As the leading company of hyaluronic acid, Huaxi Biotechnology is well known. Many people regard Huaxi Biotechnology, Amic and Haohai Biotech as the three swordsmen of medical beauty . However, the current development status of the former Three Musketeers is very different. At the end of 2021, the stock prices of all three fell sharply. After more than half a year, Amic's stock prices have basically recovered, but the stock price trends of Bloomage Biotech and Haohai Biotech are still not optimistic.
Bloomage Biotech's stock price continues to fall. There are two main reasons: On the one hand, due to the impact of the general environment, in June last year, the National Health Commission, the State Administration for Market Regulation and other departments launched a six-month crackdown on illegal medical cosmetology. The special rectification work on services has had a certain impact on medical and aesthetic companies, and market sentiment has once again spread in June this year; on the other hand, Bloomage Biotech has been questioned for its "emphasis on sales and light on R&D." Is this really the case?
1. The sales expenses of Bloomage Biotech in 2021 are 8.6 times the R&D expenses
Reading the companyâs financial report shows that the R&D expenses of Bloomage Biotech increased from 53 million yuan in 2018 to 284 million yuan in 2021; during the same period, sales expenses increased from 284 million yuan to 284 million yuan. Rapidly grew to 2.436 billion yuan. In 2021, Bloomage Biotech's sales expenses are 8.6 times as much as R&D expenses. Not only that, Bloomage Biotechnology's sales investment in the first quarter of 2022 was as high as 566 million yuan, and R&D expenses are indeed a bit "miserable" in comparison.
(data from Bloomage Biotechâs financial report)
When comparing the two data, it will give everyone an illusion that Bloomage Biotech seems to have reversed priorities. In fact, this is not the case. Bloomage Biotech now has four major business segments: hyaluronic acid raw material business, medical terminal business, functional skin care products business and functional food business. Judging from the revenue in 2021, the functional skin care products segment is 3.32 billion yuan, accounting for 67.09% of the total revenue. In this sense, Huaxi Biotech can be said to be a skin care product company.
2. Bloomage Biotech has been diligently researching and developing
In fact, Bloomage Biotechnology has always attached great importance to research and development because it wants to strengthen competition barriers and moats with its research and development capabilities. In 2021, the number of R&D personnel will be 571, an increase of 194 year-on-year, and 239 projects under research, an increase of 116 year-on-year. As of the end of 2021, R&D personnel accounted for 17.77% of the company's total number of employees, and those with a bachelor's degree or above accounted for 78.63%. At least from this aspect, the scientific research strength is no problem.
(data from Bloomage Biotech's 2021 annual report)
It is precisely because of its emphasis on research and development that Bloomage Biotech has been authorized 89 invention patents in 2021, an increase of 40 year-on-year, and its core scientific and technological capabilities have continued to increase. Therefore, Huaxi has obtained 12 new certifications and registrations for raw materials in 2021, 2 medical device registrations and , and 8 special cosmetics administrative licenses.
In addition, Bloomage Biotech undertakes the key projects of the "Green Biomanufacturing" and the "Technology Assists the Economy 2020" of the Ministry of Science and Technology's national key R&D programs in 2021; was awarded the "Key Laboratory for Quality Control of Cosmetic Raw Materials" by the State Food and Drug Administration . It is the countryâs first cosmetic raw material quality research laboratory. This is undoubtedly recognition of the R&D capabilities of Bloomage Biotechnology, and for this reason, Bloomage will pay more attention to research and development and continue to carry out independent innovation of products.
3. High investment in sales expenses to build brand power
Huaxi Biotechnology has four major brands: " Runbaiyan ", " Quadi ", "Mibeier" and "Jihuo". The first two major product brands are Revenue has entered the 1 billion level, forming a certain brand influence, and there is no lack of marketing in this.
The retail sales of China's functional skin care products market in 2021 is 30.8 billion yuan. From the perspective of market share, Bloomage Biotech accounts for 11.60%, ranking fourth, and there is still a certain gap between Betteni.
Functional skin care products are different from hyaluronic acid raw materials. The former is a TO C business model and relies on spending money on marketing. Otherwise, how can it be known by consumers? Moreover, the competition in the industry is quite fierce. There are many domestic companies participating, as well as well-known foreign companies such as Europe, America, Japan and South Korea. Bloomage Biotech will inevitably fall into a tough battle.
Huaxi Biotechnologyâs goal is: builds product strength and brand strength based on technological strength. Obviously, after more than 20 years of development, Huaxi has passed the first two stages and is currently doing its best to build brand power. For a direct-to-consumer business model, combined with peopleâs preferred consumption methods, more than half of Bloomage Biotechâs sales expenses are spent on online promotion. Bloomageâs products can be found everywhere on software such as Mouyin and Moubao. Facts have proved that , the money was not wasted.
4. Spending a lot of money to build a brand, but the market does not buy it
A careful reading of the annual report shows that Bloomage Biotech has a very clear plan for itself, which is to enter the high-end cosmetics field and create 1-2 national brands in the next few years. Feiji Investment Research believes that in today's era, building a brand is a cool thing. In the past, foreign companies made most of the profits in China's skin care industry, but now domestic companies are beginning to work hard on the brand side and seek to win in the market. Establishing your own rules and gameplay in the game is undoubtedly worthy of recognition.
However, this approach of Bloomage Biotech is not recognized by investors. Although revenue and profits continue to grow, the stock price has not been able to rise. Why is this so? Probably due to the influence of market sentiment, in the long-term market slump, any disturbance will be infinitely amplified. Even if Bloomage Biotech's performance has increased, the growth rate has not met the expectations of investors, and the stock price will still fall. .
5. Summary
The skin care product industry still has a lot of room for development in the future, and Huaxi Biotechnology has the innate advantage of hyaluronic acid, and its functional skin care business has also achieved initial results. From the perspective of value investment, Feiji Investment Research believes that it is still worth it. expected. Every company has its own way of playing, and building a brand is a hard battle. Maybe the market doesnât recognize it at the moment, but who can guarantee that it wonât in the future?
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Source: Flying Whale Investment Research
