Excerpts from CGS-CIMB report

outlet zhongshanAn outlet of Best World International in Zhongshan, China. Photo: Internet

Beauty sells!
Amid recent store closures and the bankruptcies of retail chains worldwide, the cosmetics sector seemingly bucks the trend.

In fact, the topic of beauty is second only to gaming in terms of number of views on YouTube.

According to Orbis Research, the global cosmetic products market is projected to attain a market value of US$805.6bn by 2023F, registering 7.14% CAGR over 2018-23F.


Apart from increasing spending on cosmetics by millennials, we think that ageing demographics and the growing number of image-conscious men will also contribute to the cosmetics market growth.

The NPD Group (formerly known as the National Purchase Diary Panel Inc. and NPD Research Inc) estimated that millennials spent 25% more on cosmetics in 2016 than two years before.

In an Apr 2018 survey jointly carried out by iResearch and Chinese online discount retailer Vipshop Holdings Ltd (VIPS US, Not Rated), 18.8% of men born after 1995 use blemish balm (BB) cream, 18.6% use lipstick, 8.8% use eyebrow pencils and 8.5% use eyeliner.

BEST WORLD Stock 

S$2.64

52-week
range

$2.15 – $2.79

PE (ttm)

22

Market cap

S$1.45 b

Shares outstanding

550 m

Dividend 
yield 
(ttm)

1.46%

1-year return

108%

Source: Bloomberg

We expect consumers discovering more young and independent cosmetic brands, as well as e-commerce gaining prominence as a distribution channel to sustain the sales growth momentum of the cosmetics industry.

Attractive acquisitions of smaller companies by major cosmetic players will also be a driver of sector growth, in our view.

BEAUTY COMMUNITY Stock 

6.80 baht

52-week
range

6.25 – 23.70 baht

PE (ttm)

16

Market cap

20.3 b baht

Shares outstanding

3.0 b

Dividend 
yield 
(ttm)

6.4%

1-year return

-64%

Source: Bloomberg

Within our ASEAN stock coverage universe, we think Beauty Community (BEAUTY TB, Add, TP: THB12.10) and Best World (BEST SP, Hold, TP: S$1.90) are poised to capitalise on such secular trends, as they have successfully introduced new products and built strong presence in a few countries.

Full report here.


Share Prices

Counter NameLastChange
AEM Holdings1.9300.030
AusGroup0.0330.002
Avi-Tech Electronics0.4200.005
Best World Int.1.360-
CEI0.955-
China Sunsine0.5100.010
CNMC GoldMine0.245-
CSE Global0.535-
Eagle HTrust USD0.515-0.005
Food Empire0.615-
Golden Energy0.159-
GSS Energy0.0860.002
ISDN Holdings0.2200.005
ISOTeam0.245-
JB Foods0.655-
KSH Holdings0.4400.010
Miyoshi0.030-
Moya Asia0.065-0.001
Nordic Group0.280-
Oxley Holdings0.350-0.005
Procurri0.475-0.005
REX International0.1860.007
Riverstone0.950-0.020
Roxy-Pacific0.4000.005
Sing Holdings0.3900.005
SingMedical0.295-
Straco Corp.0.6750.005
Sunningdale Tech1.3300.050
Sunpower Group0.5900.015
The Trendlines0.087-
Tiong Seng0.200-
Uni-Asia Group0.745-
Yangzijiang Shipbldg1.1300.040

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