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Recently, Caixin Securities released the "Monthly Review of the Beauty Care Industry", in which statistics showed that from June 16 to July 15, the Shenwan Beauty Care Index fell 6.56%. Due to the change in the "618" promotion rules, cosmetics sales in June fell month-on-month.

In this regard, Caixin Securities commented that in the short term, against the backdrop of a weak recovery in consumption and continued destocking of consumer inventories, the willingness to consume cosmetics may still be relatively weak; but in the long run, the overall growth logic of the industry has not changed. As consumption continues to recover and overseas brands continue to release market space, domestic brands with localization advantages and high cost-effectiveness may accelerate their rise.

The medical beauty sector has considerable growth potential

There is a saying that goes, "It is easiest to make money from women, children, and the elderly."

Someone on the Internet made a rough calculation that the most basic daily sun protection, facial care, and anti-aging measures for ordinary people can be calculated at 15,000 yuan per year; facial SPA, fruit acid peel, hyaluronic acid injection and other beauty expenses can be calculated at 30,000 yuan per year; ultrasonic cannon, Thermage, eye bag removal and other medical beauty products are even more of a considerable expense.

If we start calculating from the age of 25, assuming the average life expectancy is 80 years, skin care and anti-aging treatments during this period are expected to cost nearly one million, and it is an expense that requires long-term and continuous investment.

This is the case for ordinary people, and there is no upper limit to the maintenance expenses of celebrities and wealthy ladies. It is rumored that Zhang Yuqi spends nearly 700,000 yuan a month on her face, and Yi Nengjing's annual anti-aging expenditure is as high as seven figures.

It can be seen that the saying "a woman's maintenance bill can make a man tremble" is true.

According to the "China Medical Beauty Industry 2024 Annual Insight Report" jointly released by the China Plastic Surgery Association, Deloitte China and other authoritative organizations, it is predicted that the growth rate of my country's medical beauty market will reach 10% in 2024, and the growth rate is expected to remain between 10%-15% in the next four years.

As living standards improve, consumers have a stronger demand for beauty and are more accepting of medical beauty. Non-surgical light medical beauty has developed rapidly and gradually become the main market, with the characteristics of flexibility, less trauma, short recovery period and low risk. According to the Guanyan report data, the scale of my country's non-surgical light medical beauty market will reach 120.7 billion yuan in 2022, and is expected to increase to 146.1 billion yuan in 2023.

Caixin Securities commented that the logic of increased penetration rate, increased rate of light medical beauty, and increased domestic substitution rate continues to play out, and continues to be optimistic about the future growth of the medical beauty sector.

The downstream medical dressing industry is developing rapidly

The medical dressing industry, which is inseparable from the medical beauty industry, will also grow along with the growth of the medical beauty sector.

According to the introduction, medical dressings are mainly used for repairing the skin barrier after clinical operations such as laser and acid peeling that have certain irritation and damage to the skin. Its main functions are calming, soothing, and hydrating the stratum corneum under specific circumstances.

Data shows that the scale of China's medical dressing market has grown from 6.7 billion in 2017 to 25.9 billion in 2021, with an average annual compound growth rate of more than 40% in the past five years, and has maintained a double-digit growth rate every year. It is expected that in 2025, the scale of the medical dressing market will exceed 70 billion.

Public information shows that my country's "Medical Device Classification Catalogue" stipulates that although medical dressings are mid-to-high-end functional skin care products, they belong to the broad category of medical device products. Based on their shape, they can be further divided into patch type and non-patch type, among which patch type is the mainstream, commonly known as "medical beauty mask."

Around 2017, international brands such as Vichy and La Roche-Posay set off a trend of functional skin care, and a large number of medical beauty and post-operative repair mask brands emerged one after another. After gaining recognition from consumers, major grass-seeking platforms began to promote and sell medical masks, making the product of medical masks quickly popular.

Data shows that from 2017 to 2021, the consumption of patch-type medical dressings in my country increased from 160 million pieces to 530 million pieces, with a five-year compound growth rate of nearly 40% and an industry penetration rate of about 30%. It is estimated that by 2025, the consumption of patch-type medical dressings in my country will exceed 1 billion pieces. Based on the average terminal selling price of 15 yuan per piece, the market size will reach 15.75 billion yuan, with huge development potential.

Industry chain companies benefit

Whether it is a medical mask or an ordinary skin care mask, the main raw material of the membrane cloth is spunlace non-woven fabric. Nuobang Co., Ltd., which is known as the "leading enterprise in spunlace non-woven fabrics" by the outside world, mainly produces spunlace non-woven materials that are mainly used in the four major product areas of beauty care, industrial materials, civil cleaning, and medical materials.

The 2023 financial report data showed that Nuobang Co., Ltd. achieved total revenue of 1.915 billion yuan, a year-on-year increase of 20.48%; net profit was approximately 82.64 million yuan, a year-on-year increase of 119.07%, far exceeding the industry average, and the company's profitability has significantly improved.

Among them, spunlace nonwoven materials and their products occupy an important position in the company's main business.

Data shows that in 2023, the revenue of spunlace nonwoven products reached 1.18 billion yuan, a year-on-year increase of 21.44%, accounting for 61.63% of the total operating income. During the same reporting period, the revenue of spunlace nonwoven materials itself also reached 718 million yuan, a year-on-year increase of 19.15%, accounting for 37.39% of the operating income.

Due to the substantial growth in revenue and proper cost control, the gross profit margin and net profit margin of spunlace nonwoven materials and their products have increased. Specifically, the gross profit margins of spunlace nonwoven products and spunlace nonwoven materials were 13.39% and 20.41% respectively, and the overall gross profit margin reached 16.16%, an increase of 2.32 percentage points year-on-year. In terms of net profit margin, the company's full-year net profit margin was 5.19%, an increase of 1.93 percentage points over the same period last year.

The rapid rise of the medical beauty sector and the medical dressing sector has brought huge growth space to Nuobang Co., Ltd. With the upgrading of residents' consumption of disposable sanitary products, the increase in consumption of household products such as wet wipes, kitchen wipes, sanitary napkins, diapers, face towels, wet toilet towels, etc. has also brought it more profit growth points.

According to the 2024Q1 financial report data, Nuobang's net profit was 20.48 million yuan, a 98.70% increase over the same period last year. Although the financial report did not specifically list the net profit amount and proportion of spunlace nonwoven materials, we can get a glimpse of it from previous financial reports.

It is worth mentioning that 2023 is also the first year that Nobang Co., Ltd. truly launches its own brand "Xiaozhijia".

It is understood that Xiaozhijia adheres to the brand concept of "pure plants, true care" and is committed to providing comprehensive household daily cleaning services to more Chinese families. Its products include civilian cleaning products such as face towels, cotton towels, wet wipes, and health care products such as Shusan flushable sanitary napkins. In 2023, Xiaozhijia achieved sales of 16.5294 million yuan, a year-on-year increase of 67.52%.

Caixin Securities analysis believes that medical beauty and daily personal care have become rigid consumer needs of the nation. The population size determines the huge demand market. Combined with the overseas export market, it is a good opportunity for domestic personal care companies and material companies to expand their development scale. Companies are expected to usher in a new life cycle.