In the past two years, the popularity of the medical beauty and cosmetics industries has not decreased. In 2021, the medical beauty market generally rose and fell, and the trend of individual stocks in the second half of the year began to diverge, but eventually it still closed sharply: the Flush Medical Beauty Concept Index rose by 40% throughout the year. The heat of the cosmetics industry is mainly concentrated in 2020, and the overall cooling down in 2021.
So, can the beauty industry still pay attention, what is the future development of the industry, and how should investors choose good companies? On January 18, Zhang Junhao, chief analyst of the commercial and retail industry of Guosen Securities, made a micro-interview with Securities Times E Company, sharing the investment opportunities and analysis logic in this field for investors.
Zhang Junhao believes that the beauty industry has the attribute of growth and is also affected by the macro environment. Since the second half of last year, the beauty industry has followed the trend of the consumer environment, and the growth rate has slowed down. In the future, under the premise that the general trend of consumption upgrading remains unchanged, there is still a long-term development momentum as the market consumption willingness warms up after the epidemic improves. Investors can pay attention to the skin care categories that are relatively more in demand in the sub-industry, especially the efficacy skin care track. In the selection of enterprises, we can focus on the head enterprises with stronger product research and development capabilities and channel refinement marketing capabilities.
Long-term optimism about the high prosperity of medical beauty
In the first half of last year, the entire medical aesthetic sector came out of a magnificent market, which reflected the market's optimism about the long-term prosperity of the fundamentals of the entire medical aesthetic industry.
Zhang Junhao believes that the medical aesthetic industry is still in the early stage of demand outbreak. On the one hand, at this stage, the entire domestic industry relative to the mature foreign market, the penetration rate still has a huge room for improvement; on the other hand, the current domestic medical beauty market consumers are mostly 20 to 35 years old young consumers, with the growth of these young consumers, customer unit price, consumption frequency will be improved, thus driving the industry's volume and price to rise. Therefore, the future prosperity of the medical aesthetic industry continues to be optimistic.
For the adjustment of the market in the second half of last year, Zhang Junhao believes that the valuation of listed companies is generally at a relatively high level after a wave of sharp rises, and at the same time, the investment sentiment of the sector has been disturbed by the overall fluctuations of the market and the market's concerns about the uncertainty of industry regulatory policies.
Since the beginning of this year, the trend of the medical aesthetic industry has also been relatively flat. Zhang Junhao said that the market situation of the short-term medical aesthetic industry is still affected by the switching of the investment style of the large market, and in the long run, the fundamentals of leading companies are still positive. After the valuation pressure of the sector has been released, under the support of the fundamentals of follow-up enterprises, the annual market is still worth looking forward to.
Zhang Junhao further analyzed that the probability of future plate differentiation is larger. In the long run, the increase in supervision will bring a healthy growth environment to the leading enterprises that comply with the regulations, and the overall competitive landscape of the beneficiary industries will continue to be optimized. Therefore, Zhang Junhao suggested paying attention to high-quality leading companies, especially some enterprises with long-term operating performance support.
Cosmetics can pay attention to the rising trend of domestic products
The cosmetics sector has been relatively flat in the past year. Zhang Junhao analyzed that the beautiful increase in the cosmetics industry from 2018 to 2020 is mainly due to the fact that since the end of 2017, the fundamentals of the entire industry have been supported by the rapid growth achieved under the release of channel dividends. At the same time, since 2017, well-known companies in the industry have also landed on the capital market, driving the entire sector upward. Since the second half of 2021, the overall market in the cosmetics sector has been flat, which is also related to the fundamental trend of the industry to a certain extent.
So after a period of sideways trading, has the industry ushered in a good layout opportunity? Zhang Junhao believes that the investment opportunities in the industry this year will still focus on the head enterprises. Since last year, the differentiation of the entire sector has become more and more intense, mainly for two reasons: on the one hand, the rise in traffic costs has increased the operating costs of small and medium-sized enterprises; on the other hand, the introduction of industry regulatory policies has cleared out many small and medium-sized brands with weak product strength, and the head brands will benefit from the optimization of the competitive landscape under this trend.
From the perspective of the entire industry, Zhang Junhao believes that the overall growth rate of the cosmetics industry may slow down with the improvement of the base in the next year, but the competition pattern and market concentration of the entire industry will be optimized and improved. From this point of view, it is more necessary to pay attention to the leading companies that subdivide the track.
The rise of domestic products can be seen everywhere in various consumer goods industries, and the investment results of domestic cosmetic brands in increasing product research and development and improving production technology have begun to appear.
Zhang Junhao believes that the improvement of its own research and development strength is superimposed on the acceptance of young consumers, and domestic cosmetics are becoming more and more popular in the market. Among them, the rise trend of domestic products with efficacy strength in the field of skin care is more obvious, and the market share is accelerating; and some brands in the makeup track have also achieved better growth than the market through the deep cultivation and dissemination of the concept of national tide and national style culture.
Barriers look at product development and channel marketing
Zhang Junhao said that from the perspective of enterprises, investors can pay attention to head enterprises with core competitiveness and sufficient long-term development potential. Specifically, the basic research and development capabilities of products and refined channel marketing capabilities are the core competitive barriers of enterprises.
The business model of most enterprises in the cosmetics industry is to C, so the channel operation of the C-end is very important for enterprises. Especially in the current situation where traffic dividends are scattered and traffic costs are rapidly increasing, how to carry out refined traffic delivery is a problem that the entire industry needs to solve, and this also requires enterprises to make appropriate adjustments in organizational structure.
In addition, since the introduction of a series of cosmetics regulatory regulations such as efficacy evaluation and raw material filing since last year, the cosmetics industry has paid more and more attention to product strength, and has also put forward higher requirements for product research and development of enterprises. On the one hand, enterprises are paying more and more attention to shaping differentiated competitiveness through exclusive formulation and raw material development; on the other hand, policy supervision is also forcing enterprises to improve their strength in research and development, and the barriers to entry in the future industry will become higher and higher.
Product research and development and channel marketing are also the competitive barriers for the supply side of upstream medical aesthetic products. This is because: First of all, enterprises need to have a strong product line research and development strength, in order to be able to successfully obtain the approval to enter the market; at the same time, after the enterprise has a product to enter the market, it also needs to bind high-quality medical aesthetic institutions and obtain consumer recognition through good channel marketing.
For medical aesthetic downstream hospital institutions, the core barrier is to obtain compliance resources and refined services. In the future, in the process of continuous compliance, medical aesthetic institutions will be urged to pay more attention to the accumulation of high-quality compliant medical service resources, and achieve word-of-mouth dissemination through refined service capabilities.
For detailed interview content, please click: #e company micro-interview # Guosen Securities Zhang Junhao: Beauty Industry Investment Outlook
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