Shenwan Hongyuan Securities·2025-08-10 13:44Investment Rating - The report maintains a "Buy" rating for the cosmetics and medical beauty sector, particularly highlighting companies like Shiseido and Up Beauty for their strong performance and growth potential [12][14]. Core Insights - The cosmetics and medical beauty sector underperformed the market during the week of August 1 to August 8, 2025, with the Shenwan Beauty Care Index growing by 1.7%, which is lower than the overall market performance [5][6]. - There is a notable divergence in the performance of domestic beauty brands in July, with strong growth observed in skincare brands like Han Shu and Marubi, while color cosmetics lagged due to weather and promotional timing [11][12]. - Up Beauty's H1 2025 performance exceeded expectations, with revenue projected between 4.09 to 4.11 billion yuan, reflecting a year-on-year growth of 16.8% to 17.3% [12][13]. Summary by Sections Industry Performance - The Shenwan Cosmetics Index increased by 1.3%, underperforming the Shenwan A Index by 0.6 percentage points, while the Shenwan Personal Care Index rose by 4.2%, outperforming the Shenwan A Index by 2.3 percentage points [5][6]. - The top-performing stocks in the sector included Up Beauty (+18.4%), Reliable Shares (+13.7%), and Lafang Home (+11.3%) [7]. Key Company Updates - Up Beauty's H1 2025 earnings report indicated a significant profit increase, with net profit margins improving due to optimized channel structures and a higher proportion of high-margin brands [12][13]. - Shiseido reported a 7.6% decline in sales for H1 2025, marking the largest drop in five years, with a notable decrease in the Chinese market [24]. E-commerce Insights - In July 2025, domestic beauty brands showed varied performance on major e-commerce platforms, with Han Shu achieving a 58% increase in GMV on Douyin, while color cosmetics faced challenges [20][21]. - The overall retail sales of cosmetics in June 2025 saw a decline of 2.3%, attributed to the pre-promotion of the 618 shopping festival [21][24]. Market Trends - The report highlights a shift in market dynamics, with domestic brands gaining market share against international competitors, particularly in the skincare segment [34][35]. - The Chinese skincare market is projected to reach 271.2 billion yuan in 2024, despite a 3.7% decline in growth [34][35].