Tuyere financial reporter Zhao Chong intern Zhang Lei
China's beauty boss has changed hands.
Recently, Proya Cosmetics Co., Ltd. (hereinafter referred to as "Proya") released its 2023 annual performance report. According to the report, the company's revenue reached 8.905 billion yuan, a year-on-year increase of 39.45%, and the net profit was 1.194 billion yuan, a year-on-year increase of 46.06%.
Proya officially replaced the old cosmetics company Shanghai Jahwa to the first place in local cosmetics. However, there are still hidden concerns under the overall upward trend in performance, and problems such as founders' shareholding reduction, emphasis on marketing and light on R&D still exist.
Agency brand revenue "zero"
According to the annual report, the company achieved operating income of 8.905 billion yuan, a year-on-year increase of 39.45%, net profit of 1.194 billion yuan, a year-on-year increase of 46.06%, and non-net profit of 1.174 billion yuan, a year-on-year increase of 48.91%, breaking through a new high again.
Continuing this trend, in the first quarter of 2024, Proya achieved operating income of 2.182 billion yuan, a year-on-year increase of 34.56%, and net profit and non-net profit were 303 million yuan and 292 million yuan, respectively, a year-on-year increase of 45.58% and 47.5%.
In terms of brands, the operating income of self-owned brands was 8.890 billion yuan, an increase of 40.86% year-on-year, and the operating income of agency brands decreased to 0.00 yuan for three consecutive years, compared with 50 million yuan in the previous year.
The reporter found that Proya is increasingly relying on online channels.
In 2023, Proya's online channel revenue will total 8.274 billion yuan, a year-on-year increase of 42.96%, and the proportion of Proya's main business revenue in the current period will continue to increase from 90.98% in the same period of the previous year to 93.07%. Among them, the revenue of the company's online self-operated channels was 6.748 billion yuan, a year-on-year increase of 50.7%, accounting for 75.91%.
At the same time, the proportion of Proya's offline channel revenue has been declining year by year. From 2020 to 2023, Proya's offline operating income accounted for 29.99%, 15.07%, 9.02%, and 6.93% of total revenue.
Focus on marketing over R&D
Proya has been criticized for "emphasizing marketing and ignoring R&D", which is in stark contrast to its rapid iteration.
It is worth noting that it will continue to invest heavily in sales expenses in 2023. According to the annual report, Proya's sales expenses were 3.972 billion yuan, an increase of 1.186 billion yuan or 42.59% year-on-year, accounting for 44.61% of operating income and 43.63% in the same period last year. Among them, the company's image promotion expenses were 3.534 billion yuan, an increase of 1.114 billion yuan or 46.04% year-on-year, accounting for 39.69% of operating income and 37.9% in the same period last year.
The reporter flipped through the previous financial reports and found that in the five years from 2019 to 2023, Proya's sales expenses were 1.223 billion yuan, 1.497 billion yuan, 1.992 billion yuan, 2.786 billion yuan, and 3.972 billion yuan, an increase of 38.03%, 22.41%, 33.03%, 39.88%, and 42.59% year-on-year, respectively, and the growth rate of sales expenses was higher than the revenue growth rate of the current year.
What's more noteworthy is that the proportion of sales expenses in the same period of revenue is increasing, in 2019 sales expenses accounted for 39.15% of the same period of revenue, and by the end of 2023, sales expenses accounted for 44.6% of the same period of revenue, in other words, nearly half of Proya's revenue that year was used for marketing advertising.
On the other hand, R&D expenses, in 2023, Proya's R&D expenses will be 174 million yuan, even if it has increased by 35.59% over the previous year, it will only account for 1.96% of the total revenue, which is much lower than other brands in the same industry. Bloomage Biotech's R&D expenses have been on an upward trend in the past four years, and the R&D expense ratio will reach 6.1% in 2022. The same is true for Bethany, whose R&D expenses in 2022 will be 255 million yuan, a year-on-year increase of 14.96%, and the R&D expense rate will reach 5.08%. Although the R&D expense ratio of L'Oreal, an international beauty brand, in 2023 is only 3.13%, its R&D investment has exceeded 1 billion yuan in consecutive years.
Jiang Han, a senior researcher at the Pangu Think Tank Research Institute, believes that for a cosmetics company, the balance between R&D expenses and marketing expenses is crucial. Insufficient R&D spending may affect a company's innovation ability and product competitiveness, which may be an obstacle to sustainable growth in the long run. While over-reliance on marketing can boost sales in the short term, it can also lead to a hollow brand image and consumer distrust of product quality.
Executives frequently reduce their holdings
In recent years, Proya's performance has grown by leaps and bounds, which has also led to a soaring share price, when it was listed in 2017, Proya's share price was only 10 yuan / share, and now as of April 23, it has soared to 108.25 yuan / share, which has risen more than ten times in 6 years.
But it is Proya, which is so profitable, that the management has continued to reduce its holdings in the past few years.
On the day of the release of the annual report, Proya also issued an "Announcement on the Plan for Senior Managers to Reduce Their Shareholdings through Centralized Bidding". According to the announcement, within 15 trading days to 6 months from the date of the announcement, Wang Li, deputy general manager, secretary of the board of directors and financial director of the listed company, intends to reduce his holdings of the company's shares by no more than 78,872 shares through centralized bidding transactions, accounting for 0.0199% of the company's current total share capital and 25.00% of the company's shares held by Wang Li; Jin Yanhua, deputy general manager of the listed company, intends to reduce the company's shares by no more than 75,940 shares through centralized bidding transactions, accounting for 0.0191% of the company's current total share capital and 25.00% of the company's shares held by Jin Yanhua.
However, Proya has always had a "tradition" of executives reducing their holdings on high prices.
According to public information, since November 2020, Fang Yuyou, co-founder and director and general manager of Proya, and the third largest shareholder of Proya, has begun to reduce his holdings. Up to now, Fang Yuyou has announced four shareholding reduction plans, and the reduction has exceeded 3 billion yuan.
Shareholder reductions generally affect the outside world's assessment of Proya's market value. The shareholding reduction event can be regarded as the normal flow of funds, or it may reflect the company's temporary strategy based on market macro adjustment, but Fang Yuyou, as one of the company's major shareholders, will inevitably make investors worry about the company's core management or major changes.