20220621-招银国际-贝泰妮-300957.SZ-A_niche_play_that_sees_growth_from_brand_incubation_and_an_unparalleled_R_D_franchise_8页_919kb

Botanee Biotech (300957 CH) Summary

Core Content

Botanee Biotech is a Chinese skincare company that focuses on sensitive skin care, with a dedicated product lineup and a strong R&D capability. The company has been identified as a rare investment opportunity with high growth potential and strong margins. It is considered a "Star company" due to its performance exceeding industry peers in terms of revenue growth and profitability.

Main Business Overview

• Core Focus: Sensitive skin care, which accounts for 93% of total revenue.
• Product Line: Includes anti-acne, skin barrier repair, anti-sensitive moisturizing, and other specialized skincare products.
• Brand Portfolio:
  • Winona: The flagship brand, known for its anti-sensitive moisturizing cream.
  • Winona Baby: A brand targeting infants and children, with a 30% YoY revenue growth in Q1.
  • AOXMED: A high-end anti-aging brand launching in 2022, targeting premium markets and expected to reach RMB1bn in revenue within 3-5 years.
  • Funny Elves: A color cosmetics brand with a focus on low-cost, long-lasting makeup products.

Financial Highlights

• Revenue Growth:
  • FY20A: RMB2,636mn
  • FY21A: RMB4,022mn (+52.6% YoY)
  • FY22E: RMB6,062mn (+50.7% YoY)
  • FY23E: RMB8,368mn (+38.0% YoY)
  • FY24E: RMB11,582mn (+38.4% YoY)
• Projected CAGR: 41% for revenue and 42% for net profits from 2021 to 2024.
• Gross Margin: 75.9% in FY22E, with a stable trend.
• Net Profit:
  • FY20A: RMB544mn
  • FY21A: RMB863mn (+37.0% YoY)
  • FY22E: RMB1,241mn (+38.0% YoY)
  • FY23E: RMB1,727mn (+39.2% YoY)
  • FY24E: RMB2,400mn (+38.9% YoY)
• EPS (RMB):
  • FY20A: 1.6
  • FY21A: 2.1
  • FY22E: 2.9
  • FY23E: 4.1
  • FY24E: 5.7

Key Strengths

• Herbal-Based Ingredients: Botanee sources its ingredients from Yunnan, leveraging the region's rich biodiversity. It has developed proprietary ingredients like prinsepia utilis ceramide and Thengchong hot spring fungus-derived ectoin.
• Clinical Research: The company has a strong R&D focus, with 80+ intellectual properties as of end-2021, including 22 invention patents.
• Online Sales Dominance: Over 85% of sales are online, indicating a strong digital presence and customer engagement.
• Brand Segmentation: Expanding brand portfolios (Winona Baby and AOXMED) enable more precise targeting of different consumer segments.
• Private Domain Channels: Active use of WeChat platforms for direct customer engagement and brand loyalty building.
• Product Innovation: Continuously expanding product lines and introducing new SKUs to meet evolving consumer needs.

Valuation & Investment Recommendation

• Target Price (TP): RMB251
• Upside Potential: +17.8% from current price (RMB213)
• Valuation Metric: Based on 2.0x end-22E PEG, reflecting fast growth and short listing history.
• Investment Rating: BUY – the stock is a top pick in the sector alongside Proya.

Risks

• Regulatory changes in the dermocosmetic industry.
• Challenges in executing hero product strategy and brand incubation.
• Risk of product recalls.
• Intense competition from domestic and international brands.
• Selling pressure from shareholder lock-up expiration.

Shareholding & Performance

• Market Cap: RMB89,583mn
• Shareholding Structure:
  • KM Nuona Tech: 46.1%
  • TJ Hongshan Juye: 18.8%
  • Kunming Zhenli: 8.8%
• Share Performance (3 months): Absolute return of 31.3%, relative to market of 28.2%
• Online Sales Mix: RMB82.0% of total revenue in FY21A, showing strong digital presence.

Key Ratios

• Gross Margin: 76.3% in FY20A, decreasing slightly to 75.5% in FY24E.
• Operating Margin: 23.7% in FY20A, increasing to 24.3% in FY24E.
• ROE: 45.2% in FY20A, rising to 27.3% in FY24E.
• Dividend Yield: 0.2% in FY20A, increasing to 0.9% in FY24E.
• Current Ratio: 0.5 in FY20A, stable at 0.5 in FY24E.
• Inventory Turnover Days: Increased from 132 in FY20A to 146 in FY24E.

Conclusion

Botanee Biotech is a fast-growing, high-margin skincare company with a strong focus on sensitive skin care and a robust R&D pipeline. Its unique product offerings, backed by natural ingredients and clinical validation, along with its strategic brand expansion and digital sales channels, position it well for continued growth. The company is currently rated BUY, with a target price of RMB251, and is expected to outperform the market in the next 12 months. However, it is important to note the potential risks associated with regulatory changes and competitive pressures.