Core Viewpoint - Cathay Securities initiates coverage on Lin Qingxuan (02657) with a "Buy" rating, highlighting the company's long-standing focus on oil-based skincare and the significant growth potential driven by Douyin and product expansion [1] Group 1: Company Overview - Lin Qingxuan, founded in 2003, initially focused on natural skincare products like handmade soaps and aloe vera gel, and launched its flagship product, camellia oil essence, in 2014, establishing itself as a pioneer in oil-based skincare [1] - The company has a stable and experienced management team, and its recent online transformation has led to accelerated growth, with H1 2025 revenue and net profit reaching 1.05 billion and 180 million RMB, respectively, representing year-on-year increases of 98% and 110% [1] Group 2: Market Position - The oil-based skincare segment is experiencing high demand, with the market size projected to reach 5.3 billion RMB in 2024, reflecting a year-on-year growth of 43% and a CAGR of 42% from 2019 to 2024 [2] - Lin Qingxuan has maintained a leading position in the facial essence oil category, holding a 12.4% market share in 2024, significantly ahead of other brands [2] Group 3: Growth Drivers - The company's flagship product, the camellia oil essence, has seen rapid growth, with H1 2025 revenue from this category increasing by 176%, accounting for 46% of total revenue [3] - Online sales have surged, with H1 2025 online revenue growing by 137%, making up 65% of total revenue, driven by Douyin's influence [3] - The company has a robust offline presence with over 554 stores as of H1 2025, indicating potential for further expansion and increased sales per store [3]