ShangMei Corporation's annual revenue exceeds RMB 4.191 billion, high-quality layout stimulates high-growth development

Zhitong Finance APP learned that on April 25th, Shanghai Shangmei Cosmetics Co., Ltd. (02145, Shangmei Cosmetics) released its 2023 annual report. In 2023, the company achieved operating income of 4.191 billion yuan, a year-on-year increase of 56.6%; realized a net profit attributable to the parent of 461 million yuan, a year-on-year increase of 213.5%; gross profit was 3.019 billion yuan, a year-on-year increase of 77.7%; and the gross profit margin was 72.1%, a year-on-year increase of 8.6 percentage points.

The high-speed growth performance combined with continuously improving profitability has injected a "strong stimulant" into the market. Since the earlier release of the performance announcement, brokerage institutions such as Shen Hong Wanyuan, Huatai Securities, and Guotai Junan have successively given Shangmei Cosmetics a "buy" rating, further recognizing its investment value.

One Super, Many Strong, Advancing Together, Multi-Brand Strategy Creating Diversified Growth

In the 2023 annual report released by Shangmei Cosmetics, the performance of its main brand Han Shu was particularly outstanding. The report shows that in 2023, Han Shu achieved annual revenue of 3.09 billion yuan, a year-on-year increase of 143.8%.

Previously, Shangmei Cosmetics founder and CEO Lv Yixiong stated in a public speech that focusing on strategies such as "heavy investment in Douyin, focusing on Han Shu, focusing on Han Shu Red, focusing on Han Shu Red Gift Box" has driven Han Shu to achieve high-speed growth. The facts have also confirmed the forward-looking nature of this strategic focus: in 2023, Han Shu has consecutively ranked first in GMV on the Douyin channel for multiple months, and with a total GMV of 33.4 billion yuan, it secured the first place in the 2023 Douyin e-commerce beauty brand annual ranking.

Shifting the focus to the present, the upward momentum of Han Shu is still continuously releasing. In the "2024 first quarter online platform beauty sales ranking" previously announced, Han Shu topped the list of domestic products with sales of 2.345 billion yuan, significantly increasing sales on mainstream channels across the entire network, further solidifying its position as a "super brand".

It is worth mentioning that as one of the few domestic cosmetics companies with multiple highly recognized brands, Shangmei Cosmetics has gradually formed a "One Super, Many Strong" brand structure.

In 2023, its brands Yiyazi, Red Elephant, and Han Shu together formed the "foundation" of the company's overall revenue, ensuring a "dynamic balance" for stable performance growth. On the other hand, the new brand Newpage performed well, achieving revenue of 152 million yuan, a year-on-year increase of 498.0%. While perfecting the layout of the mid-to-high-end maternal and child sector, it has also provided another growth driver for the company With the leverage effect of the main brand Han Shu and the differentiated positioning of multiple brands, Shangmei is expected to accurately tap into the segmented market, establish closer communication with consumers, and create a more diverse growth curve.

High investment in scientific research, research and innovation driving quality improvement

The brand is the outward expression of Shangmei's development, while research and development is the internal accumulation of Shangmei's development.

As early as 2003, Shangmei began to layout independent research and development, and in 2016, it entered the field of basic research, establishing an "open innovation independent research system" and accumulating four basic research results including Hexapeptide-9, TIRACLE PRO, E-AGSE, and Artemisinin AN+.

As a pioneer in the research and development layout of domestic brands, Shangmei is also proud of its research and development investment. The annual report shows that in 2023, the company invested 126 million yuan in research and development, accounting for 3.0% of its revenue, a research and development ratio that not only ranks top among many domestic brands, but also compares favorably with the 1.5%-2.5% research and development investment of international big brands.

In recent years, Shangmei has also been actively promoting the commercialization of research and development results. The brand Anmin You, with Artemisinin AN+ as its core ingredient, has gained a good reputation among consumers; recently, the "Han Shu Active Skin Water" containing TIRACLE PRO was officially launched; in addition, Hexapeptide-9 will also be applied to the upgraded version of the Han Shu Red Slim Waist series.

Currently, the cosmetics and skincare industry has entered a new stage driven by technological innovation. On the one hand, the addition of scientifically efficient ingredients helps enhance brand value; on the other hand, it can break the monopoly of international giants on raw materials, enhancing the core competitiveness of domestic cosmetics and skincare industry.

Omnichannel layout of online and offline, continuously releasing value advantages

In 2023, Shangmei saw a significant increase in the Douyin channel. Taking the Han Shu brand as an example, in 2023, Han Shu's GMV exceeded 3.34 billion yuan, a year-on-year increase of 374.4%, far ahead of international big brands such as Estee Lauder and Lancome. The high growth of the Douyin channel also drove the rapid growth of other online channels. In 2023, Shangmei's online channels achieved revenue of 3.587 billion yuan, a year-on-year increase of 78.92%.

The advantages accumulated by Shangmei are further extending. Taking the Han Shu brand as an example, the advantages of Han Shu Douyin are spilling over to other platforms such as Tmall, JD.com, Vipshop, and Pinduoduo Omni-channel balanced development is the key to achieving long-term leadership in brand, with Shangmei's outstanding R&D background and the production capacity guarantee of its own factories, providing a solid guarantee for the expansion of offline channels. It is reported that Shangmei will further focus on offline channels in 2024 to prepare for growth in 2025 and 2026.

The experience and methods accumulated in the process of maintaining growth can also effectively empower the advancement of other brands and the incubation of new brands. Guolian Securities stated: Considering the company's high growth potential, it is expected that Shangmei's revenue and net profit from 2024 to 2026 will maintain double-digit growth.

2+2+2 Strategy, Six-Six Strategy, Empowering Development Across Cycles

Currently, the strategy of "one trick pony" has long been unable to adapt to the rapidly changing landscape of the beauty industry. How to sustain growth momentum has also become the "Sword of Damocles" hanging over beauty brands.

In the 2023 annual report released this time, Shangmei also clearly defined the "Six-Six Strategy" that supports sustainable development—building six major competitive dimensions from organizational leadership, research and development leadership, AI information leadership, marketing leadership, intelligent production leadership, and transitioning from personalized development to generalized development. In the next decade, it will focus on the Chinese market, laying out business development in six major sectors: mass skincare, hair care, maternal and baby products, skin medical beauty, makeup, high-end skincare + instruments.

Facing the next three years, Shangmei will follow the "2+2+2 Strategy", consisting of 2 major skincare billion-dollar super brands, 2 major maternal and baby strong brands, and 2 major hair care super brands, collectively expanding Shangmei's influence in multiple categories, tracks, price ranges, and audience groups, comprehensively enhancing the group's performance and corporate value.

Shangmei's CEO and founder, Lv Yixiong, once said: "Shangmei's true core competitiveness lies not in talent, but in the mechanism of producing outstanding talents; not in innovation, but in the mechanism of continuous innovation; not in execution, but in the mechanism that ensures execution." From the company's understanding and interpretation of competitiveness, it is not difficult to see that the future driving force for the development of Shangmei Stock will be to expand its institutional advantages, enhance its hematopoietic function, and further strengthen the company's ability to cross cycles through internal drive empowerment.

Shangmei Stock's forward-looking development strategy has also been recognized by the capital market. Minsheng Securities stated that as a leading domestic cosmetics brand with multiple brands, Shangmei Stock's main brand Han Shu has established a strong brand presence on Douyin. The replication of this model is expected to bring brand growth elasticity. With the company's continuous improvement in research and development capabilities and the deepening empowerment of its omni-channel layout, the company's long-term growth prospects are promising