Investment Rating - The investment rating for the company is "Recommended" [1][10] Core Views - The company achieved revenue of 5.362 billion yuan in the first half of 2025, representing a year-on-year increase of 7.21%, with net profit attributable to shareholders increasing by 13.8% to 799 million yuan [4] - The company is focusing on brand enhancement and market responsiveness, leveraging its R&D capabilities to optimize its core product matrix and explore overseas market opportunities [8] - The company plans to issue H shares and list on the Hong Kong Stock Exchange, aiming for a broader market presence after reaching a revenue milestone of 10 billion yuan in 2024 [8] Financial Summary - Revenue projections for 2025-2027 are 18.05 billion yuan, 21.09 billion yuan, and 24.29 billion yuan respectively, with corresponding P/E ratios of 20, 17, and 15 times [8] - The company reported a gross margin of 73.38% in the first half of 2025, an increase of 3.56 percentage points year-on-year, and a net profit margin of 15.41% [7] - The company’s total assets are projected to grow from 75.30 billion yuan in 2024 to 125.87 billion yuan by 2027 [9]

Market Overview - The Shanghai Composite Index increased by 0.03% as of 10:29 AM, with a trading volume of 767.36 million shares and a turnover of 1,240.266 billion yuan, representing a decrease of 3.97% compared to the previous trading day [1] Industry Performance - The top-performing sectors included: - Communication: Up by 2.63% with a turnover of 799.82 billion yuan, led by Shijia Photon, which rose by 13.65% [1] - Electronics: Up by 1.69% with a turnover of 2,255.04 billion yuan, led by Lexin Technology, which increased by 17.08% [1] - Computer: Up by 1.48% with a turnover of 1,716.75 billion yuan, led by Kaipu Cloud, which surged by 20.00% [1] - The sectors with the largest declines included: - Beauty Care: Down by 1.38% with a turnover of 42.98 billion yuan, led by Proya, which fell by 5.02% [2] - Food and Beverage: Down by 1.20% with a turnover of 192.07 billion yuan, led by Jin Zai Food, which decreased by 3.53% [2] - Real Estate: Down by 1.15% with a turnover of 140.36 billion yuan, led by Shen Shen Fang A, which dropped by 9.37% [2] Summary of Sector Changes - The communication sector showed the highest increase, while the beauty care, food and beverage, and real estate sectors experienced notable declines [1][2]

Core Insights - The company reported a revenue of 5.362 billion yuan, a year-on-year increase of 7.21%, and a net profit of 799 million yuan, up 13.80% [2] - The operating cash flow surged by 95.34% to 1.293 billion yuan, indicating strong financial health [2] - The company announced a record interim dividend of 8 yuan per 10 shares, totaling 315 million yuan, reflecting a commitment to shareholder returns [4] Revenue and Profitability - The hair care segment saw a remarkable revenue increase of 131.25%, while the beauty and makeup category grew by 25.79%, driving overall revenue growth [3] - The main brand, Proya, generated 3.979 billion yuan, accounting for 74.27% of total revenue, maintaining its leading position in major e-commerce channels [3] - The net profit margin improved to 15.41%, and the gross margin increased by 3.56 percentage points to 73.38%, showcasing effective cost control and product optimization [3] Dividend and Capital Strategy - The proposed interim dividend represents nearly 40% of the net profit, marking the highest dividend payout ratio since the company's listing [4] - The company is preparing for an H-share listing in Hong Kong to enhance international financing, governance, and brand recognition, aiming to support global expansion [4] Multi-Brand Strategy - The company’s multi-brand strategy is yielding results, with the brand Caitang achieving 705 million yuan in revenue, a 21.11% increase [5] - The hair care brand Off&Relax reported a revenue of 279 million yuan, up 102.52%, indicating strong market performance [6] - Other brands like Yuefuti and Yuanse Bota also showed significant growth, contributing to a diversified growth path for the company [6] R&D and Digital Transformation - The company applied for 35 new patents in the first half of 2025, emphasizing its commitment to R&D [7] - Collaborations with Ant Group for smart customer service and upgrades to digital management systems are underway, enhancing data-driven decision-making [7] Future Outlook - The company plans to accelerate production capacity and the H-share listing process while focusing on high-end domestic markets and overseas expansion [8] - The H-share listing is expected to open international financing opportunities, positioning the company for greater competitiveness in the global beauty market [8]

Core Insights - The company reported a total revenue of 53.56 billion yuan for the first half of 2025, reflecting a year-on-year increase of 7.24% compared to 2024 and 21.09% compared to 2023 [1] Channel Breakdown - Online revenue reached 51.09 billion yuan, showing a growth of 9.17% year-on-year from 2024 and 23.68% from 2023, with a significant contribution of 95.39% to total revenue [1] - Offline revenue was only 2.47 billion yuan, which represents a decline of 21.49% compared to 2024 and 13.63% compared to 2023 [1] Brand Performance - Revenue from various brands in the first half of 2025 included: - Proya: 39.79 billion yuan - Caitang: 7.05 billion yuan - OR: 2.79 billion yuan - Yuefuti: 1.66 billion yuan - Original Pot: 0.97 billion yuan [4] - By product category, skincare (including cleansing) generated 41.99 billion yuan, color cosmetics brought in 8.37 billion yuan, and hair care products accounted for 3.2 billion yuan [4]

Core Viewpoint - The Chinese beauty industry is experiencing a dual phenomenon of heightened IPO enthusiasm alongside an increasing wave of delistings, indicating a significant transformation in the capital market dynamics [1][10][15]. Group 1: IPO Activity - As of August 26, 2023, Proya Cosmetics Co., Ltd. announced plans to issue H-shares and list on the Hong Kong Stock Exchange, marking the fourth beauty-related company to initiate an "A+H" dual listing this year [1]. - This year, three beauty-related companies have successfully gone public, while at least 30 others are competing for capital market entry, covering various segments such as brands, raw materials, and agency operations [1][10]. - The Hong Kong Stock Exchange has become a preferred listing destination for beauty companies, driven by policy support and improved listing mechanisms, with 13 companies planning to list there [13][14]. Group 2: Delisting Trends - Since 2025, at least nine beauty-related companies have faced delisting or termination of listing risks, with five companies being forcibly delisted due to financial misconduct or information disclosure violations [2][4][5]. - Companies like Puli Pharmaceutical and Jiuyou Co. were delisted from A-shares due to financial fraud, while others like Xingmei Co. and Senyu Group faced delisting for failing to disclose required reports [2][4][5]. - The delisting trend reflects a tightening regulatory environment, where companies lacking sustainable operations and transparent governance face increased scrutiny and potential removal from the market [5][15]. Group 3: Strategic Adjustments - Four companies, including Linsen Biological and Yasha Co., have voluntarily chosen to delist, citing reasons such as focusing on core business management and reducing operational costs [6][7]. - The decision to voluntarily delist is often influenced by high listing costs and low valuations, prompting companies to seek greater operational flexibility [7][9]. - Among the voluntarily delisted companies, only Opei Co. maintained stable revenue and profit growth, while others experienced declines in net profit [8][9]. Group 4: Market Dynamics - The beauty industry is undergoing a significant shift from rapid growth driven by marketing and traffic to a focus on sustainable, high-quality development [15]. - The current market environment emphasizes the importance of companies with solid internal value, clear brand recognition, and sustainable profitability to attract capital [15].

Core Insights - The report from Yien Data indicates that the Chinese beauty market is experiencing steady growth and has entered a stable development phase, with domestic beauty brands rapidly gaining market share, projected to reach 55.2% by 2024, an increase of 2.9% from previous figures, surpassing foreign brands [1][11][13]. Group 1: Domestic Beauty Market Analysis - The domestic beauty market's social media presence remains robust, with a volume of 39.313 million and an interaction count of 485 million from August 2024 to July 2025, reflecting a 20% increase [1][14][16]. - The primary consumer demographic consists of women born in the 1990s, with nearly 30% of consumers being male; over 90% of consumers have purchased domestic beauty products, with younger consumers showing a higher preference for domestic brands [1][20][22]. Group 2: Domestic Skincare Market Insights - In the domestic skincare market, 80% of consumers are female, with 62% aged between 18-34, primarily located in high-tier cities. The demand for facial masks and serums is notably increasing, with brands like Proya leading in social media heat [2][36]. - Key consumer demands focus on anti-aging, repair, and whitening, with specific needs such as anti-aging eye creams and acne-controlling cleansers each accounting for 33% of consumer interest [2][35]. Group 3: Domestic Makeup Market Insights - The domestic makeup market also sees a significant female consumer base at 74%, with 68% aged 18-34, concentrated in high-tier cities. There is a rising interest in base makeup products, with a shift towards more advanced categories like blush and contour [2][36]. - The industry is witnessing three major trends: multifunctional products gaining popularity, a focus on niche markets, and a consensus on combining makeup and skincare functionalities [2][36]. Group 4: Emerging Trends in Domestic Beauty - The domestic skincare market is experiencing four key trends: the expansion of the men's skincare market, increased focus on Chinese ingredients, refined consumer demands, and the rise of short drama marketing strategies [2][36][38]. - The men's skincare market is projected to exceed 10 billion yuan, with brands launching dedicated product lines to capture this growing segment [2][39].

Market Performance - The Shanghai Composite Index fell by 0.39% to 3868.38 points, ending a four-day rally[1] - The Hong Kong Hang Seng Index closed down 1.18% at 25524.92 points, with the Hang Seng Technology Index down 0.74%[1] - The total trading volume in the Hong Kong market was 317.87 billion HKD[1] Corporate Developments - Chinese AI chip company Cambricon reported a revenue of nearly 2.9 billion RMB, a year-on-year increase of over 4300%[8] - Cambricon achieved a net profit of 1.04 billion RMB in the first half of the year, compared to a loss of 530 million RMB in the same period last year[12] Legal and Political News - Former President Trump is preparing for a legal battle against Lisa Cook, a Federal Reserve governor he dismissed, who is seeking an injunction against her removal[12] - The Trump administration is considering options to exert greater influence over the 12 regional Federal Reserve banks, potentially reshaping monetary policy[12]

Investment Rating - The investment rating for the company is "Outperform the Market" [6][17]. Core Views - The company achieved steady growth in Q2, with a revenue of 5.362 billion and a year-on-year increase of 7.21%, while the net profit attributable to shareholders reached 799 million, up 13.80% year-on-year [1][8]. - The main brand, Proya, maintained stable development, while the emerging brands such as Off&Relax and Original Color Pot showed significant growth, contributing to the company's multi-brand strategy [4][17]. - The company plans to distribute a cash dividend of 8.00 yuan per 10 shares, marking the highest dividend payout ratio in its history at nearly 40% [1][8]. Financial Performance - In H1 2025, the main brand Proya generated revenue of 3.979 billion, a slight decrease of 0.08% year-on-year, while the Cai Tang brand saw a revenue increase of 21.11% to 705 million [2][9]. - Online channels accounted for 95.39% of total revenue in H1 2025, with online revenue growing by 9.17% year-on-year [10]. - The gross margin for Q2 2025 was 73.85%, an increase of 4.25 percentage points year-on-year, attributed to lower freight rates and improved procurement capabilities [3][13]. Brand Performance - The emerging brands Off&Relax and Original Color Pot achieved remarkable revenue growth of 102.52% and 80.18%, respectively, with their revenue shares increasing to 5.22% and 1.81% [2][9]. - The company continues to focus on product innovation and marketing investments to strengthen its market position and expand its brand portfolio [4][17]. Future Outlook - The company has slightly adjusted its net profit forecasts for 2025-2027 to 1.766 billion, 1.933 billion, and 2.065 billion, respectively, reflecting increased marketing investments [4][17]. - The projected PE ratios for the next three years are 21, 19, and 18 times, indicating a stable valuation outlook [4][17].

Investment Rating - The report maintains a "Buy" rating for the company [3][6]. Core Views - The mid-year report demonstrates the resilience of the company's multi-brand strategy, achieving a revenue and net profit growth of 7% and 14% respectively in a competitive beauty industry [11]. - The company has shown a good upward trend in profitability, with a gross margin increase of 3.56 percentage points, attributed to improved bargaining power over raw material procurement and reduced shipping costs [11]. - The company plans to issue H shares to enhance its international presence, which is expected to boost brand recognition and global influence [11]. Financial Performance Summary - Revenue (in million CNY) is projected to grow from 8,905 in 2023 to 14,156 in 2027, with a compound annual growth rate (CAGR) of 9.5% [4]. - Net profit attributable to the parent company is expected to rise from 1,194 million CNY in 2023 to 2,330 million CNY in 2027, reflecting a CAGR of 14.6% [4]. - Earnings per share (EPS) are forecasted to increase from 3.01 CNY in 2023 to 5.88 CNY in 2027 [4]. - The company’s gross margin is expected to improve from 69.9% in 2023 to 73.6% in 2027, indicating enhanced operational efficiency [4]. - The net profit margin is projected to rise from 13.4% in 2023 to 16.5% in 2027, showcasing improved profitability [4]. Earnings Forecast and Valuation - The earnings forecast for 2025-2027 has been slightly adjusted, with EPS estimates of 4.44, 5.13, and 5.88 CNY respectively [3][12]. - The discounted cash flow (DCF) target valuation is set at 112.65 CNY [3][12].

Group 1: Financial Performance - The company achieved a revenue of 5.362 billion yuan in H1 2025, representing a year-on-year increase of 7.21%, with a net profit of 799 million yuan, up 13.80% year-on-year [1] - In Q2 2025, the company reported a revenue of 3 billion yuan, a year-on-year increase of 6.49%, and a net profit of 408 million yuan, up 2.4% year-on-year [1] - The company proposed a cash dividend of 3.15 billion yuan, with a payout ratio of 39.5% [1] Group 2: Profitability and Cost Management - The gross margin for H1 2025 was 73.4%, an increase of 3.6 percentage points year-on-year, while the net profit margin was 15.4%, up 0.9 percentage points year-on-year [1] - The sales expense ratio increased to 49.59%, primarily due to increased promotional activities and new product investments [1] - The management expense ratio decreased to 3.31%, and the R&D expense ratio was 1.77%, both showing slight year-on-year improvements [1] Group 3: Brand Performance and Market Strategy - The main brand, Proya, generated revenue of 3.979 billion yuan, a slight decline of 0.08% year-on-year, while new products enhanced category competitiveness [2] - Growth brands showed strong performance, with Caitang achieving revenue of 705 million yuan, up 21.11% year-on-year, and Off&Relax (OR) reaching 279 million yuan, a significant increase of 102.52% year-on-year [2] - New brands are gradually gaining traction, with revenue from Original Pot reaching 97 million yuan, up 80.18% year-on-year, and Yuefuti generating 166 million yuan, up 3.31% year-on-year [2] Group 4: Strategic Initiatives - The company plans to issue H shares and list on the Hong Kong Stock Exchange to accelerate internationalization and enhance overseas financing capabilities [3] - The "Double Ten" strategy is being implemented to reduce costs and improve efficiency, while the multi-brand matrix continues to break through in niche markets [3] - Long-term competitive advantages are expected to strengthen with the continuation of the new product cycle and growth from emerging brands [3]