Shenwan Hongyuan Securities·2026-02-01 11:45Investment Rating - The report maintains a "Positive" outlook on the cosmetics and medical beauty industry, suggesting a focus on pre-festival promotions as a key opportunity for growth [3][10]. Core Insights - The cosmetics and medical beauty sector has underperformed the market recently, with the Shenwan Beauty Care Index declining by 3.8% from January 23 to January 30, 2026, which is worse than the overall market performance [4][5]. - Recent earnings forecasts from companies like Shanghai Jahwa, Ruya Chen, and Huaxi Biological indicate a recovery in profitability, highlighting the sector's high growth potential [10][11]. - The upcoming Spring Festival is expected to drive significant promotional activities, particularly on platforms like Tmall and Douyin, which could enhance sales for domestic brands [10][11]. Summary by Sections Industry Performance - The cosmetics and medical beauty sector has shown a decline, with the Shenwan Cosmetics Index down 3.6% and the Shenwan Personal Care Index down 4.6%, both underperforming the Shenwan A Index [4][5]. - The top-performing stocks in the sector include Qingdao Kingway (+7.2%) and Beijia Clean (+0.1%), while the worst performers include Lafang Jiahua (-18.7%) and Shanghai Jahwa (-10.9%) [6]. Earnings Forecasts - Companies like Ruya Chen expect a net profit of 176 to 200 million yuan for 2025, representing a year-on-year increase of 66.61% to 89.33% [4]. - Shanghai Jahwa anticipates a turnaround with a projected net profit of 240 to 290 million yuan for 2025, while Huaxi Biological expects a net profit of 270 to 320 million yuan, reflecting a growth of 54.93% to 83.63% [4][10]. Market Trends - The retail sales of cosmetics in 2025 are projected to grow by 5.1%, with a notable increase in Q4 driven by promotional events like Double Eleven [11][19]. - The report highlights the strong performance of domestic brands, with significant growth in online sales channels, particularly on Douyin [12][29]. Investment Recommendations - Key recommendations include focusing on brands with strong growth in GMV such as Mao Ge Ping, Shangmei Co., and Shanghai Jahwa, as well as companies in the medical beauty sector like Aimeike and Langzi Co. [14][30]. - The report also suggests monitoring e-commerce operations and self-owned brands like Ruya Chen and Qingmu Technology for potential high growth [14][30].