Haitong Securities International·2025-11-10 08:33Investment Rating - The report suggests a positive investment outlook for the beauty and personal care sector, recommending a "buy" rating for high-growth companies with strong brand power and innovative product offerings [2][3]. Core Insights - The beauty and personal care sector is experiencing a slow recovery, with significant differentiation among sub-sectors. Personal care products and innovative channels continue to perform strongly, while the cosmetics sector shows signs of slowing growth due to domestic brand competition [1][2][3]. - For 2026, the overall beauty and personal care market is expected to remain stable, but further differentiation among companies is anticipated. The report emphasizes the importance of selecting high-growth targets with product and channel innovations [2][3]. Summary by Sections Overall Market Performance - In the first three quarters of 2025, the beauty and personal care sector saw revenues and net profits increase by 2.7% and 4.9% respectively, with personal care outperforming cosmetics and medical aesthetics [12][31]. - The cosmetics sector experienced a slight decline in revenue, with a 0.4% decrease year-on-year, while net profit fell by 2.3% [31][33]. Personal Care Sector - The personal care segment achieved revenues of 52 billion yuan and net profits of 5 billion yuan, reflecting a year-on-year increase of 33.7% and 5.7% respectively. The third quarter alone saw a revenue increase of 41.1% [12][16]. - Companies like Ruoyuchen reported impressive growth, with a 123% increase in revenue and a 73% increase in net profit in the third quarter [12][28]. Cosmetics Sector - The cosmetics sector's revenue for the first three quarters was 308 billion yuan, with a net profit of 30 billion yuan, showing a decline of 0.4% and 2.3% respectively. The third quarter saw a revenue drop of 0.5% but a significant profit increase of 50.8% [12][31]. - The report highlights the importance of individual company strategies and product life cycles in determining performance within the cosmetics sector [13][48]. Medical Aesthetics Sector - The medical aesthetics segment reported revenues of 75 billion yuan and net profits of 27 billion yuan, with a slight revenue decline of 0.7% but a profit increase of 14.5% year-on-year [12][52]. - The third quarter saw a revenue increase of 1.8% and a remarkable profit growth of 96.6%, although underlying performance was affected by increased competition and integration challenges [52][56]. Investment Recommendations - The report recommends focusing on high-growth companies with strong brand power, such as Ruoyuchen, Shangmei, and Maogeping, as well as companies with stable fundamentals and potential for marginal improvement like Dengkang Oral and Shanghai Jahwa [2][3]. - It also suggests monitoring companies that are expected to reach a turning point, such as Runben and Jinjian Biological, which may present investment opportunities [2][3].