, and financial expense ratios of -2.

17 / -1.

00 / + 0.


Among them, the largest decrease in sales expense ratio was related to revenue growth and marketing category-related expenses that did not increase significantly; the decrease in management expense ratio was mainly due to the increase in wages and benefits and office expenses.

By quarter, 18Q1?
Expense rates for the four periods were 58.
90% (-4.

43PCT), 57.

71% (+0.

33PCT), 52.

40% (-7.

54PCT), 51.

45% (-5.
05PCT), in general, the company’s cost control indicators for each quarter of 2018.

Other financial indicators: 1) Inventory increased by 16 from the beginning of 18 years.

58% to 8.

US $ 7.5 billion, mainly due to business expansion and channel stocking, reversed inventory turnover.

27, compared to 3 of 17 years.

39 advantages.

2) Accounts receivable decreased by 11 from the early 18th.

16% to 10.

30 trillion, accounts receivable turnover rate 7.

29, earlier 17 years 8.

36 advantages.

3) Investment income is downgraded by 10 every year.

72% to 1.

30 trillion, mainly for the company to pay Cayman A2, Ltd. at the end of 17

The equity income of equity investment institutions is 22 million yuan.

4) Asset impairment losses increased by 23 in ten years.

15% to 60.31 million yuan, mainly due to increased inventory losses.

5) Net cash flow from operating activities increases by 0 per second.

18% to 8.

95 trillion, little change.

In 2018, we continued to implement the development trend of the sixteen characters, continued the good development since 17 years, and ended smoothly in 2015.
In 2016, due to the weakness of terminal retail, the company’s main channel retail sales and the decline in department store channel traffic, the company’s revenue adjusted.

At the end of 2016, the company’s new chairman Zhang Dongfang took office, and reorganized the sixteen-character management policy of “first research and development, brand driving, channel innovation, and supply guarantee”.

In 2017, the previous channel-driven business strategy was changed, highlighting the essence and independence of the brand, strengthening the collaboration / matching between the brand and the channel, and upgrading the product (such as the high-end of Herborist, Liushen, the younger beauty of Canada and Canada, Yuze, and homeSegmentation such as safety, etc.), and it is also close to the young people in terms of marketing. In 2017, the performance of many brands improved, and the total revenue of private brands resumed double-digit growth. Among them, Herborist reduced its revenue twice a year at the end of 2017, achieving more than 15%.Revenue growth, the United States and Canada ended the two-year two-year revenue growth trend, and achieved double-digit growth in 2017.

Entering the company in 2018, the company will continue to develop 16-word development strategies. 1) The product continues to be innovative: Herborist solid essence mask was launched for 10 months, retail sales exceeded 3 million tablets, and watercolor cosmetics products were listed. Herborist Yueyue · Yicai series makeup; Liushen, MeijiajingheAt the beginning of the year, they all successfully crossed the borders and completed the rejuvenation of classic products. Liushen launched a cologne with RIO, and the toffee lipstick launched by Meijiajing and Big White Rabbit was sold out in two seconds on September 20th.Goods brand Guangming Group Moslian brand, support the national lunar exploration project.

2) Continuing the fan economy in marketing and testing the water content marketing: In the fan economy, Liushen reproduces the celebrity effect and customizes UGC (UserGenerated Content) on the Douyin, and has received 16 million likes;Sales broke new highs, and Hu Ke achieved a double harvest of brand awareness and product reputation; Herborist used Li Yifeng to promote the sale of new makeup products, and Weibo spread coverage1.

5.8 billion; U.S. and Canada leveraged Luo Yunxi to promote hand creams and lipsticks, and 20,000 sets of custom gift boxes were sold before.

In terms of content marketing, brands make targeted topic exposure based on different characteristics of Weibo, WeChat, Xiaohongshu, Douyin, and Zhihu, leveraging KOL, deep interaction with consumers, and deeply cultivating word-of-mouth planting platforms.The video social platform attracts traffic, and the knowledge sharing platform creates a professional image. In 2018, driven by word-of-mouth marketing, the brand’s total network exposure was nearly 7 billion times.

Overall, the company’s performance in 2018 was stable, continuing its good trend since 2017.

In 18Q2, Herborist, Gao Fu, etc. were changed by Vipshop dealers. The influence of special channel adjustments has been adjusted, and the influence of 18Q4 has been gradually eliminated. In addition, the company’s performance is generally stable, and its revenue has achieved double-digit growth.
The respective multi-brands continue to maintain the leading divisions in their respective subdivisions. According to the Nielsen National Online Retail Research Database, Liushen ranked first in the toilet water market in 2018 with a total market share of 74.

8%; US and Canadian net accounted for reconstruction in the hand cream market.

8%, ranking first; Gough in the men’s cream market accounted for 7% of the replacement, ranking fourth; Qi Chu in the body wash in the city of 6 implants.
6%, ranked second, with a market share of 13.

6%, ranking second.

In 2019, many brands will continue to make efforts to focus on the development of Herborist. Overweight content marketing will accelerate the brand’s vitality. In 2019, the company will continue to exert efforts on multiple brands, with emphasis on the development of Herborist.

Specifically, at present, the company combs the Herborist segmentation series based on multi-dimensional portraits of the target customer group such as age, identity, life stage, and skin care needs, and divides them into four new products: “new”, “gold”, “mind”, and “extreme”.(See Table 1), there are different strategies in terms of pricing and channels. In terms of promotion, the company plans to reshape the classic Chinese medicine brand image of ancient Chinese herbal medicines through “explosion model creation + resource focus” in 2019. The first half of the year will focus on creating freeze-dried masks.In the second half of the year, we will mainly promote high-end Tai Chi series (such as Tai Chi Sun and Moon Essence, etc.), and at the same time cooperate with content marketing and other concentrated resources to revitalize the Herborist brand.

According to Amoy data, in February 2019, the growth rate of sales revenue of Herborist Tmall flagship store has now turned into positive growth. As a result of the double mutation we have monitored since November 2018, it is recommended to pay attention to the sustainability of Herborist’s performance improvement.

In terms of other brands, 1) Liushen shower gel products continue to be fully upgraded. In 2018, it will sell beautiful fragrance shower gels on online channels to expand into offline channels. 2) US and Canada series of hand cream formulas, packaging and other comprehensive upgrades, cross-border cooperationContinue to advance; 3) Gough continues to maintain the leading model in the field of men’s moisturizing skin care products. In 2019, he will launch an oil control series and launch products such as oil control cleansing milk. 4) At the beginning of the launch of new categories to expand the consumer population.

In addition, continue to play a synergistic role between brands and promote each other in terms of channels, traffic and other resources.

In 2019, the company will continue to focus on content marketing. At present, it has established direct dialogue with the major content marketing platforms (such as Xiaohongshu, Douyin, Zhihu, etc.) to meet the current marketing trend of the cosmetics industry.
We believe that the transformation of the company’s brand power and product power has a stronger competitive advantage in the context of the current content marketing resources being swarmed up, and it is expected that priority will be given to high-quality marketing resources.

Multi-channel adjustment and optimization continue, and online growth is expected to continue to exceed the industry average. Multi-channel development of companies, including offline supermarkets (distribution + direct sales) and department store channels. In recent years, the flow of people in the supermarkets and department stores has declined.Under pressure of growth, CS channels, e-commerce, and mother-baby stores have risen one after another. In the company’s traditional channels such as supermarkets and department stores, it has focused on increasing passenger flow to drive same-store growth, while expanding new channels such as CS, mother-baby stores, and e-commerce.

In terms of the number of channels, the number of company supermarkets and department stores in 2018 was small, and the number of CS and maternal and child stores expanded by double-digit growth.

1) CS channel: The CS channel company mainly develops through the classic series of Gorfu and Herborist positioning. The 2018 classic series is rationalized in the CS channel model, and it is expected to accelerate its development through model replication in 2019.

At the end of 218, the number of CS channels of the company was about 1.

30,000, an increase of 11 in ten years.


2) Mother and baby channel: The mother and baby channel mainly sells Qichu and Tang Meixing products. Among them, Tang Meixing leverages the company’s rich resources to achieve rapid development in the mother and infant channel (such as obtaining a better display position, through Qichu drainage, crossCooperation with Mead Johnson, Abbott and other expansion members), currently Tang Meixing has achieved the second sales in the child king system of China’s largest mother-to-child chain channel, consolidating the company’s competitiveness in this channel.

By the end of 2018, the company had over 5,000 mother and baby stores, an annual increase of 66.


3) E-commerce channels: Since 2017, the company has optimized settings for Jingdong, Tmall Supermarket, Vipshop, Tmall flagship store, etc .: a) In 2017, the company completed the distribution of Jingdong, Tmall Supermarket and other channels from distribution to direct.In 2018, the company’s sales in the Jingdong channel exceeded the overall level of the Jingdong channel, and the performance of Tmall Supermarket exceeded the company’s expectations; b) In 2018, under the background of the overall weak growth of Vipshop, the company continued to actively break through and adjusted Vippin in 18Q4Will dealers, 18Q4 and 19 years 1?
In February, the company’s performance exceeded the overall level of the Vipshop platform; c) In 2019, the company completed the replacement of some Tmall flagship store TPs, from the original passive “traffic operation” to the active “shop operation”, that is, all activities / planning areThe company cooperates with TP, so the content marketing of the flagship store is richer, and the scene interaction is enhanced to promote store sales.

Some series of adjustment effects of the e-commerce channel have already appeared. In 2018, the company’s e-commerce channel GMV increased by over 30%, exceeding the overall e-commerce channel, and its revenue share increased to 25%.

It is expected that the company’s online channel revenue growth rate in 2019 is expected to continue to exceed the overall growth rate of e-commerce channels.

In the future, the company plans to further increase the proportion of e-commerce revenue to 30%, and even 50% in the long run.

In addition, the company actively explores the development trend of the offline channels of Herborist: 1) After years of adjustment, some commercial supermarkets have reduced their area, increased public entertainment activities such as catering, improved product structure, and presented a high-end trend. For this part of the channel, the company plans toInfiltrating Herborist products into the company’s strong commercial and supermarket distribution system; 2) In the mother and baby channel, targeting the same purchase group of Qichu and Herborist, such as young parents, pilot selling Herborist products in the mother and infant channel; 3) inThe CS channel and Diancui series sales model has been streamlined. Its market share in the CS channel has increased by 50%, and it will be promoted and replicated in the future. 4) The company also joined the Ali Beauty smart store project. In 2018, 20 stores tested the smart store.Passenger traffic has increased significantly, and this pilot will continue to expand in the future.

Local cosmetics multi-brand leader, fully reinventing Herborist in 2019, focusing on its performance inflection points. We believe that: 1) Under the leadership of the new chairman, the company adheres to the sixteen-character policy and has generally entered a good development trend. Among them, Herborist is stuck in performance improvement in 2018, Other brands are younger, and the development trend is good under segmentation, and the future trend will continue; 2) Herborist did not perform product renewal for many years before 2016. After the new chairman took office, he completed the preliminary grooming of the brand and supplemented the new product series.New spokespersons, etc., lay the foundation for rebranding. In 2019, the company will focus on Herborist, reorganize the positioning of Herborist, use explosive models, content marketing and other efficient ways to create a star product to awaken the brand impression in consumers ‘hearts.Reshape the image of the ancient Chinese herbal medicine and realize brand rejuvenation. There are also positive adjustments in the channel. For example, change the Tmall flagship store TP merchant. According to Taobao data, the sales revenue of Herborist Tmall flagship store resumed positive growth in February and changed to double digits.It is recommended to continue to pay attention to the sustainability of the improvement of Herborist’s performance; 3) The company’s main gross profit margin受Due to the impact of amortization of production costs of new factories, rising product structure and raw material costs, it is expected that in the future, the new factory will increase its capacity growth and strengthen the control of raw material costs. The company’s gross profit margin in 2019 will generally improve, but in the long term, the company’s low gross profit marginThe brand growth rate is higher, and the overall gross profit margin is expected to decline; 厦门夜网 4) In terms of expense ratio, the company will increase new marketing methods such as content marketing in 2019, while optimizing the marketing expense structure, and the expense ratio is expected to remain stable overall; 5) 2018The company implements a budget incentive plan. The incentive targets include the core management personnel such as the chairman and the secretary.
The compound growth rate of net profit in 2021 is 37%.

The company has multi-brand and multi-channel development, and its multi-brands are excellent. Under the continuous “development first, product innovation” development strategy, multi-brands strive to maintain the leading pattern of subdivided industries. In 2019, the company will fully launch the major beauty brand Herborist.At present, the sales data of its online Tmall flagship store has 南京夜网 improved, and it is recommended to continue to pay attention. The company’s compensation and incentive plan guides high growth. In the future, it plans to lay out high-growth areas such as high-end beauty / skin medicine concept skin care products.

Taking into account the certainty of outbound M & A, and the current needs of the cosmetics industry, and the rapid changes in marketing and brand layout, the company will focus on expanding Herborist in the short term. The focus and effect are still to be reviewed. Is it downgraded in 2019?
EPS in 2020, and add EPS in 2021 to 0.

92, 1.

07, 1.

26 yuan, corresponding to 34 times PE in 19 years, maintaining the “overweight” rating.

Risk warning: weak terminal consumption; Herborist’s marketing effect is less than expected; increased competition for imported products.

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