When the reform is underway

The first quarterly report card handed over by Shanghai Jahwa after the "change of leadership" was released, and the loss trend still failed to be reversed.

After trading on October 28, Shanghai Jahwa (600315. SH) disclosed the third quarterly report, the revenue and net profit attributable to the parent company in the first three quarters of 2024 were 4.477 billion yuan and 163 million yuan respectively, a year-on-year decrease of 12.07% and 58.72% respectively.

The net profit attributable to the parent company in the third quarter reached -75 million yuan, a year-on-year decrease of 180.85%.

In addition to the impact of weakening consumer trends, according to Tradewind (ID: TradeWind01) at the Shanghai Jahwa results conference on October 28, internal organizational changes have also brought certain pressure to profits.

How to reverse the loss trend is a challenge facing Shanghai Jahwa.

Judging from the series of reform measures of Shanghai Jahwa, it may be one of the important ways to promote different brands/products in different online channels to create differentiated advantages in order to maximize the support of the platform.

On the one hand, Shanghai Jahwa plans to promote the growth of brands such as "Yuze" through cooperation with major anchors;

On the other hand, it also plans to push the traditional product "Tremella Pearl Cream" under its "Meijiajing" brand to Pinduoduo channel sales.

In the throes of change

In the third quarter of this year, Shanghai Jahwa's performance continued the performance of the previous quarter and was still in a state of loss.

Shanghai Jahwa's current revenue and net loss attributable to the parent company were 1.156 billion yuan and 75 million yuan respectively, down 20.93% and 180.85% year-on-year respectively.

Part of the reason for the continued decline is that consumption has weakened since the beginning of this year, which has put pressure on the performance of many skincare companies. For example, in the third quarter of this year, the "first strand of sensitive skin" Bethany (300957. SZ) revenue growth also slowed by more than 10 percentage points.

According to Tradewind (ID: TradeWind01) at the Shanghai Jahwa performance conference on October 28, the organizational changes of Shanghai Jahwa have also brought certain pressure to profits.

According to Lu Lu, a representative of securities affairs, Shanghai Jahwa has made active and strategic business adjustments, including the transfer of online and offline dealers to self-operated department stores, the reduction of social inventory, and the closure of business, which has led to the impact of revenue and profit in the current period to a certain extent.

In June this year, Shanghai Jahwa hired Lin Xiaohai, who had served as a senior executive at Alibaba and Sun Art Retail, as its chairman.

After Lin Xiaohai came to power, he began to carry out a "big change" of the general manager of Shanghai Jahwa's beauty business department, the general manager of the innovation business department and the brand director of Yuze.

Lin Xiaohai also gave a detailed introduction to the business-level organizational structure of Shanghai Jahwa at the results conference.

It is understood that the entire organization of Shanghai Jahwa is divided into front, middle and back offices, and the front office includes five business divisions: beauty, personal care, innovation, overseas and offline, while e-commerce has penetrated into each business division.

"Because the boundary between online and brand is now blurred, let the brand and e-commerce in the same system, the online operation efficiency of the entire organization will be higher." Lin Xiaohai pointed out, "After the organization and talent are determined, we have also completed a series of mechanism reviews in the past quarter. We conducted a review of the e-commerce related processes and optimized the processes to make the entire organization more agile. ”

In the third quarter of 2024, Shanghai Jahwa's personal care, beauty, innovation and overseas revenues were 532 million yuan, 95 million yuan, 151 million yuan and 374 million yuan, respectively.

Among them, the beauty revenue of skin care brands such as Yuze, Herborist, Shuangmei, and Diancui fell by more than 6% compared with the second quarter of this year, and the proportion fell from 19.01% in the second quarter of this year to 8.22%.

On this year's Double 11, whether the beauty business can grow is the key to whether Shanghai Jahwa's performance in the second half of the year can turn around the loss.

Compared with a number of skin care product companies such as Bethany and Fuerjia who continue to increase their sales expenses to prepare for Double 11, Shanghai Jahwa has done the opposite.

Sales expenses in the third quarter of this year were 578 million yuan, down 8.4% year-on-year.

However, Shanghai Jahwa is still optimistic about the performance of its brands on Double 11.

"So far, the overall performance of Singles' Day has met our expectations, and we are also looking forward to seeing a return to growth in the last quarter." Lin Xiaohai said.

According to Lin Xiaohai, the skin care brand "Shuangmei" was sold out in 2 seconds after it appeared in Li Jiaqi's live broadcast room on this year's Double 11.

The goal is to "return blood" in Q2 next year

In the second quarter of 2022, Shanghai Jahwa's revenue fell by nearly a quarter year-on-year.

At that time, affected by the epidemic factors, Bloomage Biotech (688363. SH), Bethany and other skin care companies have ushered in a sharp increase in performance.

However, Shanghai Jahwa's revenue has been declining year after year, and Pan Qiusheng, the former chairman who took office in 2020, finally resigned voluntarily in May 2024.

As a veteran domestic product, Shanghai Jahwa owns well-known personal care and skin care brands such as Liushen and Megajing, but it is gradually falling behind at the moment of the rise of domestic products.

As of the close of trading on October 28, the total market value of Shanghai Jahwa was 11.865 billion yuan, which has evaporated by more than 5% compared with the beginning of 2022.

A major obstacle may be the slow development of Shanghai Jahwa's online channels.

In 2022 and 2023, the channels that support half of Shanghai Jahwa's revenue will always be offline, generating revenue of 4.313 billion yuan and 3.777 billion yuan respectively, accounting for 60.76% and 57.34% respectively.

Shanghai Jahwa also continued to promote skin care brands such as "Yuze" through head anchors such as Li Jiaqi, but in the end, it was suspected that it was boycotted by Li Jiaqi's fans because it provided Wei Ya with a more competitive price, which caused a series of controversies and had to terminate the cooperation with Li Jiaqi.

It is urgent to increase online channels.

This may be the main reason why Lin Xiaohai, who has rich experience in online channels, is now "parachuting" into Shanghai Jahwa.

Judging from Lin Xiaohai's series of actions since the horse, he has continued to strengthen sales through online channels in various ways.

The specific method is to promote different brands and even different categories to sell between different platforms to achieve differentiated advantages.

"Yuze" is still strengthening cooperation with anchors to boost sales.

"There are some historical reasons why Yuze Double 11 did not go to the super head live broadcast room. But all relationships are in the process of being resolved, and we believe that after Double 11, there is a chance to resume cooperation. Lin Xiaohai said.

This may mean that the relationship between "Yuze" and Li Jiaqi has eased, and there may be opportunities for cooperation between the two in the future.

Shanghai Jahwa also vigorously promoted the sales of "Yuze" in the live broadcast room of second- and third-tier influencers on Douyin channels, which is also an important driving force for the brand's recent performance growth.

In addition to consolidating the advantages of offline channels, Shanghai Jahwa's other important brand "Megajing" also plans to push the brand's "Tremella Pearl Cream" to Pinduoduo channels.

Lin Xiaohai expects that the online channel business will achieve some growth in the fourth quarter of this year, and it is expected to achieve omni-channel growth from the second quarter of next year.

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