In the blink of an eye, the Spring Festival holiday in 2024 has arrived, and there are more and more forms of celebration for everyone, with tourism and watching movies becoming the two major entertainment items.
According to CCTV news on the evening of February 12, 2024, the proportion of passenger flow traveling more than 1,000 kilometers will be 33% to 37%, the first day of the holiday travel orders increased by more than 1 times year-on-year, all kinds of ticket orders increased by more than 3 times year-on-year, from Chinese New Year's Eve to the second day of the new year, the total passenger flow of major business districts across the country was 15.62 million, a year-on-year increase of 111%.
At the same time, as of the morning of February 14, the box office of the Spring Festival stalls exceeded 4.5 billion yuan.
On this basis, look at this year'sConsumptionIt seems to be something to look forward to.
So, when it comes to Spring Festival consumption, I have to talk about oneTraditional Chinese medicine enterprise - Dong'e EjiaoIt is not only a pharmaceutical company, but also gradually becoming a branded consumer enterprise.
The identity of a pharmaceutical company is what distinguishes Dong'e Ejiao from other consumer companiesThe medicinal value of its flagship product, Ejiao, has become the basis of its products and operationsThe "Compendium of Materia Medica" calls Ejiao a blood-tonifying medicine, and the "Shennong's Classic of Materia Medica" lists Ejiao as a nourishing product.
As a result, Dong'e Ejiao has become the No. 1 brand item in OTC (over-the-counter drugs).Angong Niuhuang Pill, which surpasses Tong Ren Tang, Huoxiang Zhengqi Oral Liquid and Pien Tze Huang of Taiji Group, in addition to the higher unit price, also has a lot to do with its higher sales volume.
From 2017 to 2018, the revenue of Dong'e Ejiao enterprises exceeded 7 billion yuan, and the sales volume of products exceeded 9,000 tons.
Subsequently, mainly because of the continuous price increase and downstream pressure problems, the performance was "thunderous", and the revenue in 2019 fell sharply, and at the same time, in order to clear the inventory discount**, the profitability fell sharply, which also caused the company to fall into a loss.
However, after 2020, Dong'e Ejiao can resume growth, which is basically an affirmation of its medicinal value.
The company actively promotes marketing reform and digital transformation, and the turnover rate of the two major operating assets continues to increase, and the two assets corroborate each other, indicating that the downstream sales of products have been continuously improving.
As of the first three quarters of 2023,Accounts receivable turnover ratioUp to 954 times, which has exceeded the same period in 2018, indicating that compared with operating income, the downstream arrears receivable are less, and the company's bargaining power for downstream customers is higher, and it has returned to the previous level;
Inventory turnoverIt is in a continuous improvement trend, which can indicate that the product is selling better than before, and there is no pressure like before.
Although the scale of revenue has declined, it is also more "real", and the sales volume in 2022 is still more than 7,000 tons.
So, now, it has been a year since the continuous improvement of the performance of Dong'e Ejiao after the thunderstorm, the companyFuture growthWhat the hell is the problem, we will come to it todayAnalyticsOne time.
1. Sales expenses and brand building complement each other
The first thing to bear the brunt of is the problem of Dong'e Ejiao's high sales expenses.
Recently, I opened the two major e-commerce platforms and found a very interesting thing, according to the screenshots of the two major e-commerce platforms on February 13, Tmall Ejiao cake sales list is the firstGushengtangEjiao cake, followed by Dong'e Ejiao Ejiao cake and Ejiao block, while Jingdong's Ejiao sales list, ranked firstBeijing Tong Ren TangEjiao cake, followed by Ejiao Ejiao cake.
The characteristics of the No. 1 product are relatively cheap (cost-effective), and although Dong'e Ejiao did not grab the No. 1 sales volume, it is significantly higher than the No. 1 product.
In fact, sales expenses have always been a difficult hurdle for pharmaceutical companies and consumer companies to overcome, and Dong'e Ejiao is no exception.
Therefore, in order to maintain its high-end positioning, Dong'e Ejiao has to continue to invest more sales expensesEspecially in the Ejiao market, where the competition has been relatively sufficient, Dong'e Ejiao has a higher price, and if you want to be different from others, in addition to relying on authentic medicinal materials, you need to establish a high-end brand image.
The investment in sales expenses and the establishment of the company's brand complement each other, which has been clearly reflected in the last few years, while the gross profit margin continues to increase, the sales expense ratio also continues to grow, but it does not affect the improvement of net profit margin.
The establishment of brand image requires both stability and time, and once the brand effect is released, the sales expense rate may even decline.
You may wonder, what if the sales expense ratio has been increasing, and the gross profit margin is no longer increasing, which affects the net profit margin?
I think this is a very unlikely situation, as of the third quarter of 2023, Dong'e Ejiao's gross profit margin and sales expense ratio have reached respectively. 48%, which is relatively high, but the net profit margin is 229%, which is not too high.
Since 2019, Dong'e Ejiao has entered a new stage of growth, and the improvement of brand power is an irreversible process for consumer enterprises.
2. Behind the questioning of sales expenses is the focus on the ceiling
In the third quarter of 2023, Dong'e Ejiao's net profit attributable to the parent company in a single quarter increased by 23 percent year-on-year42%, still resilient, but the year-on-year revenue growth rate fell to 332%。
So what we have to consider now is whether Dong'e Ejiao has hit the growth ceiling.
First of all, from the perspective of the industry, the demand for products is in an increasing trend.
It is reported that the blood and qi replenishment products of Chinese patent medicine are a relatively small segment, and OTC sales are the main way, and the market size of hospitals is much smaller than that of OTC sales.
However, with the improvement of people's health awareness and the acceleration of the pace of life, the market scale of Chinese patent medicines for replenishing qi and blood has increased steadilyAccording to the data, in 2022, the product sales of retail pharmacy terminals in China will exceed 12 billion yuan, a year-on-year increase of 711%, and the sales scale of the hospital also exceeded 5 billion yuan for the first time.
So from the perspective of the industry, Dong'e Ejiao also has the logic of industry expansion, its current revenue accounts for about 23% of the overall scale of the industry, with Ejiao series products, although the market share ranks first, but it is not to the extent of monopoly, and it is not impossible to achieve growth higher than the industry.
Secondly, the exclusive product "compound ejiao paste" performed well, and the hospital-end sales and internationalization need to be broken.
As of the first half of 2023, the revenue scale of compound Ejiao paste follows that of Dong'e Ejiao, ranking second among the gas and blood replenishing products in physical pharmacies, plus online pharmacies, achieving a total of 700 million+ revenue, and Dong'e Ejiao achieving 1.2 billion+ revenue.
As an exclusive product, compound ejiao paste is still the main breakthrough direction of the company's future growth, and the sales growth rate of online pharmacies is particularly fast, with revenue growth reaching 168% in the first half of 2023.
However, as a "double-cross" medical insurance class B product, its hospital-end sales scale is less than 100 million yuan, which is related to malignant tumorsExpansion of new indicationsOr just a little time.
In addition, internationalization is a problem that all traditional Chinese medicine enterprises are facing at this stage, and it is necessary to conduct systematic research before Ejiao can go abroad.
As of now,Clinical evidence-based research on Dong'e Ejiao and compound Ejiao pasteare all in the works.
Screenshot from Dong'e Ejiao's 2022 annual report).
Finally, it is based on the investment value of Dong'e Ejiao.
On the whole, Dong'e Ejiao, as a leading traditional Chinese medicine company in the field of blood and qi replenishment, still affirms its long-term investment value.
It's just that Dong'e Ejiao is positioned differently from competitors in the same industry, and under the trend of pursuing cost performance, the company has slightly fallen into a downward trend, but Dong'e Ejiao is positioned as a high-end, its brand power is still continuously improving, and the product side still has growth momentum, so it is still too early to be overtaken as the "first brother" of traditional Chinese medicine.
At present, although there are temporary problems with revenue growth, the company's net profit is expected to be strong.
The above is only used for the analysis of listed companies, and is not intended as specific investment advice.
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**: Flying Whale Investment Research