As public awareness of skin care increases, consumers are paying more attention to the ingredients, efficacy and safety of products than before in terms of basic skin care. In order to cater to market demand, Fuljia has launched a number of new products. The medical recombinant type III humanized collagen patch will be launched in the fourth quarter of 2022, and the Age-Reducing Second-Pulse Essence will be newly launched in the first half of this year.
The continuous introduction of new products benefits from the smooth implementation of ongoing research projects. At the same time, this is also indispensable for Fuljia's long-term intensive research on products and markets. Recently, Fuljia released its financial report for the first half of 2023. Financial report data shows that in the first half of 2023, Fuljia’s R&D expenses increased by 33.95% year-on-year.
However, in the field of functional skin care products, many players are competing for supremacy, and product usage experience has gradually become the focus of consumers. Against this background, can Fuljia maintain its pace and continue to achieve long-term growth? Faced with competing products that frequently release new models, can Fuljia continue to create hit models to consolidate its market position? Perhaps we can find some answers from Fulga's latest financial report.
Revenue rose steadily in the first half of the year. What did Fuljia do right?
Financial report data shows that Fuljia's operating income in the first half of this year was 869 million yuan, a year-on-year increase of 6.33%. Among them, the company achieved operating income of 496 million yuan in 2023Q2, a year-on-year increase of 7.06%, while the revenue growth rate in the first quarter was 5.38%. Driven by the promotion of e-commerce activities such as "6.18", Fuljia's revenue growth accelerated in the second quarter.
In terms of profitability, Fuljia achieved a net profit attributable to the parent company of 354 million yuan in 2023H1, a year-on-year decrease of 1.09%; the gross profit margin was 82.81%, a year-on-year decrease of 0.46 percentage points. Although there was a slight decline in profitability, the overall performance remained solid. On the one hand , this phenomenon lies in the balanced development of cosmetics and medical devices, and breakthroughs achieved through multiple online channels.
As of the end of the reporting period, Fuljia has more than 40 kinds of professional skin care products, and has formed a variety of products, mainly Class II medical device products suitable for mild to moderate acne, promoting wound healing and skin repair. A three-dimensional product system supplemented by functional skin care products. Fuljia holds two major categories: cosmetic brand and mechanical brand respectively, and has sufficient strength in terms of product efficacy and credibility.
From the market point of view, the mechanical brands include medical sodium hyaluronate repair patch (white film) and medical sodium hyaluronate repair patch (black film). As of September 14, according to Tmall flagship store data, white film The film has the highest sales volume, with more than 90,000 copies sold in the past month. Fuljia Centella Asiatica soothing and repairing patch, which belongs to the makeup brand, has the highest sales volume, with more than 30,000 copies sold in the past month.
Comparing the sales of other brands in the same period, the number one selling product of Juzi Biotech's Kefumei is the recombinant collagen medical dressing patch, which has sold more than 20,000 pieces and belongs to the mechanical brand; while the number one selling product of its Kelijin is Kelijin. Lijin Collagen Big Devil is a makeup brand with only 7,000 pieces sold.
The sales breakthrough of Fuljia products is inseparable from the company's vigorous promotion of channel sales layout. It is understood that Fuljia has direct-operated stores on B2C online sales platforms such as Tmall, Xiaohongshu, JD.com, and Douyin. Among them, the Tmall flagship store has 3.83 million fans, and the JD.com self-operated store has 683,000 fans.
Among the short video platforms, Douyin’s official flagship store Douyin Official Store has 706,000 fans. As of September 14, it has been operating continuously for 889 days, with cumulative sales reaching 2.121 million. The store’s comprehensive score of 5.0 is higher than 99% of its peers. Judging from the number of fans and sales on major platforms, Fuljia has formed a good matrix effect on online platforms, and its brand influence cannot be underestimated.
With the help of precise user placement, live broadcast traffic and platform resources of major e-commerce platforms, Fuljia's online revenue continues to rise. Financial report data shows that in the first half of 2023, Fuljia achieved online revenue of 392 million yuan, a year-on-year increase of 24.19%, of which online direct sales revenue increased by 28.56% year-on-year, and agency sales and distribution revenue increased by 5.08% year-on-year.
On the other hand, it has increased investment in research and development, and its new products have gained market recognition. In the first half of this year, Fuljia's R&D investment increased by 33.95% year-on-year. R&D investment has been implemented into products on sale. The medical recombinant type III humanized collagen patch launched in Q4 of 2022 has passed the market test. Tmall platform data shows that more than 1,000 pieces have been sold in the past month, and the praise rate is close to 100%.
Although the current sales volume of the Age-defying Second-Pulse Essence and Dual Peptide Soothing and Repairing Mask launched in the first half of this year are not impressive, as the two new products are mainly targeted at the firming, anti-aging and sensitive skin segments, they are There is a large audience behind it, and the potential for subsequent development cannot be underestimated.
According to the "China Expert Consensus on Sensitive Skin Diagnosis and Treatment" data, the proportion of people with sensitive skin in urban areas will be 46% in 2022 and will increase by 2% per year. There is market demand and brand reputation to pave the way. After a period of market demonstration after the launch of new products, It is expected to gain a wider consumer base.
In the first half of the year, with hot-selling products taking the lead and the brand’s reputation as a foreshadowing, Fuljia seemed to have no worries. At the same time, breakthroughs in multiple online channels have laid the foundation for the continued growth of Fuljia's performance. In the future, how will Fuljia respond to the variables caused by market demand and technological iterations?
As competition in the industry intensifies, where is Fuljia’s “breakthrough”?
The functional skin care market is in full swing. Recently, Juzi Biotech and Jinbo Biotech have handed over their report cards for the first half of the year, with both revenue and net profit recording substantial growth.
Financial report data shows that in the first half of this year, Juzi Biotech achieved revenue of approximately 1.606 billion yuan, a year-on-year increase of 63.0%, and net profit of 667 million yuan, a year-on-year increase of 52.5%; Jinbo Biotech achieved revenue of 316 million yuan, a year-on-year increase of 105.15%, achieving Net profit attributable to parent companies was 109 million yuan, a year-on-year increase of 177.66%.
(1) If increasing revenue does not increase profits, what is Fuljia’s “problem-solving idea”?
However, among its peers with rapid performance growth, Fuljia's revenue and net profit performance in the first half of this year seemed a bit bleak. In the first half of the year, Fuljia's operating income increased by 6.33% year-on-year, while net profit attributable to the parent company decreased by 1.09% year-on-year. Despite its leading sales volume, Fuljia has entered into a situation of "increasing revenue without increasing profits".
Specifically, the increase in revenue was mainly driven by the substantial growth in online direct sales revenue and popular products, while the decline in net profit was also directly related to online channels. As competition among similar products intensifies and online e-commerce platform traffic continues to concentrate, Fuljia has to increase its product market share through price reductions and increased promotion and promotion efforts.
In terms of price, in the first half of 2023, among Fuljia's own brand products, the average unit prices of medical devices and cosmetics products dropped from 48.34 yuan and 44.63 yuan in the same period last year to 45.15 yuan and 43.14 yuan respectively. The decline in product unit prices resulted in a 0.46 percentage point decrease in gross profit compared to the same period last year.
According to the financial report, the fluctuation in net profit is also related to the increase in related sales expenses driven by the increase in the proportion of online sales, as well as the opening of the company's northern Meigu base and the continued increase in R&D investment.
Forced to lower prices and compete for online traffic, the market situation became increasingly severe. How to break through the status quo became the first question before Fuljia, and the "problem-solving idea" given by Fuljia was collagen.
With the accelerated iteration of existing technologies, collagen, the core component of functional skin care products, is also in competition. Collagen, which has unique advantages in whitening, filling and repairing, has been promoted as "hot", and the increasing demand in the medical beauty market has "added fuel to the rise" of collagen.
According to a Tianfeng Securities research report, the CAGR of China's surgical medical aesthetics market from 2017 to 2021 is 17.5%, and the compound growth rate is expected to be 13.8% from 2022 to 2030. The surgical medical aesthetics market is expected to reach 399.8 billion yuan in 2026. Riding on the express train of increasing demand, Juzi Bio, Jinbo Bio, and Fuljia may be able to further divide the medical beauty and skin care market.
(2) How can Fuljia take the road to branding?
Previously, major companies have been focusing on raw material production and research and development, but this is only two dimensions of product and technology. With the rapid development of the market, in this continuously accelerating collagen competition, competitors no longer limit their attention to the research and development of raw materials, but more through brand exploration and expanding the application fields of raw materials. Improve profitability. It is reported that collagen is widely used in tissue engineering, clinical medicine, food industry, packaging materials, cosmetics, medical cosmetology, biomaterials and medical devices.
The application fields span multiple tracks and fields and will further test the multi-dimensional strength of enterprises. Presumably, companies will face more tests from products, channels, brands, etc. in the future. At present, Fuljia is still in a competitive situation with its competitors in terms of products. In terms of channels, especially online, Fuljia has a certain leading advantage, but there may be many areas worth exploring in terms of branding.
Branding includes many aspects, such as brand positioning and philosophy, brand architecture system, brand culture and brand value. In terms of brand structure system, Fuljia currently adopts a single-brand, multi-category strategy. Its operations are more focused than multi-brands, and to a certain extent, it can also save costs such as manpower and promotion.
In terms of brand positioning, Fuljia is positioned in skin health care, focusing on functional skin care products, and providing solutions for damaged skin problems and skin after special beauty care. Fuljia and similar brands have certain convergence in this direction.
Then there is the brand value, which includes two factors, one is the brand perception and the other is the brand experience. Brand perception is determined by the brand's vision, concept, price and other factors. Brand experience is the experience consumers have after using a product, which is mainly determined by the strength of the product. The sense of touch and look determine the sense of value a brand brings to consumers.
Judging from the number of Fuerjia's hot-selling products, the sales of popular products and the influence of the platform, it is enough to show that the user experience of its products is recognized by users.
But the leap in brand perception does not happen overnight. Take the international brand SkinCeuticals as an example. According to industry insiders, the VC antioxidant whitening essence and CE essence under this brand are mainly composed of vitamin C, which is the most basic chemical raw material, but the price is as high as 1,490 yuan.
This relies heavily on comprehensive performance. On the one hand, it requires a long period of precipitation to achieve brand premium. On the other hand, as a functional skin care product, the brand’s soft power, including the visual presentation of the product, requires the brand to mobilize creative resources and design resources. Achieve aesthetic premium.
Therefore, Fuljia, which has certain channel and product advantages, can continue to explore and explore multiple dimensions to create a more distinctive brand.
Conclusion
In the first half of the year, Fuljia switched from a traditional e-commerce platform to a short video platform. Based on the Tmall platform, it gradually expanded into emerging channels and achieved significant breakthroughs in the online sector, helping it achieve victory in the fierce market battle.
At present, Fuljia already has certain advantages in product layout, technology iteration, and market channels, but it still cannot relax. In the functional skin care market where many heroes are competing, new dark horses emerge in the segmented tracks, or existing competitors achieve technological breakthroughs, which will bring "threats" to Fuljia.
With the release of demand in the medical beauty and skin care market, the core ingredient collagen has attracted more and more attention from the market. Perhaps Fuljia can focus its attention on this sector and create new product layout and technical barriers.
Author: Jing Song
Source: Pinecone Finance