Investment Rating - The report initiates coverage on Shangmei Co., Ltd. with a "Buy" rating and sets a target price of HKD 44.0, indicating a potential upside of 41.9% from the current price of HKD 31.0 [1][4][5]. Core Insights - Shangmei Co., Ltd. is a leading domestic cosmetics company that has successfully implemented a multi-brand strategy, with its flagship brand, Han Shu, achieving significant growth through targeted marketing on platforms like Douyin [1][2][3]. - The company has a strong focus on the lower-tier markets, which is expected to drive future growth, supported by its diverse product offerings across skincare, baby care, and hair care segments [1][2][3]. - The report highlights the successful alignment of Han Shu's consumer profile with Douyin's user demographics, leveraging innovative marketing strategies such as short dramas to enhance brand visibility and sales [3][4][5]. Summary by Sections Multi-Brand Strategy - Shangmei Co., Ltd. has been practicing a multi-brand strategy for nearly 20 years, with its main revenue coming from the Han Shu brand, which has recently dominated the Douyin platform [2][3][4]. - The company aims to develop multiple brands across different consumer segments, from mass to premium, enhancing its market influence [2][3][4]. Channel and Consumer Alignment - Han Shu's success on Douyin is attributed to its alignment with the platform's user demographics, particularly targeting consumers aged 18-34 in lower-tier cities [3][4][5]. - The brand has effectively utilized short drama marketing to regain consumer attention and drive sales, achieving significant viewership and engagement [3][4][5]. Growth Potential - Despite concerns about reliance on a single channel and brand, the report suggests that Shangmei's strategies, including expanding into other channels and enhancing its product lines, will support long-term growth [3][4][5]. - The company is expected to continue benefiting from the growing lower-tier market, which represents a significant portion of China's population and consumer spending [3][4][5]. Financial Projections - Revenue is projected to grow significantly, with estimates of RMB 7,031 million in 2024, reflecting a year-on-year increase of 67.8% [6][11][141]. - The report anticipates improvements in profit margins, with gross margins expected to reach 74.7% by 2026 [6][11][141]. Valuation and Target Price - The target price of HKD 44.0 is based on a 15x PE ratio for 2025, reflecting a discount compared to leading domestic cosmetics brands [4][5][118].
上美股份：多系列延续主品牌的强势增长