In A-share market, Maotai is a bull stock that is not allowed by the benevolence.
Maotai is favored by investors from all walks of life. Besides the strong brand influence and unique brewing technology, there is also an important reason, that is, the super high gross profit rate. According to the data disclosed in its financial report, the gross profit rate of Maotai liquor products in 2020 is 93.99%, and the cost of each bottle of feitianmaotai is only more than 100 yuan. However, the retail price is suggested to be up to 1499 yuan / bottle, and some market terminals can even sell to the high of RMB 3400 per bottle.
However, with such a business, its profitability is not less than Maotai, the industry leader’s recent share price has also been rising. Because women are the main audience, many people call it “women’s Maotai” – a business called hyaluronic acid.
So, how did hyaluronic acid emerge? How much investment value does it have in the future? This article will try to make an answer.
Before discussing hyaluronic acid, it is necessary to briefly introduce “beauty economy”.
Everyone has a love for beauty, which is the same at all times and all over the world. As early as more than 2000 years ago, the great philosopher Aristotle once said to his disciples, “a beautiful face is a recommendation that works better than any letter of introduction.”; In our country, there are immortal legends of the four beauties and the eternal sentence of “looking back at the beautiful life with a smile”; Today, in the Internet era, in the popular “three fight”, the “beauty can’t fight the character, the character can’t fight the feelings”, the “beauty” is in the first place, even the love between men and women should say “starts from the beauty”.
Many evidences show that high face value will produce “premium effect” and bring many additional benefits to its owners.
According to the study of economist, power often belongs to leaders with higher appearance. Whether in gorilla community or in western developed countries today, leaders should reach the highest level of their career, and their appearance (including height, muscle, voice tone) and achievement are equally important; Daniel Homer, an American labor economist, pointed out clearly in his article “beauty and labor market”, that the positive correlation between the face value and the total income of the whole life labor force is strong, and there is both ugliness penalty and beauty premium in the society; A South Korean study, the cosmetic effect of marriage and labor market, confirmed that the highest male income was 15.2% higher than that of the men with middle appearance, and 11.1% higher for the women with the highest appearance value.
The above evidence tells us that “eating by face” really makes sense. People with high face value tend to get more attention and opportunities, and then grow faster and develop better. However, in real life, not everyone is born beautiful. Coupled with the change of people’s ideas and the improvement of their income level, a series of consumer activities and commercial behaviors around the appearance value begin to rise, which is called “appearance value economy”.
At first, the main category of “beauty economy” was various cosmetics, skin care products, map repair software and beauty cameras. However, in recent years, with the improvement of Internet social media penetration, the demonstration effect of star net popularity is becoming stronger and stronger, and the demand for “sun printing” on various platforms is becoming increasingly strong. At the same time, it also makes many people feel a bit anxious about face value and aging.
In this way, more and more people are really willing to pay for “beauty”. In addition to daily skin care, stability maintenance and color makeup, many women and some “exquisite” men are also keen to invest in non-surgical light medical beauty projects, including laser, radio frequency, injection filling and so on.
Compared with the traditional skin care products, the effect of “upgrading” the skin value by means of light medical beauty is more immediate. Compared with surgical plastic surgery, these non-surgical light medical beauty projects have faster recovery time, lower price and risk, so they are more easily accepted by consumers, and the market demand is also booming. According to the data from iResearch, the proportion of light medical beauty market in the overall medical beauty market is significantly higher than that of surgery cosmetic market, which is about 65% – 70%, and the annual composite growth rate is also higher than the overall growth rate of medical beauty market.
In this context, hyaluronic acid, the most popular project in light medicine and the United States, has become a hot spot in the industry.
Once upon a time, hyaluronic acid was exclusive to a few high-income people. Big s once said: “if there is no hyaluronic acid, many female stars will not survive.” However, in recent years, hyaluronic acid has gradually entered the public field of vision, and more and more by those who have the pursuit of “beauty” and “young” appeal of ordinary consumers.
Hyaluronic acid (HA), also known as hyaluronic acid (HA), is distributed in the human dermis. It has good filling effect and biocompatibility. It can not only fill the concave part, smooth the wrinkles, modify the facial contour after injection into the skin surface, but also provide nutrition for the skin, and make the skin more moisturized and smooth. Because of these characteristics, hyaluronic acid has been widely used in water supplement, filling, wrinkle removal and other light medical beauty projects, and its market scale is also expanding. The data show that the market scale of hyaluronic acid in China has increased from 4.52 billion yuan in 2015 to 13.6 billion yuan in 2019, with an annual composite growth rate of 27.5%, and it is expected that the market size will reach 15.46 billion yuan in 2021.
For a long time, China’s hyaluronic acid market has been dominated by international brands, with more than 60% of the products from imports. In 2019, LG Chemical and American eljian accounted for 42% of the total. However, in recent years, local brands are rising day by day. With the continuous optimization of production process and product quality of domestic hyaluronic acid, and the continuous improvement of consumers’ recognition of domestic brands, the domestic substitution process of hyaluronic acid will be further deepened in the future.
Among the local brands, the “three giants of hyaluronic acid” represented by Aimco (300896.sz), Huaxi biology and haohaisheng group are the most competitive. Data show that the market share of the three has increased from 20.5% in 2016 to 28.1% in 2019. Among them, EMC’s market share rose rapidly from 5.7% in 2016 to 14% in 2019, while Huaxi biological market share rose from 7% to 8.1%.
It is worth mentioning that the business layout of the three companies is different in the following areas: Aimco focuses on medical beauty filling products, Huaxi biological business involves medical terminal products, functional skin care products, raw materials products, etc., while haohaisheng Department covers four fields: Ophthalmology, plastic and wound protection, orthopedics, anti adhesion and hemostasis. Due to the layout of hyaluronic acid business, the three companies have shown a strong growth trend, especially in the capital market.
Take Emmy as an example. According to the financial report data, the operating income of EMMC reached a growth rate of 44.6% from 2015 to 2020. Although affected by the epidemic in 2020, the company is under pressure in operation, but with the rapid increase of income such as hi body products specially for neck line hyaluronic acid products, the company still achieved a total operating income of RMB 709million, an increase of 27.2% year on year; The net profit attributable to the parent company was RMB 440million, an increase of 43.9% year-on-year. It is because of the outstanding performance in performance and growth that Amex shares soared 187.56% on the first day of its listing on the gem. In the following three or four months, AMEX’s share price has been soaring all the way, rising from 340 yuan / share on September 28, 2020 to 1331 yuan / share at the end of February 2021, with no two winds. Today, EMC has exceeded 140billion yuan in market value, and has become a bull stock in A-share market.
In addition, Huaxi biology and haohaisheng family also perform well in the capital market, and this is no longer to be covered.
Is hyaluronic acid a good business? The answer, of course, is yes. In addition to the factors mentioned above, such as the increase of residents’ income, the change of ideas, and the acceleration of domestic substitution, there are also the following “three highs”, which make hyaluronic acid a business that can “lie down and make money”:
First, high gross profit rate.
At the beginning of this paper, Maotai has played a key role in making Maotai the first share in China, with a gross margin of more than 90%. However, compared with Maotai, the level of the profiteering of hyaluronic acid is not inferior to that of Maotai. The data show that the gross profit rate of EMC has been higher than Maotai since 2019, even reaching an amazing 92.5% in the first quarter of 2021, while that of Huaxi biology and haohaishengke has reached almost 75%.
In addition, the prospectus data show that the unit cost of the product of polyuric acid is more than 30 yuan, but the unit price is more than 2500 yuan; Haohaisheng family a product of hyaluronic acid with a cost of 19.22 yuan, the unit price of sales can reach 285.35 yuan, and the gross profit rate is 93.26%. In reality, a hyaluronic acid product flows into distributors, downstream hospitals, medical and beauty institutions, etc. along with the industrial chain. In the circulation layer by layer, it is inevitable to increase the price again and again.
But even so, the market demand for hyaluronic acid is still very strong, especially those women who love beauty. So it seems that it is not too much to call hyaluronic acid “the Maotai of women”.
Second, high repurchase rate.
Injection of hyaluronic acid is not once and for all. Its effect usually lasts for half a year to one year. If it is not injected again, the skin of consumers will become loose, dry and dull. For those who pursue beauty, once they experience the moisture, luster and elasticity of their skin, they are easy to rely on or even addicted to it, and it is difficult to accept the appearance of skin deterioration, “from frugality to luxury, from luxury to frugality”, so they can only buy repeatedly.
This is of course the best thing for businesses. The original gross profit margin is high enough, and more and more customers continue to buy again. The rich profits and stable and sufficient cash flow naturally have a solid guarantee, and also provide a strong momentum for the continuous improvement of the company’s competitiveness and the development and growth of the industry.
Third, high access threshold.
According to the State Food and drug administration, hyaluronic acid injections for medical beauty are recognized as three types of medical devices in China – the highest level of medical devices, specifically referring to those implanted into the human body, used to support or maintain life. These medical devices are potentially dangerous to the human body, with the highest degree of risk and the most strict supervision, Whether it is production or operation, it is necessary to obtain the registration certificate of medical devices, the production license of medical devices and the business license of medical devices issued by relevant departments. The product is approved for a long time, with large cost and high access threshold.
According to the statistics of the Oriental Securities Research Report, at present, less than 20 companies engaged in hyaluronic acid business in China have qualifications. In this way, the market position of the leading enterprises in the industry has been consolidated because of the higher access threshold, and has become their own “moat”.
Looking forward to the future, the market prospect of hyaluronic acid in China is broad: on the one hand, China has 1.4 billion people and the largest middle-income group in the world. The continuous improvement of consumption capacity will inevitably lead to further release of the potential of medical and American demand, which provides a huge demand base for the development of the hyaluronic acid industry; On the other hand, compared with the developed countries such as the United States, Japan and Korea, the penetration rate of China’s medical and American is still significantly lower, and the permeability of hyaluronic acid is less than 0.2%, and the per capita diagnosis and treatment times are only 1 / 6-1 / 4 of that of developed countries, which indicates that there is still a big room for the improvement of the market of hyaluronic acid in China in the future.
Therefore, hyaluronic acid is a well deserved sunrise industry and golden track, which has great investment value in the long run. Miss Maotai’s friend, should not miss the glass uric acid tuyere this time?
It is necessary to remind that the valuation of hyaluronic acid company is generally too high, and the PE of EMC is about 250 times, that of Huaxi biological is nearly 200 times, and that of haohaishengke is close to 100 times. Throughout the hot sectors of the A-share market, no matter the biopharmaceutical or consumer goods industry, or the daily chemical industry, its PE is generally 30 ~ 50 times, far lower than the “three giants of hyaluronic acid”. Therefore, when investing in this golden track, we must pay attention to avoid risks.
The hyaluronic acid industry is not without any problems. At present, the biggest pain point is that driven by high profits, the whole medical and beauty industry is full of chaos.
On the one hand, the organization of “black medical beauty” won the host.
For a long time, the cases of plastic and beauty failure have been reported frequently. All the parties are sorry for life, which is closely related to the proliferation of “black medical beauty” institutions in the market. Dongguan Securities Research Report shows that in 2019, there are more than 80000 black institutions without medical and beauty qualification in China, about 6 times of the number of formal medical and aesthetic institutions, accounting for 86% of the total number of medical and American institutions. Many of these “black medical beauty” institutions do not even have the basic knowledge of disinfection and drug management, so it is difficult to guarantee their health and safety, which has led to many tragedies. According to data, there are more than 40000 medical accidents in China alone, with an average of 100000 people dying or maimed due to “black medical beauty” every year.
Second, the supply of professional doctors is insufficient.
Generally speaking, it takes 5-8 years to train regular doctors, and the high profits of the industry lead to the frequent emergence of “black doctors”. According to the calculation of irey consulting, the number of regular practitioners in medical and American industry in China in 2019 is about 38300, accounting for only 28% of the total practitioners in the industry; The statistics of China Integration Association also show that the number of illegal practitioners in China is at least 100000, and 14% of the legal doctors are operating in non-compliance. All of these aggravate the industry risk.
Third, the quality of injection and equipment is not up to standard.
Because of the characteristics of easy to carry, fast flow and strong secrecy, the phenomenon of fake and smuggling of medical beauty injection is common. According to the data of iResearch, 2 / 3 of the medical and American injection in China is water and fake, so the safety problems can not be ignored.
Not only that, photoelectric equipment also has problems. According to the data of irey consulting, 11% of the optoelectronic equipment of legal medical and American institutions in China are aquatic goods and fake goods, while 90% of the photoelectric equipment of illegal medical and American institutions are fake goods, mainly because of the strict control and high price of regular photoelectric equipment.
The existence of the above problems makes the medical and American industry a high incidence of market complaints. According to the data of China Consumer Association, the number of complaints in China’s medical and American industry was 6138 in 2019, compared with 483 in 2015, which increased by more than 12 times in just four years, which seriously restricted the development of the industry.
Because of this, the industry supervision is becoming more and more strict
In March 2019, 8 departments including the national health and Health Commission jointly carried out special medical treatment actions;
In November 2019, medical cosmetology was included in the national supervision and spot check and the special rectification work of medical chaos jointly carried out by eight departments;
Recently, 8 departments such as the national health and Health Commission decided to jointly carry out special renovation work on the fight against illegal medical and beauty services from June to December 2021, aiming to further improve the legal practice awareness of beauty medical institutions, strengthen the quality and safety management of medical services, prevent medical disputes and safety risks, and severely crack down on illegal medical and beauty activities
In the short run, the regulation of regulatory authorities may have a certain impact on the industry. However, after adjustment and dynamic rebalancing, the market demand will gradually shift to genuine and legitimate medical and beauty terminals, and the development of the whole industry will become more and more standardized. With the decrease of medical accidents and industry disputes and the increase of public trust, the industry on the right track will usher in further expansion of the market