24Q1-3, the total amount of 35.36 trillion yuan for the 3 companies, yoy increased by 3.35%. For single Q3, the total amount for the 3 companies was 11.76 trillion yuan, yoy increased by 2.69%, with a slower growth rate compared to the previous quarter.
Zhitong Finance and Economics APP learned that Minsheng Securities released a research report stating that the demand pressure in the commercial retail industry in the third quarter of 2024 affected profitability. Supermarkets and department stores sectors continued to face pressure on performance, while cross-border e-commerce sectors increased revenue without increasing profitability. High gold prices in Q3 restrained end consumer spending; jewelry companies' income and profit growth were under pressure. The upstream medical beauty new materials and new product revenue and profit growth rates were impressive, but institutional profitability was under pressure in Q3. In the beauty industry, Q3 off-peak sector sales growth was under pressure, and the performance of leading brands worsened. In the 2024 Q3 retail market, overall growth momentum was weak, with sales growth and profitability facing challenges, expecting an improvement in consumer confidence to bring about a turning point.
The main points of the Minsheng Securities report are as follows:
Retail Industry: Supermarkets and department stores sectors continued to face pressure on performance, while cross-border e-commerce sectors increased revenue without increasing profitability.
24Q1-3, the total amount of 35.36 trillion yuan for the 3 companies, yoy increased by 3.35%. For single Q3, the total amount for the 3 companies was 11.76 trillion yuan, yoy increased by 2.69%, with a slower growth rate compared to the previous quarter. Looking at the monthly performance, July and August were flat, while there was some improvement in September. In terms of exports, total exports in 24Q3 were 912.7 billion US dollars, YoY increased by 6.0%.
1) Yonghui Superstores: In 2024 Q3, Yonghui Superstores achieved an operating income of 16.77 billion yuan, yoy -16.4%, and a non-controlling interest net loss of -0.69 billion yuan, a decrease of 0.217 billion yuan compared to the same period last year. As of October 30, adjustments have been made to 10 stores, with 7 of them being self-adjusted. Adjusted store revenues have all seen significant growth. The company expects the number of adjusted stores nationwide to reach about 40-50 before the Chinese New Year.
2) Zhejiang China Commodities City Group: In 24Q3, revenue reached 3.847 billion yuan, yoy +40.17%, with a net profit attributable to the parent of 0.881 billion yuan, yoy +176.73%. ChinaGoods' GMV in 24Q3 dropped by 23%, while Yiwupay payment turnover increased by 515% year-on-year. In the cross-border e-commerce sector, we focus on the performance of 12 listed companies. In 24Q3, revenue was 25.483 billion yuan, yoy +22.5%, with a net profit attributable to the parent of 1.853 billion yuan, yoy +12.0%. In 24Q3, the sector's performance growth was weaker than revenue due to rising marine freight rates, price adjustments caused by intensified industry competition, and increased selling expenses.
Gold Jewelry: In Q3, the high gold price restrains end consumption, putting pressure on the revenue and profit growth of jewelry companies.
1) Industry Trends: In the first nine months of 2024, the total retail sales of gold and silver jewelry amounted to 245.4 billion yuan, a year-on-year decrease of 3.1%. From July to September, retail sales decreased by 10.4%, 12.0%, and 7.8% respectively. In Q1-Q3 2024, as the price of gold continued to rise, the consumption of gold jewelry was significantly affected. With the rapid development of new e-commerce models such as live streaming sales and instant retail, the consumption of small-weight gold trinkets increased. In Q3, the continuous high volatility and expected rise in gold prices led to a slight decline in physical gold consumption. In Q3 2024, the national gold consumption was 217.98 tons, a decrease of 22.21% year-on-year, including 130.02 tons of gold jewelry, a decrease of 29.23% year-on-year; 69.09 tons of gold bars and coins, a decrease of 9.17% year-on-year.
2) Revenue and Performance: In Q1-Q3 2024, the overall revenue of the gold jewelry sector was 132.955 billion yuan, a year-on-year decrease of 2.0%; the total revenue in Q3 was 33.217 billion yuan, a year-on-year decrease of 25.0%. In Q1-Q3 2024, the net profit attributable to the parent company of the gold jewelry sector totaled 4.343 billion yuan, a year-on-year decrease of 10.4%; in Q3 2024, the net profit attributable to the parent company totaled 1.025 billion yuan, a year-on-year decrease of 34.8%. Both revenue and profit are under pressure. In terms of revenue, in Q3 2024, Manka Long/Caibai's revenue increased by 14.9%/8.7% year-on-year, while others remained flat or declined; in terms of gross margin, Chow Tai Seng's gross margin in Q3 2024 increased by 9.70 percentage points, mainly due to optimization of the self-operated channel's product structure, an increase in the proportion of brand usage fees collected from franchisees, and an increase in the proportion of high-margin jewelry from e-commerce channels.
Medical Beauty: Upstream new materials and new product revenue and profit growth are impressive, but Q3 institutional profitability is under pressure.
In Q1-Q3 2024, the total revenue of the medical beauty sector was 41.094 billion yuan, a year-on-year increase of 4.8%; in Q3 2024, the total revenue was 13.552 billion yuan, a year-on-year increase of 4.7%. In Q1-Q3 2024, the net profit attributable to the parent company of the medical beauty sector was 5.218 billion yuan, a year-on-year increase of 20.1%; in Q3 2024, the net profit attributable to the parent company was 1.689 billion yuan, a year-on-year increase of 15.3%.
1) Jinbo Biology: In Q3 2024, achieved a revenue of 0.386 billion yuan, a year-on-year increase of 92.1%, with rapid revenue growth mainly due to the continued strong growth trend of three categories of collagen-based products under the WeiyiMei brand.
2) Jiangsu Wuzhong: In Q3 2024, the main business income of the medical beauty and life science sector was 0.119 billion yuan, an increase of 6558.7% year-on-year. Actively promoting the sales work of AestheFill, the number of cooperative medical beauty institutions continues to increase, covering many medical beauty chain brands including Meile, Huahan, Yixing, Union League, Fuai, and Milan Bayu.
3) Shanghai Haohai Biological Technology: With a differentiated hyaluronic acid product matrix, the 'Hai Mei' brand has been recognized in the market for its high-end hyaluronic acid positioning due to characteristics like no particleization and high cohesiveness. The product has continued to rapidly expand, with 'Hai Wei' and 'Jiao Lan' showing good growth. In July 2024, the fourth-generation hyaluronic acid product 'Hai Mei Moon White' obtained the Class III device certificate from the NMPA. As the only hyaluronic acid product in the country that uses natural product lysine as a cross-linking agent, it will form a high-end hyaluronic acid product series together with 'Hai Mei' and 'Hai Mei Yun'.
Cosmetics: In Q3, the off-season sector sales growth is under pressure, and the performance of leading brands is becoming increasingly differentiated.
24Q1-3, the retail sales of cosmetics decreased by 1.0% year-on-year, with growth slower than the overall social retail; 24Q3, the retail sales of cosmetics decreased by 5.5% year-on-year, with year-on-year growth rates of -6.1%, -6.1%, -4.5% in September, gradually narrowing the decline. In terms of platforms, Douyin channel continues to grow with a further increase in contribution to the large cap of cosmetics. In 24Q3, Douyin's cosmetics GMV accounted for 50% of the cosmetics large cap, and Tmall's cosmetics GMV growth rate improved marginally. In terms of performance, the overall revenue of the beauty and skincare sector in 24Q1-3 was 33.574 billion yuan, yoy +3.60%, and the net profit attributable to the parent company was 3.766 billion yuan, yoy -6.81%; in a single Q3, the overall revenue was 9.697 billion yuan, yoy -1.84%, and the net profit attributable to the parent company was 0.648 billion yuan, yoy -42.52%; including:
1) Beauty brands: In 24Q1-3, Runben, Marubi, and Proya's net profits attributable to the parent company showed positive year-on-year growth, with growth rates of +44.35%, +37.38%, and +33.95% respectively; Fuerjia, Lushang Freda, Be'teni, Bloomage Biotechnology, Syoung, and Shanghai Jahwa's net profits attributable to the parent company showed year-on-year decreases of -4.2%, -28.09%, -28.39%, -29.62%, -47.6%, -58.72%, respectively, with Bloomage Biotechnology and Shanghai Jahwa mainly experiencing a decline due to strategic transformation pains.
2) Leading sunscreen raw material upstream: Cosmos Chemical Q3 net profit attributable to the parent company decreased by -4.11% year-on-year.
3) Midstream OEM companies: Green Pine Q3 net profit attributable to the parent company increased by +1250.36% year-on-year; Jiaheng Household Chemicals Q3 net profit decreased by -38.77% year-on-year.
Investment advice:
① Beauty sector recommendations: Proya Cosmetics (603605.SH), Runben (603193.SH), Giant Biotech (02367), Chicmax (02145), Syoung Group (300740.SZ), Marubi Biotechnology (603983.SH), Lushang Freda (600223.SH), Cosmos Chemical (300856.SZ), Jiaheng Household Chemicals (300955.SZ), Bloomage Biotechnology (688363.SH), Be'teni (300957.SZ), Shanghai Jahwa (600315.SH), Green Pine (300132.SZ).
② Retail sector recommendations: Zhejiang China Commodities City Group (600415.SH), Loctek Ergonomic Technology Corp. (300729.SZ), Huakai Yibai Technology (300592.SZ), Saiweishidai (301381.SZ), Chongqing Department Store (600729.SH); recommend Mingyue Optical Lens (301101.SZ), Doctorglasses Chain (300622.SZ), recommend the global retail leader Miniso (09896), recommend the leading professional maternal and child retail leader Child King (301078.SZ).
③Medical beauty sector, recommend Kinbo Biology (832982.BJ), cautiously recommend Jiangsu Wuzhong Pharmaceutical Development (600200.SH), recommend Shanghai Haohai Biological Technology (688366.SH), Imeik Technology Development (300896.SZ), Lancy Co., Ltd. (002612.SZ), Beautyfarm Med (02373).
④Jewelry sector, recommend Laopu Gold (06181), Guangdong CHJ Industry (002345.SZ), Lao Feng Xiang (600612.SH), Chow Tai Seng Jewellery (002867.SZ), Shenzhou International Group Holdings Limited unsponsored adr (600916.SH), Cai Bai Co., Ltd. (605599.SH), Mankaron (300945.SZ), Chow Tai Fook (01929).
⑤Textile and clothing sector, on the manufacturing side recommend Yue Yuen Ind (00551), Huakai Yibai Technology (300979.SZ), Zhejiang Weixing Industrial Development (002003.SZ), suggest paying attention to Shenzhou International Group Holdings Limited unsponsored adr (02313), Zhejiang Xinao Textiles Inc. (603889.SH), on the brand side recommend Baoxiniao Holding (002154.SZ), Biem.l.fdlkk Garment (002832.SZ), suggest paying attention to HLA Group Corp., (600398.SH), Bosideng (03998).
Risk reminder: industry competition intensifies, end demand falls short of expectations, etc.
