Over-reliance on the Marumi brand.
Editor’s note: This article is from WeChat public account “IPO knows early” (ID: Ipozaozhidao), by Uncle C.
Marumi shares (603983.SH) finally went public after the IPO for the fifth time. On the first day of the listing, the performance was good. During the two months of listing, Maru shares had surpassed Shanghai Jahwa and opened the distance. On September 30, Maru shares closed at 59.3 yuan, and the stock price rose more than 200%. The market value of Marumi has reached 23.8 billion yuan, and Shanghai Jahwa has 23.1 billion yuan.
Guangdong Marumi Biotechnology Co., Ltd. was established in 2002, mainly engaged in the research and development, design, production, sales and service of cosmetics. At present, the company owns three brands, namely “Maru Mei”, “Chun Ji” and “Love Fire”. After occupying the leading position in the industry, the main brand of Marumy Eye Cream, which is positioned in the middle and high-end, develops the “Chun Ji” brand for young people. In 2017, the company acquired the Korean makeup brand “Love Fire” and entered the makeup market.
In the semi-annual report of 2019, Maru shares announced the latest performance. In the first half of the year, the company’s operating income was 815 million yuan, an increase of 11.85%; sales expenses were 238 million yuan, an increase of 8.71%; research and development expenses were 19,385,500 yuan, an increase of 6.52%; net profit was 256 million yuan, year-on-year. The increase was 31.57%. It can be seen that the company’s profitability has increased significantly compared with the same period last year.
But the increase in operating income is mainly due to the dividends in the cosmetics market, the launch of new high-end anti-aging products, and the marketing strategy of a large number of advertisements. The problem of less R&D investment and over-reliance on the main brand of Marumi is still presence.
Market dividends increase and continue to launch high-end anti-aging series
At present, although the economic data has slowed down, the cosmetics industry is in a period of rapid development. In 2018, China’s retail sales of cosmetics above designated size was 261.9 billion yuan, with a compound annual growth rate of 9.9%, exceeding the global market by 2.6%. According to statistics from Alibaba, the retail sales of its entire network in August increased by 32.89% year-on-year and 9.79 percentage points from July.As a result of the company’s large-scale domestic brand, the company’s operating income has increased.
In terms of products, since eye cream and essence are the two products with the highest function and utility in skin care products, many beauty bloggers even said that the skin condition will stay at the age of starting to use anti-aging essence, so that consumers can The willingness to pay is the strongest, so the company follows the trend of high-end, and focuses on launching anti-aging products.
In 2019, Maruyama launched the second imported high-end series of Japanese R&D and production – MARUBI TOKYO Japanese flower elastic series; and due to the recent heat of hyaluronic acid, nicotinamide and protein peptide, Marumi keeps up with the current trend In addition to the launch of the three muscle energy masks; in addition, because the essence is one of the fast-growing categories in recent years, so continue to increase the investment in the elite category.
In terms of marketing strategy, the Maru brand relies on the influence of Zhou Xun and Peng Yuxi, and has 360-degree stereoscopic channels on video websites, network comprehensive and major airports, high-speed rail stations, outdoor, cinemas, etc., such as “Wife’s Romantic Travel 2” A large number of implants on the hot program such as “Extreme Challenge 5”. In addition, through the Oriental TV, Zhejiang Satellite TV “My True Friends”, Oriental TV “Daddy and Dad” TV drama plot and scene deep implant, secondary communication, fan interaction to achieve IP bundle marketing.
In the previous disclosure of the prospectus, the company’s nearly 90% of its revenue came from dealers, and its worrying issues such as complete documentation improved. This year, the establishment of the retail core college has strengthened the exclusive team support for product promotion, display design, ground promotion, training, etc., to ensure the implementation of marketing policies.
In terms of channel sales, the offline channels have benefited from the MARUBI brand, and the department store channel has grown by more than 30% year-on-year. The beauty salon channel maintained a growth rate of more than 20%, and the CS channel achieved a steady growth rate of 10%.
On the online channel, the Marumi brand has grown by more than 10% through its operations on the mainstream e-commerce platform. In the first half of 2019, for the sixth consecutive month, the Tmall Eye Care Kit category was ranked first in the flagship store, and the Jingdong Eye Cream category was ranked in the top three, the domestic first; the Vipshop 618 Maru brand ranked second, the domestic product the first.
So, from the financial data, we can see that, relying on strong sales and channel sales, in the first half of 2019, the company mainly relied on high-end anti-aging series to increase sales revenue. Marumi’s MARUBI brand revenue accounted for 91.92% of the company’s total revenue.
R&D costs are low
Compared with the above a large amount of marketing expenses, the company’s R&D expenditure is still low, although it increased by 6.52% compared with the previous period, and the R&D expense rate was 2.32%, which was an increase from 2.15% in 2018. Compared with foreign brands, there is still a gap. Although in domestic brands, it is not comparable to Shanghai Jahwa and Polaiya.