招银国际-上海家化-600315-Too early to call for a turnaround but ESOP target is likely hit as a low hanging f

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（以下内容从招银国际《Too early to call for a turnaround but ESOP target is likely hit as a low hanging fruit; Down to HOLD》研报附件原文摘录）
　　上海家化(600315) 　　Jahwa’s surprising 1Q was mainly driven by non-core gains and a lower tax rate.The quarter’s net profit has marked its 4-year high; however, it is still too early tocall for an operation turnaround. Jahwa’s 1Q sales momentum was lackluster.For instance, Dr. Yu/Herborist/Maxam/gf was down 13%/18%/9%/11% YoY, withthe exception of Liushen/Derma Herborist seeing flattish/7% growth. Discountsand mix change has weighed on GPM, and a stubbornly high selling expenseratio is not helpful to OPM which contracted by 0.7pp to 9.2%. Despite this,management remains upbeat and believes its new brand strategy shouldrejuvenate growth for the remainder of this year. While we do not see sufficientexecution track record to substantiate this initiative, we think Jahwa is likely toattain its ESOP target thanks to a soft comp as a low hanging fruit. Consideringsub-peers growth and hence a likely capped near-term earnings upside, wedowngrade Jahwa to HOLD. 　　2023 outlook. Different from a restrained marketing budget, managementplans to lift up promotional efforts from 2Q onwards with more KOLcollaboration. Management is confident to attain its ESOP target for 2023. 　　The multi-brand strategy. Herborist – pushing up its hero product strategyin return for extending its e-commerce growth momentum that saw a 35%increase in 1Q23; Dr Yu – further intensifying its dermatologist brand imagewith new launch such as facial cream (for oil skin), repair essence, and otherSKU for sensitive skins. 　　Earnings change. We largely maintain our 2023/24E revenue estimates.Instead, we lower our administration expense ratio by 0.5pp as we believeJahwa’s management will have to maintain a cost-efficient operation to hit itsESOP target as a last resort. Meanwhile, we raise our selling expense ratioby 0.3pp to factor-in more aggressive promotional effort starting from 2Q. Our2023E estimates are set marginally at the low end of the ESOP B target. 　　Valuation. Our revised TP is based on an updated 26.0x (from previously40.0x) roll-forward end-23E P/E which now represents -1sd below average(from average valuation) since 2019. This was the period when the marketbegan to re-rate the sector in view of the rise of the domestic brands, andsubsequently a timely online migration amid the outbreak of COVID-19. Ourtarget multiple is set lower than that of Proya (at long-term average) to reflectthe difference in growth outlook and hence our preference.