Summary of the Conference Call Transcript Company Overview - **Company**: Shangmei Co., Ltd. (上美股份) - **Industry**: Cosmetics and Personal Care - **Date of Report**: September 2, 2025 Key Points and Arguments 1. **Performance Outlook**: The company maintains a positive outlook for the second half of the year, with strong first-half results showing revenue and profit growth of 17% and 31% year-over-year, respectively, aligning with positive earnings forecasts [1][9][18]. 2. **Business Strategy**: The strategic shift towards self-broadcasting on Douyin has proven effective, with the "Han Shu" brand leading the beauty category on the platform, achieving a GMV ranking that is over twice that of the second place [1][4]. 3. **Sales Growth**: Year-to-date sales have increased by over 25%, with a target of exceeding 40% GMV growth for the year [1][4]. 4. **Future Goals**: The company aims for a 25% growth in both revenue and profit by 2026, with a mid-term goal of reaching 30 billion yuan in revenue by 2030 [1][4][18]. 5. **New Product Lines**: The second growth curve, represented by the "Yi Ye" brand, has seen a sales increase of 147% to 397 million yuan in the first half of 2025, surpassing 2024 levels [1][4]. 6. **International Expansion**: Plans for overseas expansion are set to begin in 2026, targeting Southeast Asia, including Indonesia [1][4]. 7. **Dividend Policy**: The interim dividend is set at 0.5 yuan per share, with a payout ratio of 38%, down from 76% in 2024 due to capital expenditures for new capacity and overseas investments, while maintaining a long-term payout ratio of 30-50% [1][4]. 8. **Market Position**: As of 2024, Shangmei is among the top ten domestic beauty brands in China, with a market share of 1.4% and retail sales of 7.7 billion yuan [9][18]. 9. **Financial Projections**: Revenue and profit are expected to grow at a compound annual growth rate (CAGR) of 22% and 30%, respectively, from 2025 to 2027, with operating profit margins projected to rise from 10.9% in 2024 to 14.0% in 2027 [9][18]. 10. **Valuation**: The target price is set at 109 HKD, corresponding to a 24x 12-month forward P/E ratio, based on a discounted cash flow analysis [1][9][19]. Additional Important Information - **Sales Efficiency**: The shift to self-broadcasting has led to improved advertising efficiency, with a decrease in sales expense ratio by 0.7 percentage points in the first half of 2025 [4]. - **Brand Performance**: The "Han Shu" brand accounted for 81.4% of total revenue in the first half of 2025, with significant contributions from online sales channels [16]. - **Financial Metrics**: The company reported a net profit of 556 million yuan in the first half of 2025, a 35% increase year-over-year [14]. - **Risks and Catalysts**: Key risks include product quality issues and inflation, while potential upside catalysts involve successful new brand launches and better-than-expected growth from the main brand [21][22]. This summary encapsulates the essential insights from the conference call, highlighting the company's strategic direction, financial performance, and market positioning within the cosmetics industry.

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年8月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 上海上美化妝品股份有限公司 (於中華人民共和國註冊成立的股份有限公司) 呈交日期: 2025年9月2日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | H | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 02145 | 說明 | | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 206,319,319 | RMB | | 1 | RMB | | 206,319,319 | | 增加 / 減少 (-) | | | 0 | | | | RMB | | 0 | | 本月底結存 | | | 206,319,319 | RMB | | 1 | RMB | | 206,3 ...

Core Insights - The company reported a 30.7% increase in net profit attributable to shareholders for H1 2025, reaching 524 million yuan, with total revenue of 4.108 billion yuan, reflecting a 16.0% year-on-year growth, aligning with market expectations [1][2] Revenue Breakdown - The main brand, Han Shu, generated revenue of 3.344 billion yuan, up 14.3%, maintaining its leading position in the beauty market, particularly on Douyin [2] - The emerging brand, Newpage, saw significant growth with revenue of 397 million yuan, a 146.5% increase, ranking second in the Tmall baby skincare category during the 618 shopping festival [2] - Other brands, such as Hongse Xiaoxiang and Yiyezi, reported revenues of 159 million yuan (down 8.7%) and 89 million yuan (down 29.0%), respectively [2] Channel Performance - Online and offline revenue reached 3.809 billion yuan (up 20.1%) and 269 million yuan (down 10.6%), respectively, indicating improved online self-operated capabilities [2] Profitability Metrics - The company's gross margin for H1 2025 was 75.5%, a slight decrease of 1.0 percentage points, while the expense ratios for sales, management, and R&D were 56.9%, 3.6%, and 2.5%, showing minor year-on-year changes [2] Strategic Developments - The company is focusing on a "focus + fission" strategy with six major business units (BUs) collaborating for growth, while Newpage has completed its product range for all age groups [2] - New products, including the X Peptide series and various skincare items, have shown rapid sales growth, contributing to secondary growth [2] - The company plans to launch new brands, including a baby care brand and a high-end anti-aging line, expanding its product portfolio [2]

Core Viewpoint - The company reported strong financial performance in H1 2025, with revenue of 4.108 billion yuan, a year-on-year increase of 17.3%, and a net profit of 556 million yuan, up 34.7% [1][2]. Group 1: Financial Performance - Revenue breakdown by brand shows that Han Shu generated 3.344 billion yuan, accounting for 81.4% of total revenue, with a year-on-year growth of 14.3% [1]. - Newpage achieved revenue of 397 million yuan, a significant increase of 146.5%, representing 9.6% of total revenue, driven by strong sales of its star products [1]. - One Leaf reported revenue of 89 million yuan, a decline of 29.0%, making up 2.2% of total revenue due to transformation adjustments [1]. - Red Little Elephant generated 159 million yuan, down 8.7%, accounting for 3.9% of total revenue, with a narrowing decline as brand strength improves [1]. Group 2: Strategic Initiatives - The company is implementing a "Six Six Strategy" focusing on six major sectors: mass skincare, maternal & child care, personal care, color cosmetics, functional skincare, and high-end skincare, aiming for sustainable development [2]. - The company’s gross margin decreased by 1.0 percentage points to 75.5%, while the net profit margin increased by 1.7 percentage points to 13.5%, indicating improved profitability [2]. - Sales expense ratio decreased by 0.7 percentage points to 56.9%, reflecting the release of scale effects [2]. Group 3: Future Outlook - The company forecasts net profits of 1.02 billion yuan, 1.28 billion yuan, and 1.55 billion yuan for 2025-2027, with year-on-year growth rates of 31.1%, 25.3%, and 20.9% respectively [2]. - The strong performance of the main brand Han Shu on Douyin has established significant brand momentum, with potential for other brands to replicate this success [2].

Investment Rating - The report maintains a "Buy" rating for the company [4][7]. Core Insights - The company reported a robust revenue growth of 17.29% year-on-year, achieving a total revenue of 4.108 billion yuan in H1 2025. The net profit attributable to the parent company reached 524 million yuan, reflecting a significant increase of 30.65% [1]. - The gross margin for H1 2025 was 75.52%, a slight decrease of 0.99 percentage points year-on-year, while the net profit margin improved by 1.74 percentage points to 13.52% [1]. - The company effectively managed its expenses, with a sales expense ratio of 56.88%, down by 0.69 percentage points, and a management expense ratio of 3.72%, up by 0.47 percentage points [1]. Revenue Breakdown - The main brand, Han Shu, generated revenue of 3.344 billion yuan in H1 2025, marking a year-on-year growth of 14.3%. The secondary brand, Newpage, saw a remarkable revenue increase of 146.5% to 397 million yuan [2]. - The company launched several new products across various categories, including a high-end anti-aging skincare brand, and is preparing to introduce a well-known IP licensed baby brand [2]. Online Sales Strategy - The company has strengthened its online sales strategy, particularly on the Douyin platform, where the Han Shu brand consistently ranks first in GMV. Online self-operated channels generated 3.421 billion yuan in revenue, a 24.6% increase year-on-year, accounting for 83.3% of total revenue [3]. Profit Forecast - The company is projected to achieve net profits of 1.025 billion yuan, 1.286 billion yuan, and 1.566 billion yuan for the years 2025, 2026, and 2027, respectively, with corresponding P/E ratios of 32, 26, and 21 [4].

Core Insights - A-share mid-year report shows revenue and net profit growth remains positive, but the proportion of loss-making stocks is still high [2][10] - The overseas revenue share of A-shares reached a record high of 13.4% in 2025, indicating a trend towards internationalization [10] - The pet food industry is experiencing a trend towards "micro-innovation" and "precision nutrition," with a focus on premium products [3][16] A-share Market Analysis - A-share revenue growth peaked in Q1 2021 at 44.8% and has been on a downward trend for 14 consecutive quarters, with a slight recovery in 2025 [10] - The proportion of loss-making companies in A-shares reached 29.4% in Q2 2025, the highest since 2008 [10] - The profitability of the main board is under pressure, while the Sci-Tech Innovation Board is showing signs of recovery [10] Pet Food Industry Insights - The 27th Asia Pet Expo in 2025 saw a record number of exhibitors but a decline in the number of participating brands, indicating increased industry concentration [12][3] - Major brands like Guibao Pet and Zhongchong Co. are focusing on product upgrades and expanding their market presence [3][12] - The trend of "small dog economy" is rising, with leading brands increasing their focus on dog food products [16] Financial Performance of Key Companies - The report highlights that companies like Boss Electric and Wanhe Electric are maintaining stable profitability despite market challenges [22][24] - The pet food sector is seeing significant product innovation, with brands launching new premium products to cater to evolving consumer preferences [3][16] - The overall cash flow and operating cash return in A-shares have improved, indicating better financial health among companies [13]

Core Insights - The report highlights a recovery in real estate transactions, with a 33% increase in average transaction area in 30 major cities compared to the previous two weeks, although still lower than historical levels [10] - Manufacturing PMI shows a slight recovery but remains below seasonal expectations, with a production index increase of 0.3 percentage points to 50.8% [14] - The report emphasizes the importance of structural growth over overall economic recovery, focusing on high-growth sectors such as technology manufacturing and consumer goods [19][21] Macro Economic Overview - Real estate transactions are showing signs of recovery, with a narrowing decline in new housing sales compared to previous years [10] - Industrial production remains at a historically high level but has shown marginal decline recently, particularly in the chemical and automotive sectors [7][8] - The demand side for construction materials has turned negative year-on-year, with a notable drop in steel and building materials demand [8] Industry Performance - The report identifies the top-performing sectors, with telecommunications leading at a 5.22% increase, followed by comprehensive and non-ferrous metals sectors [3] - Conversely, the non-bank financial sector and banks have shown declines of -1.28% and -1.03% respectively, indicating potential weaknesses in these areas [4] - The report suggests that sectors like technology manufacturing and consumer goods are experiencing high growth, while real estate and construction are in a bottoming phase [22] Investment Strategy - The report recommends focusing on sectors with high growth potential, particularly in technology manufacturing and consumer goods, while being cautious of sectors like real estate that are still recovering [19][22] - It highlights the importance of identifying industries with improving profit margins and those that are in a recovery phase, such as power equipment and defense [22] Company Updates - Companies like Yongtai Energy and Sanofi are noted for their positive performance, with significant growth contributions and share buybacks [5] - The report also mentions the potential of companies involved in vocational education and eSIM technology, indicating a shift towards international collaboration and domestic production capabilities [39][44]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4][12] Core Views - The company reported a 30.7% year-on-year increase in net profit for H1 2025, achieving a revenue of 4.108 billion yuan (up 16.0% year-on-year) [4][5] - The main brand, Han Shu, continues to lead the market, while multiple brands are contributing to long-term growth [4][5] - The company maintains its profit forecast, expecting net profits of 1.006 billion, 1.258 billion, and 1.532 billion yuan for 2025, 2026, and 2027 respectively, with corresponding EPS of 2.53, 3.16, and 3.85 yuan [4][8] Financial Summary - Revenue for 2023 was 4.191 billion yuan, projected to grow to 8.496 billion yuan in 2025, reflecting a year-on-year growth of 25.1% [8] - Net profit for 2023 was 461 million yuan, expected to reach 1.006 billion yuan in 2025, indicating a year-on-year growth of 28.8% [8] - The gross margin is projected to remain stable at around 75.8% in 2025, with a net margin of 12.2% [8] - The company’s P/E ratio is expected to decrease from 33.1 in 2025 to 21.8 by 2027, indicating improving valuation [8]

Group 1 - The core viewpoint of the news is that Shangmei Co., Ltd. reported strong financial performance for the first half of 2025, with significant revenue and profit growth, leading to a rise in stock price [1] - For the six months ending June 30, 2025, the company achieved a revenue of 4.108 billion yuan, a year-on-year increase of 17.29%, and a net profit attributable to shareholders of 524 million yuan, up 30.65% year-on-year [1] - The company plans to distribute an interim dividend of 0.5 yuan per share [1] Group 2 - The revenue from the Han Shu brand for the first half of 2025 was 3.344 billion yuan, an increase of 14.3% compared to 2.927 billion yuan in the first half of 2024, driven by brand upgrades and category expansion [1] - Han Shu maintained its leading position in the online beauty industry, ranking first in total gross merchandise value (GMV) on the Douyin platform and achieving the top spot in the "Douyin E-commerce Skincare Brand Overall Ranking H1" [1] - According to Haitong International, other brands under the company, such as Newpage, Yiyue, and Red Little Elephant, reported revenues of 397 million, 89 million, and 159 million yuan respectively, with Newpage showing a significant year-on-year growth of 146.5% [2]

Group 1 - The core viewpoint of the news is that 上美股份 (Shangmei Co., Ltd.) has shown significant growth in its mid-term performance for the first half of 2025, with a revenue increase of 17.29% year-on-year and a notable rise in shareholder profit by 30.65% [1] - For the first half of 2025, 韩束 (Hansu) contributed 33.44 billion yuan in revenue, up 14.3% from 29.27 billion yuan in the same period of 2024, driven by brand upgrades and category expansion [1] - 韩束 maintained its leading position in the online beauty industry, achieving the highest monthly GMV among beauty brands on the Douyin platform and ranking first in the "Douyin e-commerce skincare brand total list H1" [1] Group 2 - 海通国际 (Haitong International) reported that besides the 韩束 brand, the new brands newpage, 一叶子 (Yiyezi), and 红色小象 (Red Elephant) generated revenues of 3.97 billion, 0.89 billion, and 1.59 billion yuan respectively, with year-on-year changes of +146.5%, -29.0%, and -8.7% [2] - The revenue contribution from newpage increased by 5 percentage points year-on-year, making it the second-largest revenue contributor [2] - The repurchase rates for newpage on Tmall and Douyin were 54% and 53% respectively, showing increases of 6% and 16% year-on-year, with an average transaction value of approximately 130 yuan [2]