Investment Rating - The report maintains a "Positive" outlook on the cosmetics and medical beauty industry [2]. Core Insights - The cosmetics and medical beauty sector has underperformed the market recently, with the Shenwan Beauty Care Index declining by 1.2% from June 6 to June 13, 2025, which is weaker than the market average [4][6]. - The 618 shopping festival has shown strong performance for domestic brands, with Han Shu leading in GMV, followed by Proya and others entering the top 20 [9]. - The summer strategy report highlights the rise of new consumption trends, with the Shenwan Beauty Care Index increasing by 13.4% year-to-date, leading among 31 Shenwan primary industries [10]. - The report emphasizes the importance of new functional ingredients and the ongoing trend of domestic brands gaining market share, particularly in the context of the "Guochao" (national tide) phenomenon [10][32]. Summary by Sections Industry Performance - The cosmetics and medical beauty sector has shown a decline, with specific indices such as the Shenwan Cosmetics Index down by 1.4% and the Shenwan Personal Care Index down by 2.4% during the reporting period [4][6]. Market Trends - The report notes that the 618 shopping festival has solidified the position of domestic brands, with significant sales figures and a focus on new consumption trends [9]. - The report anticipates continued momentum in H2 2025, driven by new ingredients and market segments [10]. Company Recommendations - Recommended companies include Up Beauty and Proya for their strong brand matrices and relatively low PE ratios [13]. - Other notable mentions include Marubi for benefiting from Douyin traffic and brands like Mao Geping and Juzi Bio for their focus on national tide beauty and innovative products [13]. Market Data - The report cites that the retail sales of cosmetics in April 2025 grew by 7.2%, indicating a recovery in consumer demand [18][19]. - The overall market for skincare products is projected to reach 271.2 billion yuan in 2024, despite a slight decline from the previous year [32][33].