[Guotai Haitong Light Industry Liu Jiakun] Comment on Strong Rise of Dengkang Oral

English summary

Reason for the surge: Last week, the company held an offline public exchange meeting + visit of Dengkang World, clearly disclosing the 15th Five-Year strategic plan, with clear growth logic and increased institutional attention! According to Jiuqian data, the company's Lengsuanling brand toothpaste in 26Q2 on Tmall/JD/Douyin YoY -16%/+39%/+5.3%. Among them, June on Tmall/JD/Douyin YoY +5%/+62%/+35%, with good online growth. The company's future development is clear. The 15th Five-Year Plan requires revenue and profit to double in five years (15% CAGR). Growth points come from 1) oral care basic market, based on Eastern oral needs, technological innovation highlights product competitive advantages (emphasis on efficacy), exporting to Southeast Asia with hopes of reaching 100 million scale in the future. 2) Smart oral care (electric toothbrushes, water flossers), oral medical (medical use). 3) Investment and M&A to lay out new tracks (preferring upstream companies). Online explosive product strategy has been effective, and offline expansion is active. The company's online growth is remarkable, mainly due to attention to content marketing, precise traffic investment, using high-margin explosive products as traffic-generating products for interest e-commerce, increasing exposure while ensuring profitability. ...