Shanghai Lily&Beauty (SH:605136) 格隆汇APP·2025-05-30 10:15Core Viewpoint - The article discusses the recent surge in the beauty and cosmetics industry, particularly focusing on the explosive growth of stocks related to the antioxidant and beauty-enhancing compound, ergothioneine [1][6]. Group 1: Market Dynamics - The stock of Liren Lizhuang, known as the "first stock of ergothioneine," has seen its price double within a month [2]. - Despite the recent capital frenzy, Liren Lizhuang's performance remains lackluster, with a significant drop in stock price on the last trading day of May [3][5]. - The concept of ergothioneine gained traction after a promotional event by Kelong Pharmaceutical, which highlighted its anti-aging properties [7][8]. Group 2: Product and Market Potential - Ergothioneine is a natural sulfur-containing amino acid antioxidant that protects cells and has various health benefits [11]. - The global market for ergothioneine is projected to grow from $2.2 million in 2022 to $17 million by 2028, with a compound annual growth rate (CAGR) of 36% [13]. - The increasing consumer focus on product efficacy has shifted the competitive landscape in the skincare industry, with over 70% of consumers prioritizing product effectiveness in their purchasing decisions [15]. Group 3: Company Performance - Liren Lizhuang reported a revenue of 1.728 billion yuan in 2024, a year-on-year decline of 37.44%, with a net loss of 24.4 million yuan [26]. - The company's self-owned brands, including "Yurongchu" and "Meiyitang," have seen a growth rate of 110% in the first quarter of 2025, but their overall contribution to revenue remains below 10% [37]. - Liren Lizhuang's inventory has been high since 2019, with stock levels rising from 517 million yuan to 1.26 billion yuan by 2021 [33]. Group 4: Industry Challenges - The beauty industry is experiencing a significant shift, with only 7 out of 16 listed cosmetic companies achieving net profit growth in 2024 [47]. - The competitive environment is intensifying, with head brands able to absorb costs while mid-tier brands struggle to maintain profitability [49]. - Despite the challenges, the cosmetics market is expected to recover, with retail sales increasing by 4% in the first four months of 2025 [53].