Interface News Reporter | Zhou Fangying
Interface News Editor | Lou Jingqin
On April 23, Shuiyang Co., Ltd., the parent company of Royal Mudfang, released its 2023 annual report and 2024 first quarter performance report.
In 2023, S'YOUNG's revenue will decline by 4.9% year-on-year to RMB4.49 billion, net profit attributable to the parent company will increase by 135% year-on-year to RMB294 million, and non-net profit will increase by 180% year-on-year to RMB270 million.
In the first quarter of 2024, its operating income decreased by 1.4% year-on-year to RMB1.032 billion, net profit attributable to the parent company decreased by 23.3% year-on-year to RMB40 million, and non-net profit decreased by RMB53 million, up 44.7% year-on-year.
In fact, looking at the performance of S'YOUNG in the past five years, its operating income and profit performance have been in a state of roller coaster, often in double-digit or triple-digit amplitude fluctuations.
The two obvious changes in Shuiyang shares in 2023 are that the status of the French high-end skin care brand Ifedan EDB, which was acquired at the end of 2022, began to surpass Yu Nifang and become the new pillar, and from the second quarter of 2023, Chairman Dai Yuefeng began to take over the adjustment of Douyin's channel business.
These two points are also reflected in the financial report.
Different from other beauty companies that focus on their own brands, S'Young Co., Ltd. implements a dual business-driven strategy of its own brand and CP brand. Shuiyang calls itself CP (China Partner), and its agency business is mainly to help introduce overseas brands into the Chinese market.
Prior to the acquisition of the Ifetan brand in July 2022, S'Young was the exclusive agent of the brand in China, introducing it to the Chinese market and opening online channels since 2019.
In the 2023 financial report, the Ifedan brand surpassed the main brand Yu Nifang and was listed as the first brand to be introduced in the private label system. In the past year, in order to strengthen the communication and construction of Ifedan, the brand has invested in a series of activities such as art salons, celebrity endorsements, and traceability in southern France. At the same time, Ifetan continued to expand its product matrix and introduced a more high-end Zhenjin Rejuvenation series. The price of the overall brand single product ranges from 1,000 yuan to 3,000 yuan.
According to Jiuqian data cited in the open source securities report, in 2023 and the fourth quarter of 2023, the GMV of Ifetan on Tmall, JD.com, and Douyin will reach a total of 500 million yuan and 190 million yuan respectively. Among them, the CP combination of large single products will account for about 75% of the sales of the three platforms in 2023. In September 2023, Ifetan also opened its first counter in China in Wulin Yintai, which is seen as the beginning of offline channel expansion.
Another popular brand positioned as "staying up late muscle" repair, Da Shui Di is also a benchmark brand specifically mentioned by Shuiyang shares. According to the data of the aforementioned report, in 2023, the GMV of the brand's three online platforms will be 250 million yuan, and it will maintain double-digit growth for three consecutive quarters.
Although Shuiyang has accumulated many years of experience in both online and offline channels, the main brand Yu Nifang has been in a tepid state in the public caliber. According to the annual report, in 2023, Yu Nifang will focus on the overall upgrade, complete the mental correction and product system iteration, and complete the reserve of a number of core raw materials.
According to Jiuqian data cited in the Debang Securities report, from January to November 2023, Yu Nifang Tao and Douyin both fell by more than 40%. The average price of Douyin is higher than that of Tao, the average price of Douyin platform mainly fluctuates between 130 yuan and 200 yuan, and the average price of Taobao is relatively stable at around 100 yuan. However, the Yu Nifang brand still has offline channels that have accumulated since its founding, and the total income has not been publicly disclosed.
Although Shuiyang's efforts on Douyin have paid off considerably, they are still not enough to make up for the decline in Tao's business.
In 2023, its Tao business revenue will decline by 26.7% year-on-year to 1.4 billion yuan, and Douyin business revenue will increase by 60.56% year-on-year to 1.13 billion yuan, but compared with the previous year, the dual-platform revenue will still decline by 80 million yuan. In addition, the revenue of its brand management services business also fell by 60% to 108 million yuan.
Ifetan and Da Shui Di are still in the growth period, Yu Nifang has not yet regained its strength, and the multi-brand agency business is also facing market challenges. Although the net profit of S'YOUNG Co., Ltd. has broken through the peak of 235 million yuan in 2021 and is close to 300 million yuan, the sense of urgency of successive declines in revenue still exists.
The multi-brand matrix and self-owned agent dual-driven business model do ensure that "the east is not bright and the west is bright", but to be the "leader" of the beauty industry, Shuiyang shares still lack a popular product, and a star brand to do the real big rear. Leaving aside the fluctuation of channels and traffic, it is ultimately necessary to return to product strength and R&D capabilities.
In April 2023, Shuiyang Intelligent Manufacturing Industrial Park, which continues to invest 1.4 billion yuan, will be officially put into operation. However, the financial report pointed out that due to the transformation and adjustment of its own brand, the actual output in this period did not reach the expected output.
Before the official operation of the Shuiyang Intelligent Manufacturing Base, Shuiyang Co., Ltd. mainly arranged production by means of commissioned processing. The hope of S'Young Intelligent Manufacturing Base is to develop unique formula technology and production process, try the development of new technologies and new processes, and improve S'YOUNG Co., Ltd.'s R&D capabilities, overall production efficiency and profitability.
At the opening event, Ting Ting, chairman and general manager of Shuiyang Co., Ltd., said that he would compete for R&D talents from all over the world at any cost, no limit on positions, and no upper limit, so as to create the strongest beauty R&D team in the country. On the basis of the R&D team of more than 300 people at that time, it is planned to exceed 500 people within two years.
However, in the 2023 financial report, the R&D expenses of S'YOUNG Co., Ltd. decreased by 13.81% year-on-year to 76 million yuan, mainly due to the adjustment of the R&D organization and the optimization of the structure of R&D personnel. During the period, the number of R&D personnel decreased from 347 in the previous year to 295. R&D investment as a percentage of revenue also decreased to 1.7% from 1.88% in 2022.
From the perspective of the filing of new raw materials and the direction of research and development disclosed in the financial report, the innovative research and development of traditional natural plant raw materials in China is its main research direction. Although in line with the trend of the rise of the national tide, herbal raw materials are also a hot topic in the industry, but the difficulty lies in how to extract and retain its active ingredients, how to make them work with other ingredients in the formula, scientifically present its mechanism of action, and further verify its safety.
Therefore, there is still great uncertainty about whether Shuiyang shares can create the next "star ingredient".