Shanghai Jahwa suffered tremendous epidemic pressure in the first half of the year and strove to achieve recovery growth in the second half of the year

2022-08-19 On the evening of August 19th, Shanghai Jahwa (600315. SH) disclosed the semi-annual report for 2022, and simultaneously announced the adjustment of the company's 2022 financial budget, some performance evaluation indicators of the restricted stock incentive plan in 2020, and the launch of the restricted stock incentive plan in 2022. The report shows that the company achieved operating income of 3.715 billion yuan in the first half of 2022, and net profit attribute to shareholders of the company before non-recurring gains and losses reached 2.01 billion yuan. Excluding the impact of exchange rate, the company's overseas business revenue still achieved nearly double-digit growth. After reviewing the actual operation situation in the first half of the year, the leadership of the company rationally adjusted the annual assessment objectives according to the current objective environment. However, the adjusted objectives are still challenging. The reasonable adjustment of this assessment target is conducive to mobilizing the enthusiasm of the core employees of the company and helping to realize the long-term sustainable development of the company.

In the first half of 2022, especially since March, the offline and online business of the Company was impacted to varying degrees due to disadvantage factors such as the closure of retail terminals, the closure control factories and main warehouses, and limited logistics caused by Covid-19 epidemic. During the reporting period, Shanghai Jahwa continued to implement the "123 operation principle”, and strove to overcome the difficulties and challenges brought by the Covid-19 epidemic to ensure the overall orderly operation of production and operation. As of the end of the reporting period, the Company's production and operation conditions basically returned to normal, and will strive to achieve recovery growth in the second half of the year.


Facing the severe epidemic situation, Jahwa brand builds its advantages and drives R&D through global multi-dimensional insight, which enables its main brands to launch many new products. During the reporting period, Jahwa skin care brand Dr.Yu launched a new sunscreen product, "Macromolecular Platinum Shield", which ranked first in the sunscreen category on the day when Tmall Black Box went on the market. Since its listing last year, Herborist's new Taiji series has made positive progress in recruitment, repurchase and crowd operation through the theme marketing of "True Beauty", and has now become the largest product line in Herborist. Compared with the end of last year, the repurchase rate of Dr.Yu and Herborist, the main skin care brands has increased in recent 12 months. In the meantime, Shanghai Jahwa has improved the aggregation degree of its own brand top sellers by focusing on hot sellers and streamlining SKU.

Both the sale volume and the price of Liushen brand in the category of personal care and family clearing have risen slightly, which still achieved growth under the influence of the Convid-19 epidemic. During the “618” e-commerce festival, the difficulties such as insufficient supply of goods were overcome. Fortunately, the e-commerce GMV still achieved a year-on-year growth of 23%, among which Tmall flagship store increased by 56% year-on-year. Besides maintaining an absolute advantage in the market share of toilet water category, it also successfully became the TOP5 brand of Tmall shower gel category in shower gel category, driving the category to maintain positive growth in the first half of the year. At the beginning of July, Liushen Brand joined forces with online main platforms, offline key supermarket chains and new retail platforms to create "Liushen Cool Festival" with consumers, and achieved a year-on-year increase of 154% in GMV in Tmall Big Brand Day, ranking first in the category of body care.




On the channel side, Shanghai Jahwa continued to promote five core strategies to resist the impact of the epidemic. In terms of online channels, the company first opened up platform e-commerce, social e-commerce, interest e-commerce and special channels through data fusion, goods collaboration, fine operation and service linkage, and continued to promote omni-channel integration strategy. Secondly, the company's talents livestreamer matrix has been established. During the reporting period, more than 100 KOL took on post, and 50% of them were top KOL. Thirdly, the company's multi-channel layout has achieved results. During the reporting period, interested e-commerce companies achieved high triple-digit year-on-year growth.

In terms of offline channels, the Company continues to tap the growth potential and play the anti-risk role of solid and diversified layout of offline channels. On the one hand, strengthen the cooperation of community group purchase head platform. On the other hand, it increased the promotion of new retail. During the reporting period, the company's new retail business improved.In addition, it also adapts to the changes of retail terminals and further streamlines department store special counters.


In the first half of 2022, the Shanghai epidemic caused Shanghai enterprises, including Shanghai Jahwa, to suffer multiple impacts, such as large-scale shutdown, upstream and downstream shutdown, limited logistics, and terminal store closure. In terms of production, the shutdown of domestic chemical plants and the inability to keep up with related raw materials led to a decline in capacity utilization rate. In terms of logistics, the limited logistics caused by warehouse closure leads to the failure to fulfill some offline and online sales orders, and the proportion of online order returns increases, resulting in an increase in supply chain costs through temporary deployment of foreign warehouses. In terms of channels, the closure of offline retail terminals affects terminal sales. Due to the stagnation of logistics and insufficient capacity in the later period, the implementation of brand talents recruitment measures has been affected. However, with the improvement of the epidemic situation, a series of measures to stabilize the economy and promote growth will be implemented, which will also usher in the bottoming out of business.

In the second half of the year, the brand side and the channel side will make joint efforts to achieve recovery growth. The company will continue to build brand competitiveness through product innovation and marketing innovation. Specifically, Liushen will launch a clean acne shower gel, Herborist will launch a double Dendrobium high moisturizing repair series, Giving plans to launch baby multi-dimensional soothing regular care cream + special care cream, and Gf intends to launch high-end blue line oil control skin polish double-cabin milk and popular red line cleansing moisturizing cleanser. In terms of the online channels, the company will continue to reduce its dependence on a single model, improve efficiency through process, simplification and automation, and improve efficiency through marketing innovation, fine operation and private domain opening. In terms of offline channels, it will continue to increase the promotion of new retail, strengthen the cooperation of community group buying head platform, and increase the expansion of products and stores in open-shelf retail terminals in sinking cities.


According to the Company's current operating situation, combined with the impact of factors such as the growth rate of residents' consumption, the development of daily chemical industry and the market competition pattern on the Company, and based on the analysis and judgment of the basic macroeconomic situation in 2022, the Company's management strives to achieve double-digit growth in operating income in the second half of 2022 compared with the second half of 2021, and achieve an operating income of 7.5 billion yuan in 2022. In addition, the company said that it will make greater efforts on the profit side in the second half of the year, and strive for the profit growth rate to be faster than the income growth rate.

In order to further achieve this goal, the Company will continue to advance the ten major projects formulated at the beginning of the year, such as Hot sellers Innovation 2.0, refined operation of e-commerce, price management, national warehouse network planning and talent development.With regard to the price management, the company helps stabilize and improve product prices by reshaping the price control mechanism and digital management. This adjustment will affect short-term sales, but it is beneficial to the medium and long-term development of the brand. In terms of logistics warehouse network planning, the company will gradually implement the national warehouse network planning on the basis of the previous pilot project in South China, and strive to improve logistics efficiency and supply chain security.Regarding to the talent building and organizational culture, the Company will pay more attention to the creation and recruitment of talents, pay attention to the construction of talent echelon, promote internal service commitment, enhance inter-departmental cooperation, and establish an internal knowledge base platform, so as to finally improve work efficiency.

Dedicated to Beauty. Tackle the difficulties head on and meet the challenges together. In the future, Shanghai Jahwa will continue to forge ahead by adhering to the "123 operational principle”, pursue beautiful products and services with perfect beginning, create maximum value for clients, employees, shareholders and even the whole society. It always strives to become the leader of China's beauty and daily chemical industry and present Chinese beauty to the whole world.