It is planned to clear the "first share of medical beauty mask" behind the departure of Harbin Sanlian, and Fuerjia will increase income but not profits

The second shareholder of the "first share of medical beauty mask" Fuerjia is planning to leave the market.

On July 30, Harbin Sanlian threw out a stock asset sale plan, announcing that it planned to sell all its shares in Fuerjia at an opportune time in the next two years.

Behind Harbin Sanlian's plan to clear Erjia, or because the two companies are currently facing the dilemma of declining performance, Harbin Sanlian will officially announce in 2024 that it will cross over cosmetics from behind the scenes to the front of the stage.

However, the sale is still tentative, and it remains to be seen whether it will be successful. Harbin Sanlian promised that the selling price would not be lower than the issue price of the initial public offering of Fuerjia Technology, and since the listing of Fuerjia, its share price has continued to fall and is currently in a state of breakage.

It is planned to liquidate the shares of Fuerjia and promise to sell them at no less than the issue price

As soon as the ban was lifted, Harbin Sanlian threw out a plan to clear Erjia stocks.

On July 30, Harbin Sanlian announced that it intends to authorize the company's board of directors to sell no more than 18 million A shares of Fuerjia according to the stock market within 24 months from the date of approval of the company's general meeting of shareholders, accounting for 4.5% of the total share capital of Fuerjia.

Harbin Sanlian is currently the second largest shareholder of Fuerjia, and the two sides have a close relationship. In the prospectus, it was mentioned that Harbin Sanlian originally cooperated with Harbin Fuerjia Technology Development Co., Ltd. (hereinafter referred to as "Fuerjia Co., Ltd.", the predecessor of Fuerjia), of which Harbin Sanlian is responsible for the exclusive production of products, and Fuerjia Co., Ltd. is responsible for the exclusive sales, promotion and brand operation and maintenance of products, etc., which are upstream and downstream relationships in the same industrial chain and are highly related.

In order to integrate the industrial chain, in February 2021, Harbin Sanlian increased its capital to Fuerjia Co., Ltd. with its 100% equity of Beixing Pharmaceutical, and after the business restructuring, Harbin Sanlian held 5% of the equity of Fuerjia.

With the listing of Fuerjia on the GEM on August 1, 2023, the shareholding ratio of Harbin Sanlian has been changed from 5% to about 4.5%. At the same time, due to the listing of Fuerjia, Harbin Sanlian promised not to reduce its shareholding in Fuerjia during the lock-up period, that is, within 36 months from the date of acquisition of the shares and within 12 months from the date of listing of the shares. As of August 1 this year, Fuerjia shares have just ushered in the lifting period.

In May, in response to the question of whether investors would reduce their holdings of Fuerjia, the company responded that after the expiration of the lock-up period of the company's shares in Fuerjia, it will decide whether to implement the reduction according to the secondary market situation under the premise of complying with relevant regulations.

The stock price is broken, and it is difficult to change the situation of increasing income but not increasing profits

It is worth noting that the current sale plan of Harbin Sanlian is only a preliminary plan, and the company promised in the announcement that the sale price will be determined according to the secondary market price at that time, and not lower than the issue price of the initial public offering of shares of Fuerjia Technology.

Judging from the stock price performance of Fuerjia, on the first day of listing, Fuerjia's stock price reached an all-time high of 80.04 yuan, and has fallen all the way since then. As of the close of trading on July 31, the share price of Fuerjia was 28.43 yuan / share, and the issue price of Fuerjia was 55.68 yuan / share.

In terms of performance, in 2023, while revenue will increase by 9.29% year-on-year, the net profit attributable to the parent company of Fuerjia will decrease by 11.56% year-on-year to 749 million yuan. In the first quarter of 2024, the company's revenue increase but no profit increase remained unchanged, and the net profit attributable to the parent company was about 152 million yuan, a year-on-year decrease of 4.77% again.

The performance of Fuerjia has also had a direct impact on Harbin Sanlian. Harbin Sanlian will recognize the equity investment in Fuerjia as a long-term equity investment, which will be accounted for according to the equity method, and the future profit and loss of Fuerjia will be included in the operating investment income of Harbin Sanlian according to the proportion of shareholding. In 2023, Harbin Sanlian will achieve an investment income of 35.8113 million yuan.

In response to the decline in performance, Fuerjia once explained that in 2023, the increase in the proportion of the company's online sales will lead to an increase in related sales expenses, while the opening of the company's northern beauty valley base will lead to an increase in depreciation and amortization, and the R&D investment will continue to increase.

Judging from the company's financial reports over the years, from 2021 to 2023, the company's sales expenses will be 264 million yuan, 390 million yuan and 532 million yuan respectively, increasing year by year. In 2023, the company's sales expenses increased by 36.44% year-on-year, mainly due to the increase in marketing expenses related to online revenue.

According to public financial data, from 2020 to 2022, Fuerjia's online revenue increased year by year, about 461 million yuan, 598 million yuan and 719 million yuan respectively. In 2023, it will continue to maintain growth, about 924 million yuan, a year-on-year increase of 28.53%, accounting for 47.77% of the main business income. 85.58% of the company's online revenue in 2023 comes from online direct sales.

However, behind the continuous growth of online revenue, the cost of customer acquisition through the company's online channels has also continued to rise. According to the prospectus, from 2020 to 2022, the promotion service fees of Fuerjia's online e-commerce platform will be about 85 million yuan, 165 million yuan, and 242 million yuan respectively.

At the same time, the unit price of its products in its online direct sales channel continued to fall. From 2020 to 2022, the unit prices per box of Fuerjia's main business products in online direct sales channels were 70.44 yuan, 67.59 yuan, and 56.97 yuan, respectively, showing a downward trend.

Harbin Sanlian's performance declined in the first half of the year, and the official announcement of cross-border cosmetics

Behind the plan to liquidate Erjia stocks, Harbin Sanlian's own performance is not ideal.

The company's 2024 semi-annual performance forecast shows that in the first half of 2024, the net profit attributable to shareholders of listed companies will be 23 million yuan to 29 million yuan, a year-on-year decrease of 55.93%-44.43%.

In response to the reasons for the decline in performance, Harbin Sanlian said that due to the impact of external market environment competition and policies such as centralized drug procurement, even though the company's sales volume did not change much year-on-year, the further decline in product unit price reduced the company's operating income by 114 million yuan year-on-year, a decrease of about 18%; On the other hand, due to the impact of the company's product structure and other factors, the company's operating costs still increased compared with the same period, and the gross profit space was further compressed.

The decline in non-recurring gains and losses due to fair value changes in securities investments, excluding share-based payment expenses recognized on a time-based basis, also had an impact on the Company's performance.

In addition, Harbin Sanlian is planning to move from behind the scenes to the front of the stage, and realize the transformation from a manufacturer to a brand owner in the cosmetics industry. In May this year, Harbin Sanlian participated in the 28th Beauty Expo with a variety of its facial masks, announcing the official cross-border cosmetics industry.

In an interview with investors, Harbin Sanlian said that in 2024, the company will adhere to the development strategy of "one body and two wings", strengthen the main pharmaceutical business, and expand the "two wings" business of animal health and health. Its big health sector includes three core businesses: food, medical equipment and cosmetics. According to the company's 2023 annual report, the main products of the company's big health sector include 2 medical sodium hyaluronate repair patches in medical devices, Harbin triple sodium hyaluronate repair film in cosmetics and four foods.

Some of the products will be approved for production in 2023, and the company said in its 2023 annual report that in the medical device and cosmetics sector, relying on its mature R&D and production experience in medical dressings, it was approved to produce Class II medical devices "Medical Sodium Hyaluronate Repair Patch" and cosmetics "Harbin Triple Sodium Hyaluronate Repair Film" during the reporting period.

Beijing News Shell Financial Reporter Ding Shuang

Edited by Yue Caizhou

Proofreading by Xue Jingning