Rebecca: The three costs of seeking domestic market and high-end positioning transformation are still high

China's largest hair products production and sales company Rebecca (600439.SH) disclosed its annual report on March 22, relying heavily on Rebecca in the international market, due to vigorously exploring the domestic market and taking the high-end route, 2011 performance Not greatly affected, but at the same time it also made the company's three expenses high.

The annual report shows that the company achieved operating income of 2.26 billion yuan in 2011, a year-on-year increase of 13%, net profit of 250 million yuan, an increase of 38% over the same period of last year.

Rebecca's main craft springs, women's wigs , and first-class hair products are produced and sold in Xuchang, Henan Province. They landed on the Shanghai Stock Exchange in July 2003. The products are currently sold to North America, Europe and Africa abroad. China's largest hair products production and sales enterprises.

The reporter checked the company's prospectus and found that Rebecca has always relied on the international market. The prospectus disclosed that its export sales accounted for more than 98% of its operating income. Therefore, due to the weak consumption of the European debt and the US debt crisis market and the appreciation of the renminbi in 2011, the growth rate of domestic hair products exports slowed down. The company’s operating income in the African market was 480 million yuan, a growth rate of 23%, while in the North American market. Operating income was 1.3 billion yuan, and operating income in the European market was 210 million yuan, with growth rates of 5% and 13% respectively, a decline from 2010.

Relative to the decline in the growth rate of the North American and European markets, the company's domestic market has maintained a strong growth rate. In 2011, the company accelerated the construction of domestic sales channels, with 230 stores, including 110 new stores, and increased the promotion of various forms of advertising such as TV and movies. The income from hair products was 150 million, and the terminal income was about 300 million, a year-on-year increase of 74%.

In addition, the company's transition to high-end products helps maintain high profits in the face of declining sales. Zhu Jia, an analyst at Qilu Securities, believes that the company has adopted high-end products for mature markets in the West, drastically reducing the export of low-end products, causing the company's export volume to decline while revenue and gross profit are on the rise. The demand for high-end products is affected by the economic cycle. The impact is small. In the African market, the continuous development of new markets has led to a significant increase in the company's revenue and profits, with high-end products accounting for 40% of sales in 2011.

At the same time, Rebecca's transition to high-end products has also increased the gross profit margin of its products. The annual report shows that the company's comprehensive gross profit margin in 2011 reached 30.4%, an increase of 4%. Among them, the gross profit margin of the process is increased by 4.6% to 25%, the gross profit margin of chemical fiber is increased by 2% to 45%, and the gross profit margin of human hair wigs has increased by 8% to 47%.

However, the company vigorously explored the domestic market and the transformation to high-end products. In addition, due to the increase in labor costs and rising raw material prices last year, the three expenses were high. The 2011 expense ratio was 17.3%, up 2.3% year-on-year. Zhu Jia believes that the reason is that The substantial expansion of domestic channels and the increase in spending on brand operations.

In order to further guide and respond to domestic hair products market consumption, Rebecca's domestic stores increased significantly in 2011. As of February 2012, the company's store number reached 235, and the company plans to increase the number of stores in 2012 to 130 or so. There are about 80 new Sleek brand stores and about 50 new Rebecca brand stores. Zhu Jia expects that the company's three expenses will remain at a high level in the short term.