The first-quarter financial results disclosed by Shanghai Jahwa: a 17.81% year-on-year increase was achieved in net profit, and the quality of operation made steady progress

The evening of April 28

Shanghai Jahwa (600315. SH) released the first-quarter earning results report of 2022 on the evening of April 28. During the reporting period, the company achieved operating income of 2.117 billion yuan, with a year-on-year increase of 1.57 % in gross profit margin. Its management fee rate achieved a year-on-year decrease of 1.66%. The company’s net profit was 649 million yuan, with a year-on-year growth of 17.81%, and the net profit attributable to shareholders of the company before non-recurring gains and losses was 212 million yuan,which was the highest value in the past 23 quarters. Besides, its operational cash flow was 550 million yuan, which is the all-time high in a single quarter.

According to the National Bureau of Statistics, the total retail sales of cosmetics industry increased by 1.8% in the first quarter of this year, but decreased by 6.3% in March. As one of several major beauty and daily chemical enterprises with multi-brand and multi-category layout in China, Shanghai Jahwa insists on the "123" operation principle in the first quarter, overcame the negative factors that the company's special channel was adjusted and it lacked of super top streamers, continuously optimized its business structure, further enhanced its profitability, thus maintaining steady progress in its performance, as well as continuously improving its quality of operation.

Brand innovation:

Continue to launch hots sales and enhance core values

In terms of brand innovation, the company still focused on building the top SKU in the first quarter, and upgraded the consumer insight methodology. The main brands launched many new products based on the research and development driven by global multi-dimensional insight. Meanwhile, it kept on building brand core values, launch hots sales for key new products, and stimulate the growth of explosive products through word-of-mouth marketing.

In terms of product innovation, Dr.Yu launched a new sunscreen product called "Macromolecular Platinum Shield", which threaded up the clients’ demand for sunscreen categories for the market with damaged skin barriers, sensitive muscles and fragile muscles, and opened up a track for macromolecular sunscreen subdivisions. On the day of Tmall's small black box event, the sales of Dr.Yu Tmall flagship store ranked the third place in Tmall's beauty and skin care industry. Macromolecular sunscreen products ranked the first place among the Tmall sunscreen category. Herborist continued the brand gene that combined Chinese classic ingredients with modern technology and efficacy ingredients, and upgraded the new seven white series, thus providing Chinese women's skin with a lasting and reassuring upgrade experience of "anti-sugar, uniform brightness, whitening and light beige"; Giving worked closely with Beijing Children's Hospital and Dr. Ma Lin, the authorities in the field of children's skin to launch "Giving Baby Multidimensional Soothing Daily Moisturiser +Rescue Moisturiser", which extracted the active ingredients of Artemisia annua, and used Prolipid constant care technology to solve the high-frequency periodic skin problems of newborns by applying the skincare concept of "Periodic 1 +1". Herborist Derma Yeast Essence Spray was also a new product being launched in the same period.

In terms of marketing innovation, each brand is linked with multiple platforms, and spokespersons and popular IP continuously export brand core values. In the first quarter, Herborist worked cloely ith TikTok, Xinhuanet and ELLE to create the brand value and image of the new Chinese fashion trend, and the new Tai Chiseries also continued to maintain the market position of word-of-mouth hot sales. Herborist, Dr.Yu and Maxam jointly launched the "Her Power" theme IP activity in Kuaishou. The brand concept are strengthened and hot trending was ignited during the Spring Festival by taking the opportunity of the rise of women's self-confidence awareness, ranking among the top ten hot trending lists in Kuaishou; Liushen has continuously strengthened e-commerce operations and expanded offline distribution through joint spokesperson brand activities. The brand took the lead in paving the way for the word-of-mouth of planting grass, and delivered the multi-scene and multi-effect selling points of florida water with creative content, which gained more than 30 million ads impressions and more than 1 million interactions. In the first quarter, the brand achieved double-digit revenue growth, and achieved nearly 100% growth in GMV, the main channel of e-commerce.

Channel Advancement

The risk-resistance capacity is enhanced by applying multi-platform refined management.

In the first quarter of this year, the company's channel sales performance were affected to varying degrees by three major factors: epidemic situation, adjustment of special channels and lack of super top streamers.

As a local enterprise in Shanghai, it has been affected by the COVID-19 epidemic since February, and the negative impact got even severer at the end of March, thus, offline and even online businesses were impacted to varying degrees. On the one hand, offline stores were forced to suspension of business, and almost almost 30% traditional CS, department stores and Watsons suffered suspension of business. On the other hand, since the beginning of March, sporadic epidemics in many places across the country have limited logistics in epidemic areas, and the delay of express delivery has affected consumers' experience, resulting in an increase in return rate and a decrease in revenue. At the end of March, several warehouses in the neighboring areas of Shanghai were all in a closed or semi-closed state, as a result, e-commerce seller failed to deliver goods and the partial products were out-of-stock on offline channels.

In terms of offline channels, the company's solid and diversified channel layout has played a positive role in resisting risks in the context of COVID-19 epidemic. During the reporting period, channels of Supermarkets and department stores still maintained a growth trend, with a year-on-year growth of nearly 30% in new retail business performance, accounting for over 10% of sales. Shanghai Jahwa also actively conquered sales obstacles through commercial channels, community group purchases and cross-border channels. During the first quarter, sales of commercial channels achieved a year-on-year increase of 201%, a year-on-year increase of 170% in sales of community group purchases, and a year-on-year increase of 71% in sales of cross-border channels.

In terms of online channels, the company has taken the initiative to adjust the channel strategy and structure since the end of last year, in order to resist the adverse effects caused by the adjustment of special channels and the lack of super top streamer. Moreover, it realized the multi-platform layout of e-commerce by means of refined operation strategies, so that the dependence on single-mode singles was gradually relieved, and the proportion of we media livestreaming business and operational capability was increased. During the reporting period, regardless of the negative factors of lacking of super top streamers, the operating income of e-commerce in Jahwa achieved a 13% year-on-year growth, GMV of platforms such as JD.COM, Pinduoduo, TikTok and Kuaishou were greatly improved, and brands such as Dr.Yu, Herborist and GF accelerated the layout of interested e-commerce. In the mean time, the Company also accelerated the construction of we media livestreaming system. During the reporting period, the Company's we media livestreaming GMV achieved a 615% year-on-year growth, accounting for over 16% of the total e-commerce and over 30% of certain brands. The number of internalized live broadcast rooms were added to 8, the number of steamers was increased by 24%, and the we media livestreaming duration lasted for 6,315 hours. Taking the Women’s day promotion as an example, the we media livestreaming GMV achieved a 365% year-on-year growth during the promotion, among which the we media livestreaming duration of Herborist and Dr.Yu Tmall flagship stores lasted for 114 hours, and the GMV achieved a year-on-year growth of over 380%. On the other hand, the Company's talent streamer matrix has also been initially established. During the reporting period, the number of successful pit climbing by talents achieved a year-on-year increase of 150% and the average pit yield also doubled. It can be said that both the quantity and quality of talent streamers have reached a higher level, and the talent system has been initially established and entered the stage of continuous improvement and expansion.

Business is expected to fully recover via multi-dimensional anti-epidemic countermeasures

In response to dilemma caused by the current external environment, Shanghai Jahwa carried out multi-dimensional countermeasures to reduce the impact of the epidemic on the normal operation of enterprises. In terms of brand, the company plans to continue to promote brand value via key activities, strong IP linkage, word-of-mouth marketing, and hot sale creation during the second quarter. It also actively adjusted the marketing progress, so as to respond and promote synchronously with the recovery of the channel's ability on undertaking product sales. On the hand, the brand actively participated in the anti-epidemic activities and fulfilled the brand's social responsibility. In terms of channels, the online team actively conducted one-on-one communication with clients, hoping to get more understanding and support from them. On the other hand, they actively responded to epidemic prevention policies, obeyed the instruction on home-quarantine, and actively tried to explore the online livestreaming at home. Supermarkets, department stores and Watsons increased their promotion on the platform of Daojia ,and increased the activity design of epidemic prevention product group set page on the platforms of community group purchase, cloud store and Daojia, which was spread through distributors, business teams and promotion teams on Moments of WeChat, TikTok and other platforms. Department store teams actively promoted their sales via the channels of members through WeChat and Cloud Mall. Particularly, the company stocked goods for dealers in advance to ensure that out-of-stock was minimized when the logistics was seriously affected by the COVID-19 epidemic. With the gradual alleviation of the epidemic situation, the effective management of the epidemic situation by the government, the resumption of production of factories, warehousing and logistics, the gradual transformation of special canal business and the active layout of e-commerce 618 online marketing, it is believed that the company will strive to achieve the performance target of this year.

In addition to the countermeasures implemented by Shanghai Jahwa, it also actively undertook social responsibility. During the epidemic, the company actively actively striving to acquire the donation from Shanghai Charity Foundation, Shanghai Youth Development Foundation, Shanghai Red Cross Society, Soong Ching Ling Foundation and Ruijin Hospital, finally, more than 2 million yuan of cleaning and skin care products were donated to medical staff and young volunteers fighting in the front line of anti-epidemic, providing them with necessary personal protection and sending condolences and care.

A hundred years of Dedication, perfection and 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. The company will actively undertake and practice the responsibilities of enterprises, and strive to become the leader of China's beauty and daily chemical industry and present Chinese beauty to the whole world.