Shares plunge as faith in Beauty fades
Investors unsure of competitiveness
SET-listed cosmetics company Beauty Community's shares (BEAUTY) took a nosedive by 30% Wednesday as investors lost confidence in its sales and revenue growth going forward.
BEAUTY shares closed at 9.10 baht, down 3.90 baht, in heavy turnover worth 10.9 billion baht. The share price is a steep plunge from 23.30 baht per share logged between late April and early May.
Beauty Community, which also sells dietary supplements as a secondary revenue source, has been reeling from controversies surrounding that industry.
Magic Skin was found to be producing substandard and unlicensed cosmetics and food supplements, while Lyn offers weight-loss drugs that have been linked to four deaths.
As a result, all companies in the dietary supplement industry have been inspected by the Food and Drug Administration.
The company's exports to China, its main export market, and other overseas markets will face delays, said Suwin Kraibhubes, Beauty Community's chief executive and largest shareholder. He holds a 15.11% stake.
The delays will result in company's financial performance in the second quarter to be lower than previously expected, said Mr Suwin, noting that it may be the first ever occurrence where both a significant decline in sales growth and net profit is registered.
However, the company hopes that sale growth and net profit will improve in the last six months of 2018, he said.
The company still maintains a net profit margin target of at least 20% every year, he added.
"The company is negotiating with 7-Eleven to adjust product size for distribution in more than 10,000 branches of 7-Eleven stores across the country," said Mr Suwin. "The deal is expected to be completed within this year."
In 2017, Beauty Community recorded a gross profit margin at 67% and net profit growth at 33%, with total revenue registered at 3.74 billion baht and net profit at 1.23 billion.
First quarter revenue was 905 million baht, with and 282.4 million baht in net profit.
Core revenue comes from domestic retail and non-retail channels at 70%, with the rest attributed to overseas sales.
Apart from the product inspection issue, the decrease in shares held by Mr Suwin and his family from 70% to 20% is another factor prompting loss of confidence among investors as this could result in the company losing market share, said an analyst at Finansia Syrus Securities, who requested anonymity.
Mr Suwin said the sale was made to increase its floating stocks. Retail investors hold 64% of the company's floating stocks, registered to 19,803 individuals.