Core Insights - Shanghai Jahwa held its 2024 annual shareholders' meeting, approving 14 proposals including the 2024 Board of Directors' work report and the 2025 employee stock ownership plan [1] - The company achieved a revenue of 5.679 billion yuan in 2024, with improvements in corporate governance and operational standards [1] - The meeting also approved a profit distribution plan for the first half of 2025, aiming to reward investors and enhance employee motivation through shared interests [1] Group 1: Strategic Focus and Brand Development - The company has completed four major tasks: defining direction, clarifying governance, boosting morale, and eliminating burdens, leading to a strategic transformation [2] - The focus is on core brands, brand building, online presence, and efficiency, with significant upgrades in product offerings across various brands [2] - The Yuze brand has strengthened collaborations with top hospitals, leading to comprehensive upgrades in brand image and product formulation [2] Group 2: Performance and Future Goals - The company's major brands achieved double-digit growth in online channels during the 618 shopping festival, attributed to strategic planning and operational efficiency [3] - The leadership emphasizes the importance of organizational capability and aims to create a high-performing team to drive future success [3] - The company plans to deepen reforms and focus on brand development, targeting double-digit revenue growth by 2025, which is seen as a pivotal year for the company [3]

Market Overview - On September 15, the cosmetics sector declined by 0.18%, with Huaye Fragrance leading the drop [1] - The Shanghai Composite Index closed at 3860.5, down 0.26%, while the Shenzhen Component Index closed at 13005.77, up 0.63% [1] Individual Stock Performance - Notable gainers included: - Jinsong New Material (300849) with a closing price of 14.48, up 3.72% and a trading volume of 121,800 shares, totaling 179 million yuan [1] - Lafang Home (603630) closed at 28.58, up 2.11% with a trading volume of 71,300 shares, totaling 200 million yuan [1] - Notable decliners included: - Huaye Fragrance (300886) closed at 29.66, down 1.79% with a trading volume of 18,400 shares, totaling 55.05 million yuan [2] - Marubi Biological (603983) closed at 39.95, down 1.36% with a trading volume of 13,900 shares, totaling 55.49 million yuan [2] Capital Flow Analysis - The cosmetics sector experienced a net outflow of 83.38 million yuan from institutional investors, while retail investors saw a net inflow of 76.42 million yuan [2] - The overall capital flow for individual stocks showed: - Jinsong New Material had a net inflow of 18.50 million yuan from institutional investors, accounting for 10.31% of its total [3] - Huaye Fragrance had a net outflow of 4.23 million yuan from institutional investors, accounting for 6.58% of its total [3]

Market Overview - The Shanghai Composite Index fell by 0.12% on September 12, with 9 out of the 28 sectors rising, led by non-ferrous metals and real estate, which increased by 1.96% and 1.51% respectively [1] - The communication and comprehensive sectors experienced the largest declines, down by 2.13% and 1.95% respectively [1] - Overall, there was a net outflow of 53.64 billion yuan in the main funds across the two markets, with 6 sectors seeing net inflows [1] Sector Performance - The non-ferrous metals sector had the highest net inflow of main funds, totaling 2.168 billion yuan, coinciding with its 1.96% increase [1] - The construction and decoration sector also saw a positive performance with a 0.96% rise and a net inflow of 721 million yuan [1] - In contrast, the non-bank financial sector had the largest net outflow, amounting to 8.138 billion yuan, followed by the electronics sector with a net outflow of 7.517 billion yuan [1] Beauty and Personal Care Industry - The beauty and personal care sector declined by 1.52% with a net outflow of 228 million yuan [2] - Out of 29 stocks in this sector, 5 rose while 24 fell [2] - The top three stocks with the highest net outflows included Aimeike, Shanghai Jahwa, and Proya, with outflows of 55.4558 million yuan, 51.6741 million yuan, and 38.7707 million yuan respectively [2][3] Fund Flow in Beauty and Personal Care - The top stock in terms of net inflow was Shuiyang Co., with an inflow of 12.3562 million yuan, followed by Zhongshun Jierou and Huaxi Biological, with inflows of 10.1629 million yuan and 7.6373 million yuan respectively [2][4] - The table of fund flow indicates that Aimeike had the largest outflow at -55.4558 million yuan, with a decline of 3.03% [3] - Other notable outflows included Shanghai Jahwa at -51.6741 million yuan and Proya at -38.7707 million yuan [3]

Group 1 - The cosmetics sector experienced a decline of 1.22% on September 12, with Shanghai Jahwa leading the drop [1][2] - The Shanghai Composite Index closed at 3883.69, up 0.22%, while the Shenzhen Component Index closed at 12996.38, up 0.13% [1] - Major stocks in the cosmetics sector showed mixed performance, with Marubi Biological and Water Sheep shares increasing by 1.15% and 0.45% respectively, while Shanghai Jahwa fell by 4.07% [1][2] Group 2 - The net outflow of main funds in the cosmetics sector was 211 million yuan, while retail investors saw a net inflow of 113 million yuan [2][3] - Specific stocks like Water Sheep and LaFang Home had varying net inflows and outflows, with Water Sheep seeing a net inflow of 14.77 million yuan from main funds [3] - Shanghai Jahwa and other companies like Beitaini and Furuida experienced significant net outflows from main funds, indicating potential investor concerns [3]

Group 1 - The cosmetics sector experienced a slight increase of 0.22% on September 10, with Jinsheng New Materials leading the gains [1] - The Shanghai Composite Index closed at 3812.22, up 0.13%, while the Shenzhen Component Index closed at 12557.68, up 0.38% [1] - Jinsheng New Materials saw a significant rise in its closing price to 14.38, reflecting an increase of 11.73% with a trading volume of 139,700 shares and a transaction value of 198 million yuan [1] Group 2 - The cosmetics sector faced a net outflow of 10.99 million yuan from institutional investors and 78.76 million yuan from retail investors, while individual investors saw a net inflow of 89.75 million yuan [2] - The trading data indicates that Jinsheng New Materials had a net inflow of 24.75 million yuan from institutional investors, despite a net outflow from retail and speculative investors [3] - Qingdao Kingway and Beitaini also reported net inflows from retail investors, while other companies like Shanghai Jahwa and Marubi experienced net outflows from both institutional and speculative investors [3]

Company Overview - Shanghai Jahwa United Co., Ltd. is located at 11F, Shuangshi Hui Building A, 399 Dongchangzhi Road, Hongkou District, Shanghai, established on December 1, 1995, and listed on March 15, 2001. The company specializes in the research, production, and sales of skincare, personal care, household cleaning, and maternal and infant products [1]. Financial Performance - As of June 30, 2025, Shanghai Jahwa achieved a revenue of 3.478 billion yuan, representing a year-on-year growth of 4.75%. The net profit attributable to shareholders was 266 million yuan, reflecting an increase of 11.66% year-on-year [2]. - The company has distributed a total of 3.569 billion yuan in dividends since its A-share listing, with 318 million yuan distributed over the past three years [3]. Stock Performance - On September 10, Shanghai Jahwa's stock price increased by 2.00%, reaching 28.04 yuan per share, with a trading volume of 152 million yuan and a turnover rate of 0.82%. The total market capitalization stood at 18.849 billion yuan [1]. - Year-to-date, the stock price has risen by 65.82%, with a 6.29% increase over the last five trading days, 28.39% over the last 20 days, and 31.52% over the last 60 days [1]. Shareholder Structure - As of June 30, 2025, the number of shareholders increased to 37,800, a rise of 10.15% from the previous period. The average circulating shares per person decreased by 9.22% to 17,804 shares [2]. - Among the top ten circulating shareholders, Hong Kong Central Clearing Limited is the second-largest shareholder with 32.7782 million shares, an increase of 15.0639 million shares from the previous period. New entrant招商产业精选股票A holds 3.4 million shares, while 富国研究精选灵活配置混合A has exited the top ten list [3]. Business Segmentation - The revenue composition of Shanghai Jahwa includes personal care products (45.70%), beauty products (21.48%), overseas sales (20.20%), innovation (12.55%), and other segments (0.06%) [1].

Summary of Conference Call for 嘉化公司 Company Overview - 嘉化公司 has undergone significant organizational restructuring since Q4 2023, establishing brand, e-commerce, and market management teams to enhance communication efficiency and integrate offline sales departments for 10 private brands [4][2]. Key Points and Arguments - **Channel Inventory Management**: The company has initiated a channel inventory cleanup, reducing 百草集百货's inventory turnover days to approximately 89 days, indicating a more comprehensive inventory status [5][2]. - **Brand Hierarchy Adjustment**: The brand hierarchy has been redefined, with 玉泽 and 六神 in the first tier, and 百草集 and 美加净 in the second tier. This restructuring aims to enhance brand positioning and product offerings [6][2]. - **Product Launches and Market Focus**: - 六神 is focusing on price control and has launched the 驱蚊弹 2.0, targeting over 100 million in sales in its launch year, with a significant increase in sales compared to the previous version [7][2]. - 玉泽 has returned to a growth trajectory with double-digit growth driven by brand repositioning, new product launches, and improved e-commerce capabilities [8][2]. - 佰草集 plans to promote new product lines, including 新七白, 修护线, and 抗老线, with expectations of strong online sales performance [11][2]. - **Market Strategy for 高夫**: The brand has shifted its target market from 30-40-year-old men to 18-24-year-old male college students, launching products like气泡水洁面巾 and achieving high conversion rates through live streaming [12][2]. Additional Important Insights - **Profitability and Growth Expectations**: The company anticipates that its skincare business will maintain rapid growth and improve profitability over the next two years, with 六神 contributing approximately 20 billion in revenue annually [15][3][16][3]. - **E-commerce and ROI**: 玉泽 and 佰草集 have shown slight improvements in profitability, with e-commerce channels becoming increasingly important for revenue generation [11][2]. - **Future Product Development**: The company is focusing on long-term brand investments and product development to enhance market share, with 玉泽's new products priced under 200 yuan to support growth [9][2][8][2]. - **Impact of Management Changes**: The management restructuring has led to improved performance, with the skincare business showing signs of stability and growth, particularly in Q2 2025 [15][3][16][3]. This summary encapsulates the key developments and strategic directions of 嘉化公司 as discussed in the conference call, highlighting the company's focus on brand management, inventory control, and market repositioning.

Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Insights - The company has completed four core tasks since the second half of 2024: defining direction, clarifying governance, boosting morale, and eliminating burdens. The results of past promotions are beginning to show in specific products and brands, and the upcoming new product launches and brand promotions are highly anticipated [2][10]. - In the first half of 2025, the company achieved operating revenue of 3.478 billion yuan, a year-on-year increase of 5%, and a net profit attributable to shareholders of 266 million yuan, a year-on-year increase of 12%. However, the net profit excluding non-recurring items decreased by 6% to 221 million yuan [6][10]. - In the second quarter of 2025, the company reported operating revenue of 1.775 billion yuan, a year-on-year increase of 25%, and a net profit of 49 million yuan, marking a turnaround from losses. The net profit excluding non-recurring items was 29 million yuan [6][10]. Financial Performance Summary - In the first half of 2025, the personal care, beauty, innovation, and overseas divisions generated revenues of 1.6 billion yuan, 700 million yuan, 400 million yuan, and 700 million yuan, respectively. The beauty segment saw a growth of 32%, while personal care remained stable with slight growth [10]. - The second quarter of 2025 saw rapid growth in the beauty segment and e-commerce channels, contributing to strong revenue performance. The personal care and beauty segments achieved revenue of 800 million yuan and 420 million yuan, with growth rates of 42% and 56%, respectively [10]. - The improvement in net profit margin in the second quarter of 2025 was primarily due to an increase in gross margin and a decrease in sales expense ratio. The gross margin increased by 5 percentage points year-on-year, mainly driven by the higher proportion of beauty products and an increase in average selling prices across categories [10]. Future Outlook - The company is expected to see earnings per share (EPS) of 0.50 yuan, 0.63 yuan, and 0.85 yuan for the years 2025, 2026, and 2027, respectively. The anticipated new product launches and enhanced brand promotions in the second half of 2024 are expected to drive growth [10].

Investment Rating - The report maintains a "Buy" rating for the cosmetics and medical beauty sector, highlighting strong growth potential and investment opportunities in the industry [14][19]. Core Insights - The cosmetics and medical beauty sector has shown resilience, outperforming the market during the week of August 29 to September 5, 2025, with the Shenwan Beauty Care Index declining only 0.8% [3][4]. - The transition to autumn skincare marks the beginning of a consumption peak for the sector, with significant sales events such as the Autumn Beauty Consumption Festival and Double 11 approaching, creating new investment opportunities [9][10]. - Major companies in the sector are optimistic about their performance in the second half of 2025, as indicated by a recent conference involving over ten beauty care companies [9]. Summary by Sections Industry Performance - The Shenwan Cosmetics Index remained stable, outperforming the Shenwan A Index by 1.4 percentage points, while the Shenwan Personal Care Index fell by 1.8%, underperforming the Shenwan A Index by 0.3 percentage points [3][4]. Key Company Reviews - **Mao Geping (1318HK)**: Reported a revenue of 2.59 billion yuan for H1 2025, a year-on-year increase of 31%, with a net profit of 670 million yuan, up 36%. The color cosmetics segment saw a revenue of 1.42 billion yuan, while skincare generated 1.09 billion yuan, reflecting strong brand momentum [10][11]. - **Shangmei Co. (02145HK)**: Achieved a revenue of 4.108 billion yuan in H1 2025, a 17.3% increase, with a net profit of 556 million yuan, up 34.7%. The main brand, Han Shu, contributed significantly to growth, with a revenue of 3.344 billion yuan [16][17]. Investment Recommendations - Recommended companies include Shangmei Co., Porlaia, and Shanghai Jahwa, which have strong brand matrices and relatively low PE multiples. Other notable mentions are Marubi Biological and Mao Geping, which are positioned well to benefit from the rise of domestic beauty brands [10][19]. - The report suggests focusing on companies with strong R&D capabilities and product pipelines, particularly in the upstream medical beauty segment, with a recommendation for Aimeike [10][19]. Market Trends - The report notes a significant increase in online sales, with H1 2025 online revenue for Mao Geping reaching 1.297 billion yuan, a 39% year-on-year increase, marking a shift in consumer purchasing behavior towards online platforms [12][18]. - The overall cosmetics retail market showed a 4.5% growth in July 2025, indicating a robust recovery in consumer spending [23][26]. Strategic Developments - Porlaia's investment in Huazhi Xiao reflects a strategic move to enhance its multi-brand strategy and capitalize on the influence of Gen Z consumers [28]. - The report highlights the competitive landscape, noting that domestic brands are increasingly capturing market share, with a notable shift in consumer perception from "value for money" to "quality choice" [32].

Core Viewpoint - The article discusses the recent developments in the domestic beauty market, highlighting the completion of a Series B funding round for HuazhiXiao, led by domestic beauty giant Proya, and the strategic shifts among the top ten domestic beauty companies as they seek new growth avenues amid a slowing market [3][4]. Group 1: Financial Performance of Top Domestic Beauty Companies - Proya, Shangmei, and Shanghai Jahwa ranked as the top three domestic beauty companies, with Proya achieving a revenue of 5.362 billion yuan in the first half of the year, surpassing half of last year's total revenue [5][6]. - Shangmei's revenue grew by 17.3% year-on-year to 4.108 billion yuan, with net profit increasing by 34.7% [5][6]. - The top ten domestic beauty companies saw eight achieve revenue growth, and seven companies reported positive net profit growth, indicating a robust overall performance [6][8]. Group 2: Strategic Shifts and Market Positioning - The top domestic beauty companies are rapidly building multi-brand matrices and advancing overseas strategies to adapt to the slowing domestic market [3][4]. - Proya's skincare segment remains dominant, while its hair care and color cosmetics categories have shown significant growth, with hair care growing by 131.25% and color cosmetics by 25.79% [11]. - Shangmei's main brand, Han Shu, generated 3.344 billion yuan in revenue, while its new brand, newpage, focusing on children's skincare, achieved a remarkable 146.5% growth [14][16]. Group 3: International Expansion and Investment Strategies - Proya aims to enter the top ten global cosmetics companies by 2035, targeting a revenue of at least 50 billion yuan, and is actively pursuing international market opportunities [22][23]. - The investment in HuazhiXiao is a strategic move for Proya to enhance its multi-brand strategy and recognize HuazhiXiao's global potential [23]. - Water Sheep Co. is also focusing on international expansion, with a goal to become a global luxury beauty brand management group, launching a "10+3" global strategy [26][28]. Group 4: Challenges and Future Outlook - The domestic beauty market is facing challenges such as slowing growth and increased competition, prompting companies to seek international opportunities to escape price wars [29]. - Companies that possess product originality, brand narrative capabilities, and cross-market operational efficiency are more likely to transition from "Chinese leaders" to "global players" [29].