Shanghai Jahwa (600315) Annual Report Commentary: Brand Marketing Drives Rapid Online Development Expenses Increased Income Profits Double Pressure

Shanghai Jahwa (600315) Annual Report Commentary: Brand Marketing Drives Rapid Online Development Expenses Increased Income Profits Double Pressure

Incident Description The company released its 2019 annual report on February 20, and the company achieved operating income of 75 in 2019.

9.7 billion, an annual increase of 6.

43%; net profit attributable to shareholders of the listed company is 5.

5.7 billion, an annual increase of 3.


The event review focused resources to create star products and promote social media word-of-mouth marketing.

In 2019, the company made in-depth insights into consumer needs, effectively used Chinese cultural elements, and covered different age groups of consumers with differentiated brand positioning.

The company concentrated its superior resources to create star products, actively promoted new media word-of-mouth marketing, and increased the proportion of social media investment to more than 50%.

In terms of recruiting new people, the Huameijia system is used to realize the full-brand linkage recruitment. As of the end of 2019, the total number of registered members of Huameijia has exceeded 1.15 million, and the membership activity has reached 71%.

During the year, Herborist completed its brand positioning adjustment, adhered to the brand tone of high-end and traditional Chinese medicine herbs, and launched the second generation of double repairing Tai Chi essence and freeze-dried mask with the essence as the starting point. After the listing of Tai Chi essence, the new product acquisition rate was 57%.The sales volume of freeze-dried mask series has exceeded 100 million yuan; the Liushen brand has continued its youthful strategy and gradually realized the growth of its number. The basic shower gel series has been newly upgraded, and its spokesperson fan operation and word-of-mouth marketing have been the breakthrough points to increase brand share and value; Yuze strengthenedDifferentiated brand positioning of “Repair Skin Barrier”, further enhance brand awareness through social content marketing, seize market hotspots and launch hyaluronic acid ampoule essence. It debuted on Tmall Facial Essence on the first day of sale-the largest sales volume of the ampoule category, year roundThe growth rate is over 80%; Qichu, as the leading brand of baby care, expanded the target group to launch sensory 深圳桑拿网 enlightenment series during the year, and promoted the new model and terminal replacement through a combination of traditional scene marketing and precise placement of new media.The brand’s third largest product series, with a growth rate of over 25%.

Continuously optimize channel operations and rapid development of online channels.

The company adopts an omni-channel sales model combining online and offline sales. Offline sales are distributed by dealers, and KA is directly operated. Online sales are e-commerce and special channels.

In 2019, the company continued to optimize channel operations, rapid development of online channels, and channel sales accounted for an increase of 11 over the same period last year.

5pct to 34%, sales revenue increased by 30%, e-commerce through cooperation with excellent TP network creation to improve the team’s operational capabilities, seize the e-commerce communication traffic dividend, promote purchase conversion, special channels through multiple marketing, live broadcast and training and other means, Which further increased the channel and customer penetration rate; offline is the company’s main channel, channel sales account for 66%, as of the end of 2019, the company’s organized distribution of controlled stores includes 200,000 supermarket stores, nearly 90,000 rural outletsThere are nearly 1,500 department stores and about 1 specialty cosmetics stores.

30,000 homes, etc., used channel celebrities and scene marketing methods to guide channel innovation. However, due to the decline in department store operating income, offline channels have declined slightly.


The increase in marketing expenses suppressed the growth of profits, and the adjustment of product structure affected the slight decline in gross profit margin.

The company’s gross profit margin for 2019 is 61.

87%, a reduction of 0 per year.

At 95pct, the decrease in gross profit margin was mainly due to the adjustment of product structure in some regions such as Shandong, Beijing, and Sichuan. The increase in costs exceeded the income to suppress the growth of gross profit. The growth rate of the adjustment period of the Herborist brand division decreased.The impact of factory operations, but gross margins in Zhejiang and overseas regions increased by 1.

31 points and 1.

72 points.

Overseas regions contribute 22% of the company’s operating income. The overseas M & A project completed by the company in 2017 was Cayman A2, Ltd.

(Some of its core assets are the British mother and baby brand Tomme Tippee.) Revenue growth in 20194.

28% to 17.

30,000 yuan, net profit increased 14% to 8,611 per year.

870,000 yuan, contributing stable income and profit growth for the company.

In terms of expenses, the overall expense ratio increased by 1.

29 points to 57.

26%, sales / management / R & D expenses increased by 10 respectively.

43% / 6.

62% / 15.

60%, of which the sales expense ratio increased by 1.

5pct to 42.

2%, which was mainly affected by the increase in the promotion expenses of the Double Eleven channels. The increase in expenses suppressing profits directly affected the net profit of deducting non-attributed mothers in Q4 of -390,000.

91% to 3.

8 billion.

Finance costs are reduced by 48 per year.42% was mainly due to the decrease in exchange loss gains and losses caused by changes in the exchange rate of the US dollar against the British pound.

Investment suggestion The company covers consumer groups of different ages with differentiated brand assets. Through the combination of online and offline, the traditional omni-channel sales model linked with social media, focuses on the creation of star products, continuous product innovation, and optimized channel operationsIn 2019, the rapid development of online channels will be achieved, and traditional channels such as direct-operated KA will grow steadily. In 2020, new media community marketing will be focused on accelerating brand extension.

Taking into account the influence of factors such as reduced revenue and new crown epidemics after adjusting for new income indicators, the EPS for 2020-2022 is expected to be 0.



02 yuan, corresponding to the company’s closing price of 27 on February 19.

94 yuan, PE from 2020-2022 is 33.

83X / 31.

69X / 27.

42X, for the first time, gave an “overweight” rating.

There are risks. Acceleration of online and offline traffic growth; high-end foreign brands and local emerging brands bring increased market competition risks; new product progress is less than expected risks; the new crown epidemic situation brings unlimited risks.