Investment Rating - The report maintains an "Outperform" rating for the retail sector, indicating expected performance above the market index [3][41]. Core Views - The overall consumption growth remains stable, with retail sales in August 2025 reaching CNY 3.97 trillion, a year-on-year increase of 3.4%. The growth in commodity retail sales was 3.6%, while catering revenue grew by 2.1% [1][14]. - The report highlights that individual stock performance will be more significant than overall industry trends in the current market environment, emphasizing the importance of stock selection [1][11]. Summary by Sections Beauty and Personal Care - The third quarter is typically a slow season for the cosmetics industry, but marketing efforts have been advanced in preparation for Q4 promotions. Despite a supportive year-on-year growth forecast, rising online channel costs and a lack of product innovation are expected to increase expense ratios, leading to continued stock differentiation within the sector [1][12]. Gold and Jewelry - In August 2025, the gold and jewelry sector saw a retail sales increase of 16.8% year-on-year. The sector is expected to perform well due to low base effects and rising gold prices. Products that appeal to younger consumers, such as fixed-price gold items, are anticipated to see growth above the industry average [1][12]. Supermarkets and Department Stores - From January to August 2025, department store retail sales slightly increased by 1.2%, while supermarket sales grew by 4.9%. The sector is undergoing a transformation, and companies are expected to stabilize their performance in the second half of the year, setting the stage for a potential rebound in 2026 [2][12]. Cross-Border E-commerce - Major companies in the cross-border e-commerce sector are expected to benefit from steady overseas demand and domestic product innovation. However, profit margins may vary due to external environmental disruptions. Leading domestic platforms are seen as resilient against risks due to their strong product capabilities and flexible tariff strategies [2][12]. Investment Recommendations - The report recommends several companies across different segments, including: - Beauty and Personal Care: Upgrading products and refining channel operations are expected to enhance market share for domestic leaders like Shiseido, Aokang Technology, and others [3][41]. - Gold and Jewelry: Companies focusing on differentiated designs and fixed-price products, such as Chow Tai Fook and Man Ka Long, are expected to benefit from current market conditions [3][41]. - Offline Retail: Companies like Miniso and Yonghui Supermarket are highlighted for their potential to improve performance amid a stable domestic demand environment [3][41]. - Cross-Border E-commerce: Companies with strong risk resilience, such as Small Commodity City and Focus Technology, are recommended for investment during market dips [3][41].

Core Insights - The report from CICC indicates that the consumption data for the National Day and Mid-Autumn Festival holidays in 2025 shows strong performance, driven by longer holiday periods and a high level of domestic and outbound travel [1] Group 1: Consumption Trends - Overall consumption data reflects a youthful and experience-oriented trend, with notable performance in discretionary categories such as home appliances and outdoor sports [1] - The average daily flow of cross-regional personnel in mainland China from October 1 to 8 increased by 6.2% year-on-year, indicating a robust travel environment [1] - The average spending per trip during the holiday increased by 14.6% year-on-year, attributed to the ongoing recovery of outbound tourism and a rise in long-distance and segmented travel within the country [1] Group 2: Retail Performance - The Ministry of Commerce's monitoring of 78 key business districts showed a year-on-year increase in foot traffic and sales of 4.2% and 4% respectively during the first three days of the holiday [1] - Data from the National Immigration Administration revealed that the average daily number of inbound and outbound travelers exceeded 2 million, marking a 15% year-on-year increase [1] Group 3: Investment Recommendations - CICC recommends focusing on sectors benefiting from self-indulgent consumption trends, such as trendy toys and e-cigarettes, highlighting companies like Pop Mart (09992), Blucor (00325), and Smoore International (06969) [1] - The report also suggests investing in domestic brands in the beauty and personal care sectors, recommending companies like Mao Geping (01318), Giant Bio (02367), and Shanghai Jahwa (600315) [1] - Attention is drawn to retail sectors that may benefit from supportive domestic policies and seasonal catalysts [1]

证券研究报告 | 2025年10月13日 商贸零售行业 10 月投资策略暨三季报前瞻 优于大市 消费整体平稳增长，把握细分板块配置机遇 4）跨境电商：三季度主要企业预计收入端仍受益于海外需求稳步增长和国 内优质产品创新助推，但利润端受外部环境扰动预计分化明显。当前外部关 贸环境虽仍有变数，但国内优质头部平台型企业通过灵活的关税应对措施， 以及坚实的产品力壁垒，长期来看已经具备了强抗风险韧性。 投资建议：维持板块"优于大市"评级。在大盘水位走高下消费板块滞涨已 久，Q4 在海内外旺季及大促的基本面带动下，存在板块轮动下的补涨机会。 1）美容护理：存量市场下，产品积极迭代升级，渠道精细化运营的国货龙 头有望持续提升市占率，推荐：上美股份、青木科技、毛戈平、上海家化、 登康口腔、若羽臣等。2）黄金珠宝：在当前金价持续高位以及工艺进步下 为黄金品类赋予了悦己和保值两大新消费特质，积极通过差异化设计布局一 口价产品的企业，有望持续受益，推荐：潮宏基、周大福、曼卡龙等。3） 线下零售：板块整体偏内需为主，受外部环境扰动影响较小，短期可关注兼 具改善主线和低估值低位置标的：名创优品、重庆百货、永辉超市等。4） 跨境电商：外 ...

Investment Rating - The report gives a "Buy" rating for the cosmetics and medical beauty industry, particularly highlighting the potential of specific companies like Water Sheep Co., Ltd. [13] Core Insights - The cosmetics and medical beauty sector has underperformed the market recently, with the Shenwan Beauty Care Index rising by 1.3% from September 29 to October 10, 2025, which is lower than the overall market performance [3][4] - The upcoming Tmall Double 11 event is expected to boost sales, with domestic brands actively participating with competitive discounts [8] - Water Sheep Co., Ltd. is identified as a leading technology-driven beauty company, with stable revenue projections and improving profit margins [9][10] Summary by Sections Industry Performance - The cosmetics and medical beauty sector has shown weaker performance compared to the market, with the Shenwan Cosmetics Index increasing by 1.2%, lagging behind the Shenwan A Index by 0.4 percentage points [3][4] - The top-performing stocks in the sector include Jiaheng Home Care (+35.0%), Yiyi Co., Ltd. (+18.6%), and Yanjing Co., Ltd. (+15.6%) [5] Upcoming Events - Tmall's Double 11 sales event is set to begin on October 15, 2025, with major domestic brands like Proya and Maogeping expected to participate actively [8] Company Focus: Water Sheep Co., Ltd. - Water Sheep Co., Ltd. has a dual business model of proprietary and CP agency brands, with projected revenues stabilizing between 4 to 5 billion yuan from 2021 to 2024 [9] - The company is expected to achieve net profits of 258 million, 331 million, and 398 million yuan for the years 2025, 2026, and 2027, respectively, reflecting significant growth [10][13] Market Trends - The overall retail sales of cosmetics in August 2025 grew by 5.1%, indicating a recovery in consumer demand [17] - The domestic market is seeing a shift in market share, with local brands gaining ground against international competitors [25] E-commerce Insights - Data shows that domestic brands are performing well on platforms like Douyin and Tmall, with significant growth in GMV for brands like Proya and Maogeping [14][15] Company Developments - Proya has filed for an IPO in Hong Kong, with stable revenue growth and a strong online presence [19] - The report highlights the strategic moves of various companies, including partnerships and new product launches, to enhance their market positions [24][23]

Core Insights - The beauty brand Chando, founded by former Liao Yang billionaire Zheng Chunying, has submitted its listing application to the Hong Kong Stock Exchange, aiming to join other domestic beauty brands in the international capital market [1][2] - Chando's rise in the beauty industry has been significant, with the brand becoming the third-largest domestic cosmetics group in China, achieving a revenue of 4.601 billion yuan in 2024 [1][3] Group 1: Company Background - Zheng Chunying left his stable government job in 1996 to start a beauty brand, recognizing the potential in the largely foreign-dominated market [1] - Chando was established in 2001 and quickly gained popularity with effective marketing strategies, including the famous slogan "You are already beautiful" [1] Group 2: Financial Performance - Chando's revenue has become heavily reliant on its main brand, contributing approximately 95% to the group's income from 2022 to 2024 [3] - The company's revenue growth is nearing a ceiling, with a projected year-on-year growth rate of only 3.58% for 2024 and 3.48% for 2023 [3] - Despite revenue growth, Chando faces a "dilemma" of increasing revenue without corresponding profit, with a net profit of only 203 million yuan and a net profit margin of 4.4% in 2024 [4] Group 3: Listing Strategy - The company plans to raise up to $500 million through its Hong Kong listing to enhance its brand matrix and invest in research and development [2][5] - As of mid-2023, Chando's cash reserves were only 931 million yuan, while its current liabilities exceeded 1.7 billion yuan, indicating a need for additional funding [5] Group 4: Market Sentiment - There are concerns regarding Chando's ability to attract investors, given the sluggish performance of the Hong Kong consumer sector and a more rational investor sentiment towards domestic brands [6][7]

Core Viewpoint - The Chinese beauty and cosmetics industry has transitioned from "incremental competition" to "stock game," shifting from channel-driven to brand-driven strategies, with significant advancements in raw material innovation, efficacy verification, and technology transformation [3]. Group 1: Market Overview - The market size of China's cosmetics industry has exceeded 1 trillion yuan for two consecutive years since 2023, making it the largest cosmetics consumption market globally [3]. - In 2024, the total transaction volume of China's cosmetics market is projected to reach 1,073.82 billion yuan, reflecting a year-on-year growth of 2.8% [6]. Group 2: Industry Challenges - The core driving force of the cosmetics market is the raw materials, with domestic companies primarily focused on mid-to-low-end markets due to insufficient R&D investment and outdated production processes [6][9]. - High-end raw materials are still heavily reliant on imports, highlighting the need for domestic companies to enhance their R&D capabilities [6]. Group 3: Technological Advancements - Many domestic beauty companies are investing in R&D to develop new raw materials, with examples including the establishment of an intelligent bio-fermentation raw material factory by the natural brand Chando [8]. - Companies like Huaxi Biological have achieved breakthroughs in synthetic biology technology, allowing for precise control over hyaluronic acid molecular weight [9]. Group 4: Government Support - The Chinese government is encouraging innovation in upstream raw material development, implementing policies such as "immediate reporting and review" for new cosmetic raw materials [10]. - In September, Shanghai introduced measures to promote high-quality development in the cosmetics industry, offering substantial subsidies for new raw material development [10]. Group 5: Collaboration and Innovation - The industry is focusing on systematic and foundational innovation, with companies like Yunnan Betaini emphasizing the integration of medical research and technological innovation to build strong brand barriers [12]. - Collaborative projects, such as the establishment of a joint laboratory for artemisinin and traditional Chinese medicinal plants by Shanghai Jahwa and the Chinese Academy of Medical Sciences, aim to enhance the application of artemisinin in skincare [17].

Core Viewpoint - The domestic cosmetics industry is experiencing a significant transformation, focusing on the innovation of plant-based ingredients and the development of proprietary technologies for extracting and utilizing these ingredients effectively [1][4][14]. Group 1: Technological Advancements - Since 2022, the domestic cosmetics industry has gradually mastered the full-process technology of "active substance labeling, impurity separation, and purity control" [10]. - Companies like Yunnan's Betaini have successfully extracted beneficial components from plants, such as the Qingci fruit, which has shown efficacy in skin barrier repair and anti-aging [2][11]. - The use of AI technology has accelerated the identification and extraction of effective plant components, allowing for higher purity and better efficacy in products [12]. Group 2: Market Trends - There is a growing trend among domestic cosmetics companies to utilize plant-based ingredients as a key differentiator in product offerings, with many brands showcasing their latest research and development at industry conferences [3][6]. - The number of new plant-based raw materials registered has increased significantly, from 3 in 2022 to 42 in 2024, indicating a shift towards plant-based ingredients dominating the market [7]. - The market for domestic cosmetics is expanding, with local brands capturing over 55.2% of the market share, surpassing foreign brands [15]. Group 3: Investment and Capital Market - Several companies focusing on plant-based ingredients have initiated IPO processes, reflecting increased investor interest in the sector [14]. - Notable investments have been made in companies with capabilities in plant raw material research, indicating a strong market confidence in the potential of domestic plant-based cosmetics [14]. Group 4: Future Outlook - The domestic cosmetics industry is expected to continue its shift towards using local plant resources, with predictions that domestic raw materials will account for over 80% of the market share in the future [15]. - As the industry matures, the purity, stability, and efficacy of domestic raw materials are approaching or even surpassing international standards, enhancing brand confidence in local sourcing [15].

Core Viewpoint - CHANDO has submitted its IPO application to the Hong Kong Stock Exchange, facing multiple challenges including high revenue dependence on its main brand and fluctuating net profits [1][5][6]. Company Overview - CHANDO is the third-largest domestic cosmetics group in China based on retail revenue projections for 2024, with a valuation exceeding 7.1 billion RMB after a recent investment from L'Oréal [5][6]. - The company has five major brands, with CHANDO accounting for over 94% of its revenue, peaking at 95.9% in 2023 [11][12]. Financial Performance - In the first half of 2025, CHANDO reported revenue of 2.448 billion RMB, with a total revenue growth from 42.92 billion RMB in 2022 to 46.01 billion RMB in 2024, reflecting a compound annual growth rate of only 3.5% [8][9]. - The net profit fluctuated significantly, reaching 3.02 billion RMB in 2023 but dropping by 37.1% to 1.9 billion RMB in 2024, before recovering to 1.91 billion RMB in the first half of 2025 [8][9]. Market Position - CHANDO ranks sixth among domestic beauty companies, with competitors like Pechoin and Shanghai Jahwa achieving significantly higher revenues [6][7]. - The company's gross margin has improved from 66.5% in 2022 to 70.1% in the first half of 2025, but it still lags behind industry leaders [9]. Marketing and Sales Strategy - CHANDO's sales and marketing expenses reached 27.17 billion RMB in 2024, accounting for 59% of its revenue, which is 14.3 times its net profit for the year [15]. - The company has a high reliance on online sales, with online revenue constituting 68.8% of total revenue in the first half of 2025, primarily from direct online sales [16]. Challenges - The heavy reliance on the CHANDO brand and skincare products limits the company's ability to adapt to market risks and explore new growth opportunities [13]. - The increasing competition in the e-commerce space and rising customer acquisition costs may further pressure the company's profit margins [16].

Core Viewpoint - CHANDO has submitted its IPO application to the Hong Kong Stock Exchange, facing multiple challenges including high reliance on its main brand and fluctuating net profits [2][5]. Group 1: Company Overview - CHANDO is the third largest domestic cosmetics group in China based on retail sales projected for 2024, with a valuation exceeding 7.1 billion RMB after a recent investment from L'Oréal [5]. - The company has five major brands covering skincare, makeup, and personal care, with the main brand CHANDO contributing over 94% of total revenue [11][12]. Group 2: Financial Performance - CHANDO's revenue growth has been stable but slow, with a compound annual growth rate of only 3.5% from 2022 to 2024, lagging behind industry leaders [8][9]. - In 2023, the company's net profit peaked at 302 million RMB but dropped by 37.1% to 190 million RMB in 2024, with a slight recovery to 191 million RMB in the first half of 2025 [9]. Group 3: Market Position and Competition - In the first half of 2025, CHANDO's revenue was 2.448 billion RMB, significantly lower than competitors like Pechoin, which achieved 5.362 billion RMB [8][9]. - The company's reliance on a single brand and product category may weaken its ability to adapt to market fluctuations, especially in a diversifying beauty market [13]. Group 4: Marketing and R&D Expenditure - CHANDO's sales and marketing expenses reached 2.717 billion RMB in 2024, accounting for 59% of total revenue, which is 14.3 times its net profit for the year [14]. - The company's R&D investment has been relatively low, totaling only 348 million RMB from 2022 to the first half of 2025, with a decreasing R&D expense ratio compared to industry peers [14]. Group 5: Online Sales Strategy - The company has a high dependency on online sales, with online revenue accounting for 68.8% of total income in the first half of 2025, primarily from direct online sales [14][15]. - The increasing competition in e-commerce and rising customer acquisition costs may further pressure the company's profit margins [15].

Core Insights - The Chinese cosmetics industry is increasingly focusing on plant-based ingredients as a key differentiator and competitive advantage in product development [2][3][9] - The number of new plant-based raw materials registered has surged, indicating a significant shift towards natural ingredients in the cosmetics sector [4][5][11] Group 1: Industry Trends - The trend of utilizing local plant ingredients is becoming a common strategy among domestic cosmetics companies, with many brands showcasing their innovative plant-based products at industry events [2][3] - The number of plant-based raw materials registered with the National Medical Products Administration has increased from 3 in 2022 to 42 in 2024, surpassing chemical raw materials [4] - The market for domestic cosmetics is growing, with local brands capturing over 55.2% of the market share, indicating a shift in consumer preference towards homegrown products [11] Group 2: Technological Advancements - Advances in technology have enabled the extraction and identification of active components from plants, allowing for more targeted and effective product formulations [6][7] - Companies like谷雨 have successfully utilized AI technology to enhance the purity and efficacy of their plant-based ingredients, leading to breakthroughs in product development [8] - The development of proprietary extraction techniques has allowed companies to produce high-purity plant extracts at scale, significantly reducing costs and increasing market competitiveness [7][10] Group 3: Market Dynamics - The increasing interest in plant-based ingredients has led to a rise in IPO applications from companies specializing in these materials, reflecting investor confidence in the sector [10] - The push for domestic raw material sourcing is reshaping the supply chain dynamics, with companies advocating for the use of local ingredients to reduce reliance on imports [10][11] - The cosmetics industry is at a critical turning point, with local plant resources becoming a vital demand for future product development [2][4]