Baby-friendly room (603214): The COSTCO-like model may become an offline maternal and infant retail breakthrough

From the perspective of the overall scale of the industry: the increase in the birth rate has brought about a more severe development scale for the overall growth of the mother and infant industry, but it has been translated into an increase in the urbanization rate, an increase in national consumption, and 80/90 new-generation mothers and babies.Driven by the expected strengthening of commodity consumption, it is expected that the mother and infant product market will continue to grow steadily, and it is expected to maintain an average annual growth rate of 8% to 9% in the next five years, and the mother and infant industry size is expected to reach 5 by 2023.

05 trillion, based on the current overall situation, it is reasonable to assume that the online penetration rate is 29%, and the offline channels of mother and infant stores account for 54%, so the market size of mother and infant stores by 2023 can reach 1.
.

94 trillion.

  From the perspective of the development of various channels for mother and infant sales: The total mother and infant industry channels are mainly divided into physical channels (commercial retailers such as supermarkets, professional mother and infant chain stores) and e-commerce channels (maternal and infant categories of integrated e-commerce and vertical mother-to-childE-commerce).

Because consumers have higher requirements for the safety and quality of mother and baby products, the tax rates of cross-border e-commerce and general trade import channels are gradually flattened, and online mother and baby users have relatively higher customer acquisition costs.Limited penetration.

In the physical channel, specialty stores have a scale advantage both in the richness of product categories and in the promotion of mid-to-high-end brands. Therefore, it is expected that monopoly stores will continue to be the main channel for selling maternal and infant products in the future.

  Judging from the industry competition pattern of mother and infant stores: The market size of offline mother and infant stores in 2018 is about 1.

2 trillion, and among several major mother-to-baby chain brands, the largest income of the king of children is only about 10 billion in 2018, the market share is very low.

武汉夜生活网Baby-loving room’s operating income in 201821.

400 million, the market share is only 0.

18%.

The market structure is very fragmented, and the market share of regional leaders has increased the space barrier.

The focus of the future layout of the baby-friendly room is still the concentrated urban agglomerations in the Yangtze River Delta, the Pearl River Delta, Chongqing and Chengdu, and the growth will be achieved by seizing the urbanization process.

  From the perspective of the company, the company’s deep cultivation of the East China region is the number one consumer consumer brand in the mother and infant market in East China.

  As of the first half of 2019, the company has opened 251 directly-operated stores in Shanghai, Jiangsu, Zhejiang, Fujian, Chongqing and other regions, and is expected to gradually open 60-70 new stores, stepping into the cross-regional accelerated exhibition development zone.

  The company’s headquarters revenue in 2018 was 21.

4 trillion, an annual growth rate of 18.

1%; Revenue in the first half of 201911.

800 million, an increase of 15 in ten years.

9%.

The company achieved net profit attributable to mothers in 20181.

2 ppm, an increase of 28 in ten years.

2%.

  The company’s core development ideas for the future: (1) Optimize product categories, introduce high-quality external brands, and optimize the supply chain: With reference to peers, the main focus of the baby-friendly room is still in the field of product sales, so expanding product categories and consolidating its own competitive advantages are still the future.Development focus.

(2) Optimize the membership model to enhance the repurchase rate of users, and create a COSTCO-like model: The particularity of mother and baby products determines the limited age of the customer group, the user’s life cycle is extended, and the liquidity is fast, so the user’s repurchase rate is increasedBecome the core competitive advantage of mother and baby sales channels.

The advantage of selling mother and baby products on the Internet is that the product category is rich, but the disadvantage is that it is too rich and product quality is difficult to guarantee.

The baby-loving room actually played the role of the first round of screening products in the sales of mother-to-child channels. By analogy with the development experience of COSTCO, the membership model will become an effective way for the company to strengthen user loyalty and improve user retention.

The company just launched the Max membership card in July 2019. In the future, the Max membership system can be continuously expanded through more flexible promotion forms, product pushes, and regular coupon delivery to train users to stabilize their consumption habits and other ways to increase the repurchase rate of users.

(3) Promote the development of private brands and improve profitability: The company’s private label merchandise sales in 20181.

800 million, accounting for 9% of merchandise sales, an annual growth rate of 29%, a faster growth rate, the proportion of sales increased year by year.

The increase in the sales of the company’s own-brand products has improved the gross margin of the company’s products and also improved the company’s overall profitability.

(4) Accelerate the development of online channels and form synergy with offline: vertical e-commerce scale expansion has become the company’s business goals, and e-commerce revenues have decreased year by year from 2013 to 2016.

In 2017, the company began to promote the development of e-commerce business. In 2018, the trend of high growth continued, and the revenue of e-commerce was 45.35 million yuan, an annual increase of 139%.

Online channels are mainly designed to meet the needs of consumers in different consumption scenarios and form synergies with offline.

  Investment suggestion: The leading mother and infant in the East China region, the extension is gradually expanding, trying to step into the accelerated development zone.

  We believe that after more than 20 years of intensive cultivation in the mother and infant industry, the company has consolidated the position of the leading mother and infant in East China. The advantages in terms of product categories and store layout have gradually become prominent, and synergies have been formed through multi-channel layout.

At present, the offline mother and infant monopoly industry is highly fragmented. After listing, the company has accelerated the pace of extension and expansion, which not only consolidated the regional leading advantage in the economically developed regions of the Yangtze River Delta, but also actively entered the Pearl River Delta and Southwestern markets, focusing on the progress of industry integration.Strengthen their own advantages.
It is estimated that the company’s revenue will be about 25 in 2019-2021.
92/31.

41/37.

23 ppm, an increase of 21 in ten years.

39% / 21.

15% / 18.

55%.

Realized net profit attributable to mother about 1.

46/1.

77/2.

100,000 yuan, an increase of 21 in ten years.

93% / 21.

08% / 18.

42%.

Diluted earnings1.

44/1.

74/2.

06 yuan.

The current market value corresponds to a PE of about 27/22/19 in 2019-2021.

With reference to maternal and infant and other comparable companies in the retail industry, it is estimated that considering the company’s ability to expand as a mother-infant sparse target and initially merge across regions, it will give the company 30-35 times PE in 2019, and for the first time, give the company an “overweight” rating.

  Risk alert events: (1) The growth rate of the new population, changes in the marriage rate, the expected displacement of the second child, and other factors have caused the lack of endogenous growth momentum in the industry.

(2) The speed of exhibiting stores was lower than expected, and the growth rate of newly entered regional stores during the incubation period.

(3) The online penetration rate of mother and baby products has increased, and e-commerce has a certain impact on offline retailers of mother and baby.

(4) Brand homogeneity is serious, and the repurchase rate of users is further increased, which has led to increased competition among mother and infant chain retailers.

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