Summary: The cosmetics market is constantly new every day, and "Future Daily" will look at Chinese phenomena from a global perspective, focusing on the new trends and new operations of "digitalization", "industry-university-research" and "investment and financing" of China's cosmetics industry, as well as new interpretations of them. Our task is to torture the value behind the new and make it work for you.
Author of Future Traces Editorial Department
Hello readers, this is Future Daily. Today we focus on the new trends of two listed companies to provide you with an in-depth interpretation. First, L'Occitane Group released its half-year report for fiscal year 2023, selling 840 million yuan in the Chinese market; second, Zhongrong Printing Group Co., Ltd., a daily chemical packaging material manufacturer, was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange.
Let's start with the first L'Occitane earnings news.
On October 25, L'Occitane released its financial results for the second quarter and first half of the 2023 financial year. According to the financial report, in the second quarter of fiscal 2023 (July-September), the group's net sales were 480 million euros (about 3.461 billion yuan), a year-on-year increase of 16.2% at constant exchange rates; From April to September in the first half of the financial report, net sales reached 900 million euros (about 6.47 billion yuan), a year-on-year increase of 16.1% in constant exchange rates.
According to the main financial data of recent fiscal years, L'Occitane's net sales have maintained a steady growth trend for the rest of the time, except for a significant decline in fiscal 2021.
During the first half of the 2023 financial year, L'Occitane recorded growth in all regions. Among them, the net sales in the Asia-Pacific region were 370 million euros (about 2.66 billion yuan), a year-on-year increase of 1.9%. China remains the largest market in the Asia-Pacific region, accounting for 13% of overall sales in the first half of the fiscal year, reaching 117 million euros (about 843 million yuan).
In the financial report, L'Occitane said that the growth of the Asia-Pacific region is mainly driven by Australia, Malaysia and other countries and regions, and most markets have achieved double-digit growth. This was partially offset by declines in Chinese mainland business.
During this period, all major L'Occitane brands also recorded growth in the first half of the financial year. The main contribution came from L'OCCITANE en Provence, ELEMIS and Sol de Janeiro.
Among them, the high-end skin care brand ELEMIS saw the highest increase, with net sales reaching 105 million euros (about 755 million yuan), a year-on-year increase of 13.1%. L'Acitane said ELELIAMIS' good performance was mainly due to strong growth in the US market and further expansion of its international business. Net sales of L'OCCITANE en Provence were €610 million (approximately RMB4.385 billion), up 3.4% year-on-year, mainly due to the recovery of the travel retail market, which led to the brand's active physical channel development.
In addition, the Sol de Janeiro brand achieved sales of 94.6 million euros (about 680 million yuan) in the first half of the fiscal year. In addition, Grown Alchemist, Erborian and L'OCCITANE au Brésil remained active, while LimeLife and Melvita performed weakly.
According to the financial report, L'Occitane's three main channels also achieved growth in the first half of the financial year. Net wholesale and other sales increased by 50.9% year-on-year, with strong growth in chain wholesalers, international distribution and travel retail. Both retail and visitor sales increased, recording a year-on-year increase of 4.4% despite a decrease of 121 retail outlets. The online channel increased by 2.2% year-on-year, and the Group's online channel accounted for 29.4% of the total sales, or 265 million euros (about 1.905 billion yuan).
Okay, that's the news is, let's see what value it contains.
China has always been an important market for L'Occitane Group. In FY2022, L'Occitane's Chinese mainland sales increased by 24.4% year-on-year to RMB2.2 billion, leading the list with a contribution of 19.4% to overall growth.
However, in the first half of the financial year performance report, the performance of the Chinese market is average. Although L'Occitane did not name the specific reasons for the market decline in its financial report, according to public data, it is not unrelated to the weak beauty consumer market.
In fact, compared with the sales data of the first half of the financial year, it is worth paying more attention to the market competitiveness trend under L'Occitane's current brand matrix.
From the perspective of the major brands L'OCCITANE en Provence, ELEMIS and Sol de Janeiro, each brand has a unique positioning, and the segments they enter are more in line with the overall environmental trend.
According to HSBC Holdings, the number of millionaires in China will more than double in the next five years, and the size of the middle class will increase by nearly half. With the improvement of China's personal income level and consumption power, the market scale of high-end skin care products has also shown a trend of growth year by year. According to forward-looking data analysis, it is estimated that the market size of high-end skin care products in mainland China will reach 105.5 billion yuan in 2021, and by 2026, the market size of high-end skin care products in mainland China is expected to reach 192.5 billion yuan.
In addition to facial skin care, with the diversification and refinement of consumer demand, the body care market has also become a potential track. Forward-looking data also shows that from 2015 to 2019, the market size of mainland care products grew steadily at a growth rate of 7%-8%, and maintained a growth rate of 3.51% after the epidemic in 2020, reaching 13.237 billion US dollars, accounting for 18.08% of the cosmetics market.
The steady growth of the high-end skin care and personal care market proves that L'Occitane en Provence, ELEMIS and Sol de Janeiro still have a lot of room for growth.
It is understood that the brand Sol de Janeiro is a high-end care brand acquired by L'Occitane last year, advocating the concept of cruelty-free and refusing animal testing. With the liberalization of mainland China's policies related to animal testing of imported ordinary cosmetics, Sol de Janeiro is expected to officially enter the Chinese market.
In addition, this year L'Occitane also acquired a majority stake in Australian "pure" skincare brand Grown Alchemist, which may be a major boost to performance growth in the future in the emerging Chinese market for pure beauty.
Next, look at the second piece of information, Zhongrong shares rang the bell to list, and another daily chemical packaging listed company was born.
On October 26, Zhongrong Printing Group Co., Ltd. (hereinafter referred to as "Zhongrong Shares") officially landed on the Growth Enterprise Market of the Shenzhen Stock Exchange with an issue price of 26.28 yuan per share and a total market value of about 5.021 billion yuan.
As of today's close, Zhongrong shares fell by 6.66% to 24.53 yuan per share, with a total market value of 4.737 billion yuan.
According to the prospectus, Zhongrong Co., Ltd. was founded in 1990 and is one of the largest packaging and printing enterprises in China, focusing on paper printing and packaging in cosmetics, oral care, personal and home care, food and other fields. It has established cooperative relations with more than ten Fortune 500 companies and more than 30 well-known domestic enterprises, and its cooperative customers include P&G, L'Oreal, Paikling, Vinda and other well-known brands at home and abroad.
This is not the first time that Zhongrong has rushed to IPO, it has submitted IPO applications twice in 2018 and 2019, and has voluntarily withdrawn due to various reasons. In March last year, Zhongrong shares rushed to IPO for the third time, and this "veteran" of the domestic printing and packaging industry finally successfully passed the meeting on April 26 this year.
According to the prospectus, in the five-year period from 2017 to 2021, Zhongrong Co., Ltd. increased its revenue from 1.709 billion yuan to 2.54 billion yuan, and the net profit attributable to the parent increased from 144 million yuan in 2017 to 212 million yuan in 2021, and the overall growth curve was relatively stable. However, the comprehensive gross profit margin column has fluctuated frequently in recent years, falling from 25.37% to 22.1% during 2019-2021.
Zhongrong said in the prospectus that compared with 2019, the price of raw materials required for its main products has increased in 2020 and 2021, and the price adjustment of products such as color boxes and gift boxes has a large lag. And in the second half of 2020, some customers adjusted the pricing mechanism, introduced more suppliers, fierce competition, and made a relatively large price adjustment for some products. These reasons have led to a decrease in gross margin, but the company's gross profit margin is still within the industry's gross profit margin.
According to the first three quarterly performance reports disclosed on October 24, from January to September 2022, the company achieved operating income of 1.797 billion yuan, a year-on-year decrease of 3.02%, and a net profit of 155 million yuan, a year-on-year increase of 0.71%.
Among the main business of Zhongrong Co., Ltd., the daily chemical sector is its focus. In the past three years, the sales amount accounted for 49.74%, 50.37% and 48.29% respectively, accounting for half of the overall business. Followed by food and health care categories, the sales amount fluctuates at about 30%. Overall, the proportion of each business segment has not changed much.
According to the prospectus, its daily chemical industry mainly includes cosmetics, oral care, personal and home care products and other segments. Among them, Procter & Gamble is its largest customer in the daily chemical industry, with sales revenue of 485 million yuan, 476 million yuan and 534 million yuan in the three years from 2019 to 2021, accounting for 23.5%, 21.86% and 21.01% of operating income respectively.
It is worth noting that Colgate, a toothpaste brand customer, reached 114 million yuan in revenue in 2020, with a change of 60.24%. Since then, it has stabilized, with revenue of 134 million yuan in 2021, with a change of 17.29%.
Zhongrong explained in the prospectus that 2020 was mainly due to the impact of the epidemic abroad, so Colgate transferred production capacity to China, and the company's orders increased. The steady increase in 2021 was due to the company's increase in supply share through its competitive advantage in obtaining new project orders.
Well, that's the news is, let's see what's worth it.
According to data compiled by the Prospective Research Institute, from 2015 to 2020, the number of enterprises above designated size in the mainland packaging industry (all industrial legal persons with annual main business income of 20 million yuan and above) showed a steady upward trend. This reflects the gradual increase in industry entrants, increasing market competition and profits.
According to the statistics of the China Packaging Federation, there will be 8,183 enterprises above designated size in the mainland packaging industry in 2020, and the number of enterprises will increase by 267 over 2019.
The degree of competition is increasing, and packaging material companies must always find a unique breakthrough point in order to gain a foothold.
The reason why Zhongrong Co., Ltd. can maintain good cooperative relations with many international giant enterprises, in addition to mastering a series of core technologies in the printing industry, the creative design, scheme planning, new technology application, color management and other personalized needs supporting solutions provided by the company for high-end customers at home and abroad are also an extremely important part.
During the reporting period, the creative design provided by the company was widely recognized by customers, and many product creative designs won many well-known creative design awards at home and abroad, such as iF Design Award and Red Dot Design Award.
In addition to creative design capabilities, the innovation and manufacturing process level of the materials themselves meet the increasingly personalized and diversified market demand, and are also the hard verification power of packaging material enterprises.
It is reported that the company has invested heavily in intelligent operation, intelligent manufacturing and hardware upgrading in recent years. Through the integration with customized intelligent production management software, the company's whole process of visual management from material warehousing, production to finished products out of the warehouse is effectively realized, which greatly improves the company's production efficiency.
In recent years, the continuous growth of the market in the field of daily chemicals and the expansion of the application depth of paper packaging in the daily chemical industry have laid a good foundation for the demand of the company's product market. However, according to the data of the Prospective Research Institute, although the scale of the mainland packaging industry has maintained a growth trend, the growth rate has declined, until the industry scale has negative growth in 2020. In 2020, enterprises above designated size in the national packaging industry will achieve sales revenue of 1,006.458 billion yuan, a year-on-year decrease of 1.17 percentage points.
Judging from the closing share price of Zhongrong shares today, it is not optimistic, with the increasingly competitive market and the gradual decline in revenue, it is difficult to predict what the future of this newly listed company will be.
END