Investment Rating - The report maintains an "Overweight" rating for the cosmetics and medical beauty sector, with specific recommendations for various companies based on their market positions and growth potential [5][12][17]. Core Insights - The cosmetics and medical beauty sector has shown weaker performance compared to the market, with the Shenwan Beauty Care Index rising by 1.7% from April 30 to May 9, 2025, which is lower than the Shenwan A Index by 0.6 percentage points [5][6]. - The "Jumeili Conference" held in Shanghai highlighted the industry's development direction amidst a challenging environment, emphasizing the importance of technology-driven beauty, refined operations, and AI assistance [5][12]. - Domestic brands are gaining traction, while international brands are also experiencing growth, with Estee Lauder reporting a return to positive growth in key brands in China during Q1 2025 [5][12][28]. Summary by Sections Industry Performance - The cosmetics and medical beauty sector's performance has been below market expectations, with the Shenwan Cosmetics Index increasing by 2.8%, outperforming the Shenwan A Index by 0.5 percentage points [5][6]. - The report notes a competitive landscape where domestic brands are aggressively entering the market, prompting international brands to rebound [5][12]. Company Analysis - Shanghai Jahwa's Q1 2025 results showed a revenue of 1.704 billion yuan, down 10.59% year-on-year, with a net profit of 217 million yuan, down 15.25% [5][13]. - Estee Lauder's Q3 2025 results indicated a net sales figure of 3.55 billion USD (approximately 25.8 billion yuan), a 10% decline year-on-year, but with a notable increase in gross margin [5][28]. - The report highlights the employee stock ownership plan at Shanghai Jahwa, aimed at binding key personnel and setting profit recovery targets for 2025 [5][17]. Market Trends - The report indicates that the retail sales of cosmetics in Q1 2025 reached 114.9 billion yuan, with a year-on-year growth of 3.2% [22][26]. - The domestic skincare market is projected to continue growing, with local brands capturing a significant market share, reflecting a shift in consumer preferences towards domestic products [36][38]. E-commerce Insights - The report provides data on the performance of domestic brands on e-commerce platforms, with notable growth in GMV for brands like Proya and Marubi [20][19]. - The overall e-commerce landscape for cosmetics is evolving, with brands leveraging social media platforms to enhance visibility and sales [5][12].