Recently, Blue Moon Group Holdings Limited ("Blue Moon", 06993.HK) released a share incentive scheme that attracted market attention for the first time since the company went public, and the market generally gave positive comments on it.

The company announced that the proposed use of group funds to subscribe for no more than 5 per cent of the total number of shares issued on the adoption date (that is, 292959750 shares), and the total number of shares involved in awarding awards to selected participants shall not exceed 1 per cent of the total number of shares issued on the adoption date (i.e. 58591950 shares). The main rewards are for core employees who have contributed to the growth and development of the group.

Blue Moon said that the purpose of the scheme is to recognize and reward a number of eligible participants who have contributed to the growth and development of the company, so as to encourage them to contribute to the continued operation and development of the company, and to attract suitable talents to join them. to promote the further development of the company.

The share price continues to fall and the target price is lowered.

It is worth mentioning that Blue Moon, which has only been on the market for half a year, has gone all the way down since its listing peaked at HK $19.16.As of June 22, Blue Moon shares were trading at HK $10.82, which has been falling for more than half a year compared with the offering price of HK $13.16 when it went public on December 16, 2020.

At the same time, Blue Moon's first annual report was more or less lower than the market expected. In 2020, Blue Moon's revenue was 6.996 billion Hong Kong dollars (HK $, the same below), down 0.8% from a year earlier, while net profit was HK $1.309 billion, an increase of 21.3% over the same period last year. However, by category, Blue Moon's personal cleaning care and household cleaning categories will grow rapidly in 2020. Of this total, revenue from personal cleaning care products reached HK $836 million in 2020, an increase of 99.7 per cent over the same period last year, while revenue from household cleaning care products reached HK $565 million in 2020, up 24.5 per cent from the same period last year.

UBS cut its profit forecast for 2021-2023 by 15 to 26 per cent on the back of Blue Moon's weaker-than-expected results last year, low expectations for offline distribution growth and rising raw material costs, UBS said in a research report on May 13.

UBS also pointed outThe company's share price has fallen 36 per cent since the Lunar New year holiday and 5 per cent relative to the Hang Seng Index, while the stock is now trading at 32.5 times forecast 2021 earnings and 36 times for its peers. The bank slashed its target price to HK $10.94 from HK $19.7, maintaining a neutral rating.

Bank of America Merrill Lynch also said at about the same time that Blue Moon's 2020 sales and net profit fell by 0.8% and 21.3% respectively, that is, 5.3% and 16.9% respectively in the second half of the year, roughly in line with expectations. however, based on reflecting the potential implementation risk of offline distributor channel penetration and the soaring cost of raw materials,The forecast of net profit after tax will be reduced by 12% this year and next, and the target price will be reduced from 18 yuan to 14.5 yuan.To reiterate the 'neutral' rating.

Start with hand sanitizer but it is difficult to recreate the "popular style"?

Blue Moon was founded in 1992 and has been deeply cultivated in the field of household cleaning products for more than 20 years. The company launched bacteriostatic hand sanitizer in 2000 to expand its personal cleaning business and began to enter the detergent market in 2008, opening the era of detergent.

On December 16, 2020, Blue Moon was officially listed on the Hong Kong Stock Exchange and became the "first share of laundry detergent" in China. At present, the company has more than 80 varieties of products in three categories: clothing cleaning care, personal cleaning care and household cleaning care.

Blue Moon started with hand sanitizer until the outbreak of SARS in 2003, Blue Moon seized an opportunity for rapid development and growth. At that time, the public began to pay attention to personal hygiene, including hand washing, and gradually realized the disadvantages of hand washing with soap. Blue Moon seized the opportunity to make frequent appearances on TV stations through offline activities such as social donation and promotion of hand washing, and built itself into a leading brand of hand sanitizers in just one year.

Since then, Blue Moon has long been at the top of the hand sanitizer market, ranking first in market share between 2012 and 2019. However, under the same epidemic situation, it is not smooth for Blue Moon to explore the market for new categories of "hand washing" in 2020.

Generally speaking, in the more mature commodity industry, enterprises continue to launch new products in order to further compete for market share, and Blue Moon has been committed to this. According to the financial report, Blue Moon has accelerated its pace since 2020, with various "hand washing" products such as foam bacteriostatic hand sanitizer, automatic mobile phone washing, wash-free bacteriostatic hand sanitizer and clean amino acid hand sanitizer being launched one after another around the theme of anti-epidemic.

It is worth mentioning that "Investor Network" visited the Blue Moon Tmall flagship store and the Blue Moon Supreme flagship store and found that the monthly sales of the new foam bacteriostatic hand sanitizer in 2020 were 600 tons, with a cumulative comment of 700 tons; the monthly sales of wash-free bacteriostatic hand sanitizer were 100 tons, while the monthly sales of automatic mobile phone washing and net amino acid hand sanitizer were only 6 and 12 bottles, respectively. But these new products are not an instant hit, sales are mediocre, and even some products are little known.

"Investor Network" sent a letter to the person in charge of Blue Moon, asking about the reasons for the mediocre sales of new products around the company's "hand washing", but did not receive a reply from the other party.

According to Blue Moon, the proceeds from the first global offering totaled HK $11 billion, of which HK $220 million, or about 1 per cent, was proposed to enhance R & D capabilities, while it was used to raise brand awareness. The cost of further strengthening the company's sales and distribution network and enhancing product penetration was HK $5.76 billion, accounting for more than 50 per cent.

(photo Source: blue Moon Financial report)

In response, Jiang Han, a senior researcher at Pangu think tank, analyzed to Investor Network, "in fact, most hand sanitizers have different functions, and these functions are actually very mature, such as disinfection, aroma and other functions." Therefore, there is no need to invest too much in research and development. on the contrary, the focus is on promotion and marketing, a more mature FMCG manufacturer whose business logic is closer to that of enterprises such as Coca-Cola. "

Zhu Danpeng, a Chinese food industry analyst, believes that after the Blue Moon is listed, its comprehensive strength has been well improved, and "there is also a good blessing for the widening, deepening and strengthening of the moat. On the whole, the future development of Blue Moon is still worth looking forward to."

The "powder absorption" ability of e-commerce channels needs to be improved.

For the layout of distribution channels, Blue Moon has proposed to further consolidate the leading position of online channels, comply with the trend of channel development, and expand to emerging online sales platforms such as social e-commerce.

"Investor Network" noticed that Blue Moon's advertising layout on the Douyin platform is a little less than satisfactory. Browsing its home page, you can see that the number of views and likes of Blue Moon's works are less than those of its competitors. As of June 21, Blue Moon had 79 works with 21W fans and 2.5w total likes, while Libai had 342 works with 90.3w fans and 340.7w total likes. Judging from the small number of works, Blue Moon may have been stationed on Douyin for a short time and updated less frequently, but on the whole, the effect is not very ideal. On the contrary, Libai spent a lot of effort on his works. In addition to the tens of thousands of likes, many of his works invited popular stars such as Wu Yifan, Zhou Bichang and Zhang Ziyi to help him absorb fans.

In this regard, Xu Xiongjun, an expert in strategic positioning and founder of Jiude Positioning Consulting Company, said, "Internet marketing of new media such as Tik Tok is very important, which is also the direction of Blue Moon's online and offline combination of new retail layout in marketing channels." In addition to Taobao Tmall JD.com online, such as Douyin e-commerce such short video e-commerce live with goods in the future will be more and more popular, Blue Moon also needs to be strengthened in this area. "

However, Blue Moon's sales expenses (sales and distribution expenses) have gradually shrunk in recent years. Blue Moon's sales and distribution expenses are mainly invested in employee promotion and multimedia advertising. The company's sales expenses have declined since 2018, with sales and distribution expenses falling from HK $2.548 billion in 2018 to HK $2.323 billion in 2019 and HK $2.017 billion in 2020, a drop of more than 20 per cent in three years, according to the results.

In this way, is it its confidence in the brand that has long been deeply rooted in the hearts of the people, or is it the result of product positioning that Blue Moon has not made efforts to please young consumers on social ecommerce platforms?

Hand sanitizer takes the lead while striving to capture the high-end market

It is worth mentioning that Blue Moon has never stopped moving to a higher end of the market. In 2018, Blue Moon aimed at the domestic consumption upgrading market and launched supreme detergent targeting the high-end market, filling the gap in the high-end field of the domestic washing market. In the same year, it set up supreme washing flagship stores and launched related high-end washing products on platforms such as Taobao and JD.com.

"compared with Libai, it can be seen that Libai started out as a detergent, and Libai detergent can be ranked first in China, but the category of detergent is in decline. Now many people do not use detergent to wash clothes, especially in cities. Most of them use detergent. Blue Moon is the pioneer of laundry detergent in China. The reason for the rapid growth of detergent is that the market demand for the brand of detergent is large, and the size of the demand determines the size of the brand. Therefore, we can see that the turnover of Blue Moon has gone from 1 billion or 2 billion to nearly 10 billion. " Xu Xiongjun analyzed.

With the blessing of this brand positioning, Blue Moon has been the leader in the industry for more than ten years. According to Frost Sullivan data, Blue Moon ranked first in China's detergent market share for 10 consecutive years from 2009 to 2019; hand sanitizer also ranked first in market share between 2012 and 2019; in terms of retail sales value, from 2017 to 2019, the market share of detergent, hand sanitizer and concentrated detergent was 24.4%, 17.4% and 27.9%, respectively.

"the brand of Blue Moon detergent is very strong. It is the leader of domestic detergent, and its leading position in detergent is very stable, and it has been maintained for many years. Blue Moon's entire blue bottled detergent positioning middle and high-end route, different from the white, including Procter & Gamble, Unilever and other brands targeting middle and low-end consumers, Blue Moon firmly controls the brand strategic positioning of high-end detergent. " Xu Xiongjun continued to analyze, "around the high-end strategic positioning, Blue Moon sent promoters to carry out promotional activities in the supermarket, but the whole promotion is to take the high-end route, such as no price reduction, less price reduction, replaced by free gifts." And many low-end brands like Libai or other low-end brands often fight a price war, with more promotions and price discounts, while Blue Moon has always maintained a high-end image, just like luxury goods, letting the market recognize its high-end image. "

"of course, its product quality and technology are also very excellent, which is also the foundation for it to settle down." Xu Xiongjun added. (produced by thinking Finance)