In the past few decades, with the increase in urbanization rate and the increasing disposable income and consumption level of people, Chinese consumers have become more and more receptive to various baby diaper products. The data shows that by 2022, the penetration rate of China's infant diaper product market has increased to 842% and is expected to rise to 92% by 2027.
Under this opportunity, a large number of domestic brands of infant diapers have emerged in the local market. Zhitong Finance and Economics noticed that recently, Lantian Group Holdings Limited (hereinafter referred to as "Xinshihao"), the holding company of Sichuan Xinshihao maternal and infant products, submitted a prospectus to the Hong Kong Stock Exchange, and the company officially launched a sprint to the Hong Kong market.
According to the prospectus, the business history of Xinshihao can be traced back to 2010. At present, its main products include baby diapers and baby pull-up pants, and are sold under two brands: "Seven Colored Pigs" and "Congbo". According to Frost & Sullivan's report, after more than ten years of development, Xinshihao has now ranked among the top 20 domestic brand infant diaper products, with a market share of about 3% among domestic companies.
Bucking the trend with cost-effective growth?
In terms of product positioning, the infant diaper product market can be divided into three markets: economical, mid-end and high-end.
According to the prospectus, Xinshihao currently has more than 20 series of product portfolios, including seven-color pig series, Xiaomengxin series, seven-color pig comfrey oil series, domestic product dangziqiang series, Yunrou sea suction series, Congbo series, etc. It is worth mentioning that Xinshihao's baby diaper products are mainly economic infant diaper products, with an average retail price of less than 1 yuan per piece (RMB, the same below).
In the past few years, under the combined influence of many internal and external factors such as the epidemic, consumers' preferences for infant diaper products have changed greatly. According to the data, from 2018 to 2022, the compound annual growth rate of mid-range and high-end infant diaper products was -118%、-16.1%, while economic infant diaper products grew against the trend in the same period, corresponding to a compound annual growth rate of 86%。
Based on the data of 2022, the market share of economic products has accounted for 33% of the total retail sales of the infant diaper product market1%, while the proportion of mid-range and high-end is respectively. 9%。
At this time, Xinshihao, which focuses on economic products, has also embarked on the "fast lane" of development.
In terms of performance, in 2021, Xinshihao achieved revenue of 3400 million yuan, net profit 203610,000 yuan; The following year, Xinshi's good income increased to 53.8 billion yuan, and the net profit expanded to 465350,000 yuan, the growth rate has reached respectively. 5%。However, in the first nine months of 2023, Xinshihao's revenue and net profit attributable to the parent company were 48.8 billion yuan, 439930,000 yuan, an increase year-on-year. 9%, a significant slowdown in growth.
In terms of structure, Xinshihao's revenue is mainly based on three products: infant pull-up pants, infant diapers and infant diapers. From 2021 to the first nine months of 2023, the contribution income of infant pull-up pants was 19.1 billion yuan, 28.9 billion yuan, 23.9 billion yuan, accounting for the proportion of the company's total revenue. 1%；During the same period, the revenue of infant diaper products was 14.2 billion yuan, 24.4 billion yuan, 2400 million yuan, accounting for the proportion. 1%。In addition, Xinshihao still has a small part of the revenue ** in diaper products, but the proportion of revenue brought by this product during the period does not exceed 3%, and the scale is small.
In addition, from the perspective of sales channels, Xinshihao mainly relies on dealer channels and online self-operated retail stores to sell products to the outside world. From 2021 to the first nine months of 2023, the proportion of revenue contributed by dealers is as follows: 8%；During the same period, the proportion of revenue contributed by online self-operated retail stores was as follows: 6%。In addition, the company has a small portion of its revenue** from OEM customers and export sales, and the combined revenue of these two channels in the first nine months of 2023 is about 26%。
How can second-tier brands break through when the market is stagnant and growing?
In the past few years, due to the continuous decline in the birth rate and the impact of the epidemic, the market size of China's infant diaper product market has declined significantly. Based on the present, in view of the fact that the birth rate is still declining, it is difficult for the market to return to the original rapid growth trend of baby diapers in the future. According to **, the market size of China's infant diaper products will reach 58.1 billion yuan by 2027, with a compound annual growth rate of 2 from 2022 to 20278%, growth is almost stagnant.
In terms of structure, the development speed of economical, mid-end and high-end infant diaper products will continue to be "differentiated". According to relevant institutions**, economic and mid-range infant diaper products will maintain growth during the period 2022-2027, with compound annual growth rates respectively. 7%；During the same period, the compound annual growth rate of high-end baby diaper products was -09%, the market will continue to shrink, but fortunately, there are still certain opportunities in the subdivided field, especially in the economic market.
The industry is already saturated, and it is expected that the competition between the players who remain in the stadium will increase further. According to the data, in 2022, the market share of China's top five infant diaper product manufacturers will reach a total of 592%；In the same period, the sum of the market share of the top five domestic brands of infant diaper products also reached 57%, and the market was highly concentrated.
In comparison, in 2022, the market share of Xinshihao among domestic companies will be about 3%, and its market influence is still relatively weak. In the face of international brands that have formed a large reputation and extensive resources in the market, as well as a number of highly competitive local brands, it may not be easy for Xinshihao to break through. Especially considering that the industry has basically bid farewell to the era of rapid growth, how to keep the vested achievements and even go to the next level under the stock competition will inevitably be a long-term test.
Returning to the perspective of the capital market, while the current performance is still high, it is a wise move for the new world to "take advantage of the heat" to sprint last time. However, considering the current weak market environment, whether the follow-up new world can be fulfilled may also need to be marked with a question mark.