According to the understanding of Gelonghui New Shares, Shanghai Shangmei Cosmetics Co., Ltd. (hereinafter referred to as "Shangmei Group") recently submitted a listing application to the Hong Kong Stock Exchange to be listed on the main board of Hong Kong stocks, with JPMorgan Chase, CICC and CITIC Securities as their joint sponsors.
In 2004, Shanghai Kaka Cosmetics Co., Ltd., formerly known as Shanghai Kaka Cosmetics Co., Ltd., was jointly established by Yao Zhenxiong and Lui Lichun. After several rounds of equity transfer, before the IPO, the controlling shareholder Lu Yixiong directly held 40.96% of the shares, and indirectly held shares through Red Printing Investment, South India Investment, Shanghai Hanshu and Shanghai Shengyan, with a total holding of about 91.26%. In addition, Youngor Investment and Ximei Investment hold 2.31% and 2.12% of the shares respectively.
1
Eat the old Ben
Shangmei Group is a domestic cosmetics company, and its well-known brands include Han Shu, Yiyezi, Red Elephant and so on. According to the Frost & Sullivan report, based on the 2021 consumer survey, the company is the only company with two brands (namely Han Shu and Yiyezi) that ranks in the top ten domestic skin care brands in terms of brand awareness, purchase preferences, popularity, the possibility of recommending the brand and the willingness to buy back; and the red baby elephant is also ranked first in terms of popularity and willingness to buy back.
In 2019, 2020 and the first three quarters of 2021, Shangmei Group achieved revenue of 2.874 billion yuan, 3.382 billion yuan and 2.596 billion yuan respectively, and adjusted profits of 114 million yuan, 265 million yuan and 285 million yuan respectively, showing a good growth trend.
During the period, gross margin increased from 60.9% in 2019 to 64.7% in 2020 and further increased to 65.2% in the first three quarters of 2021.
By product, the three brands of Han Shu, Yiyezi and Red Baby Elephant contributed to the company's main source of revenue, especially Han Shu, which focused on the changing anti-aging needs of Asian women of all ages, and the proportion of revenue rose to 43.8% in the first three quarters of 2021.
It is worth noting that the Hanshu brand was launched in 2003, and the leaf and red baby elephant were launched in 2014 and 2015 respectively, after more than 10 years. From the current revenue situation, Shangmei Group is still supported by old brands, and the scale and proportion of Yiyezi's revenue have declined year by year.
In addition to these three brands, the company has also launched sub-brands such as High Muscle Energy, Amyel and Jifang since 2019, positioning themselves as public sensitive skin skin care, professional progestin sensitive skin care brands and hair fixing shampoo brands, but the current revenue scale is small.
2
More than 1 billion is spent on marketing every year
In 2019, 2020 and the first three quarters of 2021, the company generated R&D expenditure of 82.9 million yuan, 77.4 million yuan and 71.7 million yuan respectively, accounting for 2.9%, 2.3% and 2.8% of the current revenue, accounting for more than the industry average.
Nevertheless, it is not worth mentioning compared to sales and distribution expenses. During the Reporting Period, the Company incurred sales and distribution expenses of RMB1,325 million, RMB1,536 million and RMB1,054 million, representing 46.1%, 45.4% and 43.1% of the revenue respectively. Among them, the expenditure on marketing and promotion accounted for the majority, 803 million, 1.070 billion and 735 million respectively.
At present, the company's retail and distribution network covers multiple online and offline channels. In addition to long-term cooperation with major e-commerce platforms such as Tmall and JD.com, online channels have also established live broadcast teams on head platforms such as Douyin and Kuaishou, and as of the first three months of 2021, the company ranks among the top three domestic brand enterprises in terms of online retail sales.
Offline retail is mainly through cooperation with well-known supermarkets and cosmetics chains, of which Watsons is its key partner, selling the company's products in more than 4,000 stores. In addition, as of the first three quarters of 2021, the company cooperated with 557 offline distributors.
3
brief summary
Overall, the operating conditions of Shangmei Group are OK, and the revenue and profit show a good growth trend, but the main source of contribution income comes from the brands created in the early years, especially the Han Shu brand, which is much higher than the new brand in terms of revenue scale and influence, on the one hand, this makes the company fall into the situation of eating the old, on the other hand, it also shows that the company lacks homework in product promotion and promotion. It is worth noting that the company's annual sales and distribution expenditure exceeds 1 billion, which is much higher than the investment in research and development, which is also slightly weaker in its new product relay, and the company still needs to strengthen product research and development investment in the future.