Chinese Beauty Brand Targets ￥5Bn Performance
- Chaileedo Press
- Oct 31, 2022
- 5 min read
In the first nine months, some listed Chinese local beauty companies were happy and some were worried. Shanghai Jahwa ranked first down 8.17% year-on-year while Lushang Development (cosmetics business) rose 44% year-on-year. However, with the boom in efficacy skincare in China, the revenue scale of beauty companies is also expected to continue to maintain high growth.
On the evening of Oct. 28, after the release of third quarterly report of Bloomage Biotech, the first three quarters performance of China's local beauty listed companies have also been basically disclosed.
After analyzing the three quarterly earnings reports released by nine beauty listed companies, CHAILEEDO found that in 2022, the pattern of Chinese local listed beauty companies may usher in a historic change.
That may also determine the the competitive trend of Chinese cosmetic companies and brands in the next 10 years. It also foreshadows the new golden era belonging to the Chinese domestic beauty is coming.
Bloomage Biotech’s annual revenue may exceed 7 billion
From the nine listed companies of beauty/daily chemical-related brands according to CHAILEEDO, Shanghai Jahwa is still the largest Chinese local beauty listed company in terms of revenue from January to September this year, ranking first with a revenue of 5.354 billion yuan(about $737 million). However, influenced by the epidemic sealing and control in Shanghai, logistics obstruction, Shanghai Jahwa's revenue declined compared to the same period last year, and its net profit fell by 25.51%, the highest decline in a number of beauty companies.
It is worth mentioning that Bloomage Biotech, PROYA, Botanee, Lushang Development four companies have achieved a double-digit increase in revenue from January to September this year. Among them, the revenue growth of Lushang Development is the largest, 44%. The net profit growth rate of Botanee is 45.62%, which leads a number of beauty companies.
For the growth of revenue in the first three quarters, Bloomage Biotech said in its financial report that it was mainly due to the fast growth of the company's functional skincare products revenue, while Botanee's financial report also showed that its revenue still maintained a 37.05% growth in the first three quarters, mainly due to the further improvement of its products and brand awareness, and the fast growth of sales scale and sales revenue.
It can be seen that Dr.Alva, PROYA, Winona, or QuadHA, BIOHYALUX are all in the same sector, it is not difficult to find that the efficacy of skincare made great contribution to the enterprise revenue. With the further expansion of the market scale of efficacy skincare, the revenue scale of the above companies is also expected to continue to maintain high growth.
Based on this background, CHAILEEDO has made a forecast of the annual revenue of major companies based on the average data of the ratio of revenue to annual revenue in the fourth quarter of 2020 and 2021. Taking Botanee as an example, according to the financial report, Botanee's fourth quarter revenue in 2020 and 2021 accounted for 43.13% and 46.24% of the annual revenue respectively, with an average value of 44.72%. Based on this calculation, Bethenny's fourth quarter revenue this year is about 2.37 billion yuan (about $326 million) and the annual revenue will reach 5.3 billion yuan (about $729 million).
According to this calculation, CHAILEEDO found that Bloomage Biotech's annual revenue may reach 7.1 billion yuan (about $976 million), surpassing Shanghai Jahwa's 7 billion yuan (about $963 million), becoming the largest revenue scale of A-share beauty listed companies this year. In addition, PROYA, S’Young and Botanee will also all enter the 5-billion-yuan club and enter a new stage of development.
1-billion and 5-billion brands emerging
It is worth mentioning that the time when the third quarter earnings of a number of beauty companies were announced centrally coincided with the first round of the pre-sale of Chinese Double 11 Shopping Festival on Tmall. According to the official data released by Tmall, on the first day of this year's Double 11 pre-sale, four beauty brands exceeded 1 billion yuan (about $138 million) in pre-sale turnover and 10 beauty brands exceeded 500 million yuan (about $68.8 million) in pre-sale turnover. Winona, PROYA and QuadHA were among the TOP 10 in the beauty category.
According to the revenue share of the main brands announced in the financial reports of local beauty listed companies in the first half of 2022, CHAILEEDO has also estimated the revenue data of major brands for the whole year. Taking the PROYA Company as an example, it achieved revenue of 2.626 billion yuan (about $361 million) in the first half of 2022, of which the PROYA revenue was 2.128 billion yuan (about $293 million), accounting for 81.04%. According to the estimated revenue of 6.3 billion yuan (about $867 million) of PROYA, the revenue of PROYA this year is about 5.105 billion yuan (about $702 million).
By analogy, Winona's annual revenue this year is also expected to reach 5.192 billion yuan (about $714 million) which is equal to PROYA in the beauty listed companies, both exceed 5 billion yuan (about $688 million).
Moreover, for Bloomage Biotech, after Biohyalux joined the 1-billion club in 2021, QuadHA and BM are also expected to be among the club with annual revenue of 1.461 billion yuan (about $201 million) and 1.164 billion yuan (about $160 million) respectively. Dr. Alva, a subsidiary of Lushang Development, is also maintaining a rapid growth trend with annual revenue expected to reach 1.125 billion (about $155 million) this year.
According to the prospectus of Chicmax Group on the Hong Kong Stock Exchange, KANS achieved revenue of 1.631 billion yuan (about $224.4 million) in 2021. While the public information shows that KANS's GMV in 2021 has also exceeded 5 billion yuan (about $688 million). This shows that the two of them continue to break through 1 billion yuan (about $138 million) in revenue this year is also a must-do thing.
More R&D investment from beauty group
On the one hand, the enterprise revenue scale into a new stage.On the other hand, in terms of R&D costs, increase R&D investment has also become the unanimous pursuit of Chinese local beauty companies. CHAILEEDO found that R&D expense rate of head of beauty brands belonging to the enterprise reached 2% from January to September this year, and most of the enterprise R&D costs compared to last year also has a very substantial increase. R&D costs of Botanee exceeded 100 million yuan for the first time in the first three quarters of 2022.
For example, in three quarterly report of Shanghai Jahwa, S’Young, Botanee, PROYA, Bloomage Biotech, these five R&D investment are more than 70 million yuan (about $9.6 million). Among them, Botanee's R&D investment increased 85% year-on-year, S’Young increased 50% year-on-year and PROYA increased 40% year-on-year ......
Although beauty companies are paying more and more attention to research and development, most companies are also in the initial exploration of new business, new models, such as cutting into the new channels such as Kwai, TikTok China, etc., which brings the larger costs of traffic and influencers and others. It also led to the growth of sales costs. According to the companies' financial data, the vast majority of the head of the beauty business sales expense ratio are maintained at more than 40% level from January to September this year. Among them, Bloomage Biotech with 2.03 billion yuan (about $279 million), 46.98% of the sales ratio ranked first.
Undeniably, in the past three quarters, the consumer industry has suffered from multiple challenges. Faced with the uncertainty of the general environment, it is true that, as one head of a Chinese local beauty company publicly stated, with the improvement of overall consumer quality and knowledge, as well as the new cosmetic regulations taking root, the Chinese cosmetics industry will gradually transform from a traffic dividend to a quality dividend. At the same time, the approach of relying on money to buy new customers will gradually migrate and balance with the approach of relying on quality for repeat purchases. At this point, the R&D and innovation capabilities of the company will also become the biggest help to cross the cycle and achieve sustainable development.
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