The 'laundry detergent king' is caught in a vortex of increasing losses as it sells.

On January 10th, Blue Moon Group (6993. HK) disclosed its 2024 performance forecast. The company expects its annual revenue to be approximately HKD 8.5 billion, a year-on-year increase of approximately 16%, reaching a new high since its listing.

All product categories of the company have achieved sales growth. Except for direct sales to major customer channels, sales from all channels have also achieved growth.

It is expected that the gross profit margin will remain at 61% in 2024, higher than the level of 58.7% in mid-2024.

While the performance was excellent, the company suffered its first annual loss since going public. The expected net loss for 2024 is approximately HKD 700 million to HKD 750 million, while the company is expected to make a profit of HKD 325 million in 2023.

This is not the first time that the company has fallen into a situation of "increasing revenue without increasing profits".

From 2021 to 2023, Blue Moon's revenue was HKD 7.597 billion, HKD 7.947 billion, and HKD 7.324 billion respectively, with year-on-year growth rates of 8.59%, 4.60%- 7.85%.

However, the total annual profit continued to shrink, with year-on-year declines of 22.54%, 39.74%, and 46.8%, respectively, and the year-on-year decline continued to widen.

The entry threshold for the Jiaqing daily chemical industry is low, and product homogenization is severe, leading to rapid growth of white label manufacturers.

In order to maintain market share, the company has invested heavily in live streaming e-commerce in recent years.

During 618 in 2024, Blue Moon cooperated with the Tiktok head anchor "Guangdong Couple" to draw a lottery for 5000 Apple mobile phones in the live broadcast room, breaking the GMV record of live broadcast on the platform list.

There are reports that Blue Moon spent 40 million yuan on streaming fees for the live broadcast, with paid traffic accounting for as much as 69%.

In 2024, the sales of Blue Moon's new e-commerce channels will increase by about 2.1 times year-on-year. Overall, the growth of sales through new e-commerce channels is on par with the growth of marketing expenses in terms of speed.

In the first half of 2024, the company's sales and distribution expenses increased by 107.9% year-on-year to HKD 2.201 billion. Among them, promotion expenses increased by 311% year-on-year to HKD 1.095 billion, and advertising expenses increased by 133% year-on-year to HKD 203 million.

The success of Blue Moon in its early years stems from its first capture of the growth opportunity of laundry detergent in the domestic market and its large-scale distribution of traditional supermarkets such as Carrefour and RT Mart.

After the decline of KA channels represented by hypermarkets, Blue Moon lost its inherent position and there was also a loosening in pricing.

Inquiring into the official flagship store of Tiktok, we found that the brand's 660g "Supreme Biotechnology Laundry Liquid" currently sells for nearly 120 yuan.

But in its exclusive collaboration link with the anchor, Blue Moon's combination set of 13 laundry detergent products is only 199.9 yuan, including 2 bottles of formal wear and 4 bottles of supplemental Supreme laundry detergent, with a discount as low as 30%.

In the current industry that pursues cost-effectiveness, Blue Moon is unwilling to give up its high-end market share, largely due to its inability to find a second growth curve outside of laundry detergent. In recent years, clothing cleaning and care products have consistently accounted for over 80% of the company's revenue.