Investment Rating - The report maintains a "Positive" outlook on the beauty and personal care industry, highlighting the resilience of domestic brands and the impact of new consumption trends [2]. Core Insights - The beauty and personal care sector experienced a robust recovery in H1 2025, with a retail sales growth of 2.9%, reversing the previous decline due to favorable consumption policies and improved income expectations [5][6]. - Domestic brands are gaining market share, with top local brands now competing closely with international counterparts, indicating a significant shift in consumer preferences [10][11]. - The report categorizes companies into three groups based on performance: those with strong brand matrices benefiting from multi-brand strategies, those capitalizing on consumer trends like domestic brands and collagen products, and those showing signs of strategic improvement [20][23]. Summary by Sections Industry Overview - The beauty market is projected to grow steadily, with a forecasted retail sales decline of 1.1% in 2024, followed by a recovery in H2 2025 [5][6]. - The domestic market share is expected to increase, with local brands achieving significant breakthroughs in both skincare and makeup segments [10][11]. Company Performance - **Cosmetics Sector**: - Major companies like Up Beauty and Proya reported revenue growth of 17.3% and 7.2% respectively in H1 2025, with net profits increasing by 30.6% and 13.8% [20][21]. - Other notable performers include Marubi and Water Sheep, with revenue growth of 30.8% and 9.0% respectively [21][22]. - **Personal Care Sector**: - Companies like Ruibin and Zhenjia showed remarkable growth, with Ruibin's revenue increasing by 67.6% and Zhenjia's by 157.11% in H1 2025 [5][20]. - **Medical Aesthetics Sector**: - Companies like Aimeike and Langzi reported mixed results, with Aimeike's revenue declining by 21.6% while Langzi's net profit surged by 64.1% [20][24]. Investment Recommendations - The report recommends investing in companies with strong brand matrices and low PE multiples, such as Up Beauty and Proya, as well as those benefiting from the Douyin traffic boost like Marubi and Water Sheep [20][24]. - It also suggests focusing on high-value segments and innovative products from brands like Ruibin and Furuida, and highlights opportunities in the maternal and infant sector with companies like Shengbeila and Haiziwang [20][24].

Group 1 - The overall performance of domestic beauty and skincare companies in the first half of 2025 remains stable, with Proya and Shiseido maintaining their positions as industry leaders, while Juzhibio leads in profit [1][2] - Proya's main brand shows a slight decline, indicating a near ceiling for single-brand growth in the domestic market, while Maogeping has entered the top five, representing the high-end trend in domestic beauty [2][10] - The financial performance of major companies shows varied results, with Proya reporting revenue of 5.362 billion yuan (up 7.21%), Shiseido at 4.108 billion yuan (up 17.30%), and Juzhibio at 3.113 billion yuan (up 22.50%) [3][4] Group 2 - Juzhibio's profit reached 1.182 billion yuan, a 20.60% increase, while Proya's profit was 799 million yuan (up 13.80%) and Maogeping's profit was 670 million yuan (up 36.10%) [5][6] - The beauty industry is facing challenges with brand positioning and organizational restructuring, particularly for established companies like Huaxi Biological and Beitaini, which have seen significant declines in performance [25][30] - Maogeping has successfully expanded into high-end skincare and fragrance markets, with a focus on diversifying its business to reduce reliance on single products [20][23] Group 3 - The emergence of new active ingredients, such as ergothioneine, is gaining attention in the beauty industry, with companies investing in research and development to innovate [39][42] - Marketing strategies are shifting towards brand strength and celebrity endorsements, with companies like Proya and Marubi actively engaging high-profile brand ambassadors [51][53] - Companies are increasingly focusing on building comprehensive sales channels that integrate online and offline strategies, as well as domestic and international markets, to adapt to changing consumer behaviors [58][60]

[Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of the company's governance structure and key contact details [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The company's board comprises executive and independent non-executive directors, supported by audit, remuneration, nomination, and corporate governance committees - Executive Directors include **Mr. Yan Jianya** (Chairman and CEO), **Ms. Ye Juan**, **Ms. Fang Juan**, **Ms. Zhang Huijuan**, and **Ms. Yan Yubo**[4](index=4&type=chunk) - Independent Non-Executive Directors are **Mr. Huang Jin**, **Mr. Shan Wenhua**, and **Ms. Huang Siying**[4](index=4&type=chunk) - **Ms. Huang Siying** chairs the Audit Committee, **Mr. Shan Wenhua** chairs the Remuneration Committee, and **Mr. Yan Jianya** chairs both the Nomination and Corporate Governance Committees[4](index=4&type=chunk) [Key Contact Information](index=3&type=section&id=Key%20Contact%20Information) The company discloses essential contact information, including its reporting accountants, legal advisors, official website, stock code, and principal bankers - Reporting accountants and independent auditors are **Ernst & Young**[4](index=4&type=chunk) - The company's website is **www.xajuzi.com**, and its stock code is **2367**[4](index=4&type=chunk) - Principal bankers include **China Merchants Bank**, **Shanghai Pudong Development Bank**, and **Chang'an Bank**[5](index=5&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section presents a summary of the company's financial performance, assets, and liabilities [Performance Overview](index=5&type=section&id=Performance%20Overview) For the six months ended June 30, 2025, the company achieved robust performance with revenue increasing by 22.5% to RMB 3.11 billion and profit for the period growing by 20.6% to RMB 1.18 billion For the Six Months Ended June 30 - Performance Overview | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 3,112,662 | 2,540,432 | 22.5 | | Gross Profit | 2,542,345 | 2,093,240 | 21.5 | | Profit Before Tax | 1,444,148 | 1,155,190 | 25.0 | | Profit for the Period | 1,182,444 | 980,550 | 20.6 | | Profit for the Period Attributable to Owners of the Parent | 1,182,083 | 983,164 | 20.2 | | Profit for the Period Attributable to Non-controlling Interests | 361 | (2,614) | -113.8 | [Assets and Liabilities Overview](index=5&type=section&id=Assets%20and%20Liabilities%20Overview) As of June 30, 2025, total assets increased by 40.4% to RMB 11.29 billion, total liabilities rose by 128.4% to RMB 2.10 billion, and total equity grew by 29.1% to RMB 9.19 billion As of June 30, 2025 - Assets and Liabilities Overview | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 11,286,255 | 8,037,958 | 40.4 | | Total Liabilities | 2,097,407 | 918,136 | 128.4 | | Total Equity | 9,188,848 | 7,119,822 | 29.1 | | Non-current Assets | 1,398,527 | 1,636,001 | -14.5 | | Current Assets | 9,887,728 | 6,401,957 | 54.4 | | Current Liabilities | 2,030,033 | 835,995 | 142.8 | | Net Current Assets | 7,857,695 | 5,565,962 | 41.2 | | Non-current Liabilities | 67,374 | 82,141 | -18.0 | | Total Equity | 9,188,848 | 7,119,822 | 29.1 | [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the company's business performance, strategic initiatives, and future outlook [Business Review](index=6&type=section&id=Business%20Review) In the first half of 2025, the company achieved steady growth despite external challenges, with revenue and net profit increasing by 22.5% and 20.6% respectively, driven by R&D investment, product innovation, and refined channel operations - During the reporting period, the company's revenue reached **RMB 3.11 billion**, a year-on-year increase of **22.5%**; net profit reached **RMB 1.18 billion**, a year-on-year increase of **20.6%**[9](index=9&type=chunk) - R&D expenditure was **RMB 41 million**, accounting for **1.3% of revenue**, with over **140 ongoing R&D projects** and **186 authorized and pending patents**[10](index=10&type=chunk) - Rebiome brand revenue was **RMB 2.54 billion**, a year-on-year increase of **22.7%**; Collagene brand revenue was **RMB 500 million**, a year-on-year increase of **26.9%**[14](index=14&type=chunk)[15](index=15&type=chunk) - Direct sales channel revenue was **RMB 2.33 billion**, accounting for **74.7%**, an increase of **2.3 percentage points** year-on-year; distribution channel revenue was **RMB 790 million**, accounting for **25.3%**[21](index=21&type=chunk) [R&D Innovation and Technological Breakthroughs](index=6&type=section&id=R%26D%20Innovation%20and%20Technological%20Breakthroughs) The company continuously increases R&D investment, expands the application scope of recombinant collagen, and participates in setting industry standards, solidifying its leading position in synthetic biology - R&D expenditure was **RMB 41 million**, accounting for **1.3% of revenue**, with over **140 ongoing R&D projects**[10](index=10&type=chunk) - Obtained important patent authorizations such as "Recombinant Human Type XVII Collagen and its Application for Hair Growth and Care" and "Type I Recombinant Collagen, its Metal Chelates, and Whitening Cosmetics"[10](index=10&type=chunk) - Participated in drafting the PRC pharmaceutical industry standard "Recombinant Collagen Dressing" and was awarded the "National Advanced Collective in Light Industry" honor[11](index=11&type=chunk) [Product Iteration and Brand Development](index=7&type=section&id=Product%20Iteration%20and%20Brand%20Development) The Rebiome and Collagene brands successfully launched multiple star products through continuous innovation and upgrades, strengthening brand value and consumer connection through diversified marketing activities - Rebiome recombinant collagen dressing ranked **TOP1** on Tmall's medical dressing praise list during the 2025 618 promotion[13](index=13&type=chunk) - Rebiome launched "Collagen Stick 2.0" with proprietary recombinant Type IV collagen, ranking **TOP1** among domestic liquid essences on Tmall during the 618 promotion[13](index=13&type=chunk) - Collagene upgraded "Collagen Mask King" to version 3.0, ranking **TOP4** on Tmall's smear mask hot-selling list and **TOP1** on JD's nourishing mask hot-selling list during the 618 promotion[15](index=15&type=chunk) - Rebiome and Collagene brands enhanced brand promotion and consumer interaction by participating in industry conferences, online and offline events, and public welfare initiatives[16](index=16&type=chunk)[17](index=17&type=chunk) [Channel Strategy and Refined Operations](index=9&type=section&id=Channel%20Strategy%20and%20Refined%20Operations) The company adheres to an omni-channel strategy, deepening refined online and offline operations, expanding its sales network, and enhancing efficiency and market penetration through data analysis and content marketing - Offline channel products entered approximately **1,700 public hospitals**, **3,000 private hospitals and clinics**, over **130,000 chain pharmacy stores**, and approximately **6,000 CS/KA stores**[19](index=19&type=chunk) - Rebiome brand specialty stores expanded to **24 stores nationwide** and became the **first Chinese functional skincare brand** to enter Watsons in Malaysia[19](index=19&type=chunk) - Online channels achieved sales growth through refined Tmall member operations, a multi-account Douyin live streaming system, and integration with JD's medical ecosystem for professional scenarios[20](index=20&type=chunk)[21](index=21&type=chunk) [Social Responsibility and Sustainable Development](index=11&type=section&id=Social%20Responsibility%20and%20Sustainable%20Development) The company actively participates in public welfare activities, promotes health and skincare knowledge, advocates environmental protection, and assists in combating counterfeiting to maintain market order - Partnered with the Chinese Medical Doctor Association to conduct public welfare clinics with over **400 public hospitals nationwide**, promoting health and skincare knowledge[22](index=22&type=chunk) - Launched the "Empty Bottle Recycling Program" to convert recycled tubes into regenerated products and collaborated with universities to host an environmental creative competition[22](index=22&type=chunk) - Assisted police in combating counterfeiting and participated in roundtable discussions to promote the healthy and sustainable development of the medical aesthetics industry[22](index=22&type=chunk) [Business Outlook](index=11&type=section&id=Business%20Outlook) Looking ahead to the second half of 2025, the company will continue to focus on scientific and technological research and industrialization, consolidate its technological leadership, and strengthen brand building and channel operations for sustainable high-quality development - Continuously strengthen scientific and technological research and industrialization exploration to consolidate technological leadership[23](index=23&type=chunk) - Enhance brand promotion and consumer communication to continuously build brand image and lay a solid foundation for long-term development[23](index=23&type=chunk) - Refine and solidify operations across all channels, cultivating sustainable, high-quality capabilities and organization amidst changes[23](index=23&type=chunk) [Operating Results](index=12&type=section&id=Operating%20Results) This section details the company's operating results for the first half of 2025, highlighting a 22.5% increase in total revenue driven by strong sales of professional skincare products, a slight decrease in gross margin, reduced R&D costs, increased sales and administrative expenses, and double-digit growth in profit for the period and EPS - Total revenue was **RMB 3.11 billion**, a year-on-year increase of **22.5%**, driven by refined online and offline operations, growth in star products, and enhanced brand influence[24](index=24&type=chunk) - Gross margin decreased from **82.4%** in the same period of 2024 to **81.7%** in 2025, primarily due to changes in product category structure[37](index=37&type=chunk) - R&D costs were **RMB 41.2 million**, a year-on-year decrease of **15.5%**, mainly due to some R&D projects entering the commercialization phase and reduced share-based payment expenses[39](index=39&type=chunk) - Profit for the period was **RMB 1.18 billion**, a year-on-year increase of **20.6%**; basic earnings per share was **RMB 1.14**, a year-on-year increase of **15.2%**[44](index=44&type=chunk)[45](index=45&type=chunk) [Revenue by Product Category](index=12&type=section&id=Revenue%20by%20Product%20Category) Professional skincare products are the primary source of revenue, with both functional skincare products and medical dressings achieving growth, and health food and other categories also showing increased revenue Revenue by Product Category | Product Category | 2025 (RMB millions) | 2025 (%) | 2024 (RMB millions) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Professional Skincare Products | | | | | | －Functional Skincare Products | 2,409.5 | 77.4 | 1,939.6 | 76.4 | | －Medical Dressings | 693.2 | 22.3 | 592.2 | 23.3 | | Health Food and Others | 10.0 | 0.3 | 8.6 | 0.3 | | **Total** | **3,112.7** | **100.0** | **2,540.4** | **100.0** | - Revenue from functional skincare products increased due to refined omni-channel operations, enhanced brand influence, and successful launch of star products (Focus Cream, Collagen Mask King 3.0)[25](index=25&type=chunk) - Revenue from medical dressings increased primarily due to the continuous enrichment of the product matrix[25](index=25&type=chunk) [Revenue by Sales Channel](index=13&type=section&id=Revenue%20by%20Sales%20Channel) Direct sales channel revenue increased its proportion to 74.7%, with significant growth in online direct sales through DTC stores and e-commerce platforms, and substantial growth in offline direct sales due to store expansion and new product launches Revenue by Sales Channel | Sales Channel | 2025 (RMB millions) | 2025 (%) | 2024 (RMB millions) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Direct Sales | | | | | | －Online Direct Sales via DTC Stores | 1,816.4 | 58.4 | 1,603.2 | 63.1 | | －Online Direct Sales to E-commerce Platforms | 391.1 | 12.6 | 167.4 | 6.6 | | －Offline Direct Sales | 117.8 | 3.7 | 67.6 | 2.7 | | **Subtotal** | **2,325.3** | **74.7** | **1,838.2** | **72.4** | | Sales to Distributors | 787.4 | 25.3 | 702.3 | 27.6 | | **Total** | **3,112.7** | **100.0** | **2,540.4** | **100.0** | - Online direct sales via DTC stores revenue increased by **13.3%**, mainly due to multi-platform layout, refined operations, and star product traction[27](index=27&type=chunk) - Online direct sales to e-commerce platforms revenue increased by **133.6%**, primarily driven by deep cultivation of beauty users and medical ecosystem resources on JD's self-operated channels[28](index=28&type=chunk) - Offline direct sales revenue increased by **74.3%**, mainly due to expanding the number of offline direct sales customer stores, strengthening marketing activities, and accelerating the layout of Rebiome brand stores[29](index=29&type=chunk) [Revenue by Brand](index=14&type=section&id=Revenue%20by%20Brand) Rebiome and Collagene brands are the company's main revenue contributors, both achieving steady growth, while other brands experienced a slight revenue decrease due to strategic adjustments Revenue by Brand | Brand | 2025 (RMB millions) | 2025 (%) | 2024 (RMB millions) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Professional Skincare Products | | | | | | －Rebiome | 2,541.9 | 81.7 | 2,070.9 | 81.5 | | －Collagene | 502.7 | 16.1 | 396.1 | 15.6 | | －Other Brands | 58.1 | 1.9 | 64.9 | 2.6 | | Health Food and Others | 10.0 | 0.3 | 8.6 | 0.3 | | **Total** | **3,112.7** | **100.0** | **2,540.4** | **100.0** | - Rebiome sales revenue increased by **22.7%**, mainly due to channel expansion, brand promotion, and increased market recognition of star products[32](index=32&type=chunk) - Collagene sales revenue increased by **26.9%**, mainly due to online channel expansion and successful upgrade and iteration of the star product Collagen Mask King[33](index=33&type=chunk) - Other brands' sales revenue decreased by **10.5%**, primarily due to strategic product upgrade adjustments for the Keyu brand[34](index=34&type=chunk) [Cost and Expense Analysis](index=15&type=section&id=Cost%20and%20Expense%20Analysis) Cost of sales increased due to higher sales volume, leading to a slight decrease in gross margin; sales and distribution expenses grew due to increased brand building investment; R&D costs decreased due to project commercialization and reduced share-based payment expenses; administrative expenses rose due to management expansion and digital upgrade investments - Cost of sales was **RMB 570.3 million**, a year-on-year increase of **27.5%**, mainly due to increased sales volume, higher direct material costs, increased logistics and shipping fees, and higher manufacturing and labor costs from capacity expansion[36](index=36&type=chunk) - Sales and distribution expenses were **RMB 1.06 billion**, a year-on-year increase of **18.7%**, primarily due to increased investment in brand building, market promotion, and channel expansion[38](index=38&type=chunk) - R&D costs were **RMB 41.2 million**, a year-on-year decrease of **15.5%**, mainly from some R&D projects entering the commercialization phase and reduced share-based payment expenses[39](index=39&type=chunk) - Administrative expenses were **RMB 82.6 million**, a year-on-year increase of **25.7%**, primarily due to increased payroll expenses from management expansion and increased investment in digital upgrades[42](index=42&type=chunk) [Financial Policies and Risk Management](index=16&type=section&id=Financial%20Policies%20and%20Risk%20Management) As of June 30, 2025, the company had no outstanding bank loans, making the gearing ratio inapplicable, maintained ample liquidity, and monitored and managed foreign currency, credit, and liquidity risks - As of June 30, 2025, the company had **no outstanding bank loans or other borrowings**, and the gearing ratio was not applicable[46](index=46&type=chunk) - Liquidity was **RMB 6.94 billion**, an increase of **72.3%** compared to December 31, 2024[52](index=52&type=chunk) - The Board believes foreign currency risk is **not material** to the Group, credit risk is continuously monitored and **not material**, and liquidity risk is managed by maintaining sufficient cash and cash equivalents[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) [Other Information](index=18&type=section&id=Other%20Information) This section covers details regarding the company's employees, remuneration policies, interim dividend, corporate governance, directors' and major shareholders' interests, employee incentive schemes, and use of proceeds from offerings [Employees, Training, and Remuneration Policy](index=18&type=section&id=Employees%2C%20Training%2C%20and%20Remuneration%20Policy) As of June 30, 2025, the company had 2,162 full-time employees and attracts, retains, and motivates talent through competitive remuneration, performance incentives, and comprehensive training programs - As of June 30, 2025, the Group had **2,162 full-time employees**, with **43.7%** in production and manufacturing, **29.1%** in sales and marketing, **8.6%** in R&D, and **18.6%** in general and administration[58](index=58&type=chunk) - The company offers competitive remuneration, performance-based cash incentives, and other motivational measures, and adopts comprehensive training programs[58](index=58&type=chunk) [Interim Dividend](index=19&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[61](index=61&type=chunk) [Corporate Governance and Securities Transactions](index=19&type=section&id=Corporate%20Governance%20and%20Securities%20Transactions) The company is committed to high standards of corporate governance, complying with the Listing Rules' Corporate Governance Code, though the roles of Chairman and CEO are combined. It also has policies for securities transactions and handling inside information - The company complies with the Corporate Governance Code, except that the roles of Chairman and CEO are combined by **Mr. Yan Jianya**, which the company believes provides strong and consistent leadership[62](index=62&type=chunk) - All Directors confirmed compliance with the "Model Code for Securities Transactions by Directors of Listed Issuers" during the reporting period[63](index=63&type=chunk) - The company has established and implemented information disclosure policies and procedures, including monitoring potential inside information, to ensure prompt identification and assessment[63](index=63&type=chunk) [Directors' and Major Shareholders' Interests](index=19&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) This section discloses the interests and short positions of directors, chief executives, and major shareholders in the company's shares as of June 30, 2025, indicating Mr. Yan Jianya and his spouse Dr. Fan Daidi as principal shareholders Directors' or Chief Executive's Interests in the Company's Shares | Name of Director or Chief Executive | Nature of Interest | Number of Shares Interested | Approximate Percentage of Shareholding in the Company | | :--- | :--- | :--- | :--- | | Mr. Yan Jianya | Spouse's interest; Beneficiary of a trust | 590,407,572 | 55.13% | | Ms. Ye Juan | Beneficiary of a trust | 1,049,800 | 0.10% | | Ms. Fang Juan | Beneficiary of a trust | 1,157,601 | 0.11% | | Ms. Zhang Huijuan | Beneficiary of a trust | 1,240,000 | 0.12% | Major Shareholders' Interests in the Company's Shares | Name of Shareholder | Capacity and Nature of Interest | Number of Shares | Approximate Percentage of Shareholding in the Company | | :--- | :--- | :--- | :--- | | Dr. Fan | Interest in controlled corporation; Spouse's interest | 590,407,572 | 55.13% | | Juzi Holding | Beneficial owner | 582,161,535 | 54.36% | | Refulgence Holding | Interest in controlled corporation | 582,161,535 | 54.36% | | Trident Trust Company (B.V.I.) Limited | Trustee | 582,161,535 | 54.36% | - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities on the Stock Exchange[69](index=69&type=chunk) [Employee Incentive Schemes](index=22&type=section&id=Employee%20Incentive%20Schemes) The company has a Restricted Share Unit (RSU) Scheme and a 2023 Share Option and Share Award Scheme, designed to attract and retain talent, incentivize employee contributions, and promote the Group's long-term development, with some share options exercised during the period - The RSU Scheme was adopted in December 2021, with a maximum of **19,000,000 shares** fully granted and no further grants after listing[71](index=71&type=chunk) - The 2023 Share Option Scheme and 2023 Share Award Scheme were adopted on August 17, 2023, with a maximum of **99,500,000 shares** issuable[79](index=79&type=chunk) - On December 28, 2023, the company granted **20,000,000 share options** to **128 eligible participants** under the 2023 Share Option Scheme, with an exercise price of **HKD 35.05 per share**[82](index=82&type=chunk)[84](index=84&type=chunk) - During the reporting period, a total of **7,684,000 share options** were exercised at an exercise price of **HKD 35.05 per share**[85](index=85&type=chunk) [Use of Proceeds from Global Offering and Placements](index=27&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering%20and%20Placements) The company details the intended and actual use of net proceeds from its Global Offering (IPO) and two placements and subscriptions, primarily for R&D investment, capacity expansion, sales and distribution network enhancement, operational and information system upgrades, and working capital - Net proceeds from the Global Offering were approximately **HKD 573.7 million**, primarily allocated to R&D investment (**11%**), production capacity expansion (**28%**), enhancement of omni-channel sales and distribution network (**46%**), operational and information system upgrades (**5%**), and working capital (**10%**)[89](index=89&type=chunk)[90](index=90&type=chunk) Use of Net Proceeds from Global Offering (As of June 30, 2025) | Use of Proceeds | Percentage of Proceeds | Net Proceeds (HKD millions) | Cumulative Amount Used (HKD millions) | Unused Amount (HKD millions) | | :--- | :--- | :--- | :--- | :--- | | R&D Investment | 11% | 63.1 | 63.1 | 0 | | Expansion of Production Capacity | 28% | 160.6 | 160.6 | 0 | | Enhancement of Sales and Distribution Network | 46% | 263.9 | 263.9 | 0 | | Improvement of Operations and Information Systems | 5% | 28.7 | 24.8 | 3.9 | | Working Capital and General Corporate Purposes | 10% | 57.4 | 57.4 | 0 | | **Total** | **100%** | **573.7** | **569.8** | **3.9** | - Net proceeds from the May 2024 placement and subscription were approximately **HKD 1.63 billion**, with **90%** for core business development and ecosystem layout, and **10%** for supplementing working capital[93](index=93&type=chunk) Use of Net Proceeds from 2024 Placement and Subscription (As of June 30, 2025) | Use of Proceeds | Percentage of Proceeds | Net Proceeds (HKD millions) | Cumulative Amount Used (HKD millions) | Unused Amount (HKD millions) | | :--- | :--- | :--- | :--- | :--- | | Core Business Development and Ecosystem Layout | 90% | 1,464.3 | 646.7 | 817.6 | | Supplementing Working Capital and General Corporate Purposes | 10% | 162.7 | 55.2 | 107.5 | | **Total** | **100%** | **1,627** | **701.9** | **925.1** | - Net proceeds from the April 2025 placement and subscription were approximately **HKD 2.29 billion**, with **90%** intended for core business development and ecosystem layout (including brand promotion, marketing, category expansion, overseas business, and R&D investment), and **10%** for supplementing working capital; unused as of June 30, 2025[98](index=98&type=chunk) [Independent Review Report](index=30&type=section&id=Independent%20Review%20Report) This section presents the independent auditor's review report on the interim financial information [Review Conclusion](index=30&type=section&id=Review%20Conclusion) Ernst & Young has reviewed the Group's interim financial information for the six months ended June 30, 2025, and found no matters that lead them to believe it is not prepared in all material respects in accordance with International Accounting Standard 34 - The independent auditor is **Ernst & Young**[103](index=103&type=chunk) - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410[101](index=101&type=chunk) - The conclusion is that the interim financial information is prepared in all material respects in accordance with International Accounting Standard 34[102](index=102&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=31&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section provides the interim condensed consolidated statement of profit or loss and other comprehensive income [Profit or Loss Statement Overview](index=32&type=section&id=Profit%20or%20Loss%20Statement%20Overview) For the six months ended June 30, 2025, the company reported revenue of RMB 3.11 billion, gross profit of RMB 2.54 billion, profit for the period of RMB 1.18 billion, and basic earnings per share of RMB 1.14, all showing year-on-year growth Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 3,112,662 | 2,540,432 | | Cost of Sales | (570,317) | (447,192) | | **Gross Profit** | **2,542,345** | **2,093,240** | | Selling and Distribution Expenses | (1,058,575) | (892,020) | | Administrative Expenses | (82,635) | (65,650) | | R&D Costs | (41,176) | (48,701) | | Other Income | 68,800 | 52,428 | | **Profit Before Tax** | **1,444,148** | **1,155,190** | | Income Tax Expense | (261,704) | (174,640) | | **Profit for the Period** | **1,182,444** | **980,550** | | Profit for the Period Attributable to Owners of the Parent | 1,182,083 | 983,164 | | Basic Earnings Per Share (RMB) | 1.14 | 0.99 | | Diluted Earnings Per Share (RMB) | 1.13 | 0.97 | [Other Comprehensive Income](index=33&type=section&id=Other%20Comprehensive%20Income) During the reporting period, net other comprehensive income was RMB (9,131) thousand, primarily affected by exchange differences on translation of functional currency to presentation currency and fair value changes of equity investments designated at fair value through other comprehensive income Other Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Exchange differences on translation of overseas operations | 67 | (8,248) | | Translation of the company's functional currency to presentation currency | (21,735) | 9,830 | | Equity investments designated at fair value through other comprehensive income: fair value changes | 12,537 | – | | **Other comprehensive income for the period, net of tax** | **(9,131)** | **1,582** | | **Total comprehensive income for the period, net of tax** | **1,173,313** | **982,132** | [Interim Condensed Consolidated Statement of Financial Position](index=33&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the interim condensed consolidated statement of financial position [Asset Structure](index=34&type=section&id=Asset%20Structure) As of June 30, 2025, the company's total assets reached RMB 11.29 billion, with a significant proportion of current assets, a substantial increase in cash and cash equivalents, and a slight decrease in non-current assets Asset Structure (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | **Total Non-current Assets** | **1,398,527** | **1,636,001** | | Property, Plant and Equipment | 1,163,594 | 1,041,771 | | Investments accounted for using the equity method | 77,126 | 11,436 | | Equity investments designated at fair value through other comprehensive income | 28,720 | – | | **Total Current Assets** | **9,887,728** | **6,401,957** | | Inventories | 441,144 | 310,814 | | Trade and Other Receivables | 466,472 | 141,282 | | Financial assets at fair value through profit or loss | 1,917,487 | 1,828,640 | | Cash and Cash Equivalents | 6,943,768 | 4,030,207 | | **Total Assets** | **11,286,255** | **8,037,958** | [Liabilities and Equity Structure](index=34&type=section&id=Liabilities%20and%20Equity%20Structure) As of June 30, 2025, the company's total liabilities increased to RMB 2.10 billion, primarily due to a significant increase in dividends payable, while total equity grew to RMB 9.19 billion, indicating strengthened financial position Liabilities and Equity Structure (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | **Total Current Liabilities** | **2,030,033** | **835,995** | | Trade and Other Payables | 299,990 | 286,708 | | Other Payables and Accruals | 281,457 | 408,890 | | Dividends Payable | 1,278,874 | – | | **Total Non-current Liabilities** | **67,374** | **82,141** | | **Total Liabilities** | **2,097,407** | **918,136** | | **Total Equity** | **9,188,848** | **7,119,822** | | Equity Attributable to Owners of the Parent | 9,176,877 | 7,108,212 | | Non-controlling Interests | 11,971 | 11,610 | [Interim Condensed Consolidated Statement of Changes in Equity](index=35&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the interim condensed consolidated statement of changes in equity [Equity Movement Overview](index=36&type=section&id=Equity%20Movement%20Overview) For the six months ended June 30, 2025, the company's total equity increased from RMB 7.12 billion at the beginning of the year to RMB 9.19 billion, primarily driven by profit for the period and proceeds from share issuance, while also reflecting the impact of declared dividends and share-based payments - As of January 1, 2025, total equity was **RMB 7.12 billion**[109](index=109&type=chunk) - Profit for the period was **RMB 1.18 billion**, and proceeds from share issuance increased equity by **RMB 2.16 billion**[109](index=109&type=chunk) - Final dividend for 2024 declared was **RMB 1.28 billion**[109](index=109&type=chunk) - As of June 30, 2025, total equity was **RMB 9.19 billion**[109](index=109&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=37&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the interim condensed consolidated statement of cash flows [Cash Flow Overview](index=38&type=section&id=Cash%20Flow%20Overview) For the six months ended June 30, 2025, net cash flow from operating activities decreased, investing activities shifted from net outflow to net inflow, and net cash flow from financing activities significantly increased due to ordinary share issuance, leading to a substantial growth in cash and cash equivalents at period-end Interim Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | 715,689 | 922,792 | | Net cash flows from / (used in) investing activities | 73,751 | (343,498) | | Net cash flows from financing activities | 2,149,080 | 1,484,309 | | Net increase in cash and cash equivalents | 2,938,520 | 2,063,603 | | Cash and cash equivalents at end of period | 6,943,768 | 4,564,386 | - Net cash flows from operating activities decreased, mainly due to increases in inventories, trade and other receivables, and prepayments[111](index=111&type=chunk) - Net cash flows from investing activities turned positive, mainly due to increased proceeds from disposal of financial assets at fair value through profit or loss and a decrease in bank deposits[112](index=112&type=chunk) - Net cash flows from financing activities significantly increased, primarily from proceeds from the issuance of ordinary shares[112](index=112&type=chunk) [Notes to the Interim Condensed Consolidated Financial Information](index=39&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim condensed consolidated financial information, covering accounting policies, segment information, revenue analysis, profit before tax components, income tax, earnings per share, property, plant and equipment, trade receivables and payables, share capital, commitments, related party transactions, fair value of financial instruments, and post-reporting period events [Basis of Preparation and Accounting Policies](index=40&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 and adopted revised IFRS accounting standards, which had no significant impact on the financial information - The interim condensed consolidated financial information has been prepared in accordance with **International Accounting Standard 34 "Interim Financial Reporting"**[113](index=113&type=chunk) - The adoption of amendments to **IAS 21 "Lack of Exchangeability"** had no impact on the interim condensed consolidated financial information[115](index=115&type=chunk) [Operating Segments and Geographical Information](index=40&type=section&id=Operating%20Segments%20and%20Geographical%20Information) The Group operates in a single operating segment, primarily engaged in the R&D, manufacturing, and sales of beauty and health products based on bioactive ingredients, with all revenue and non-current assets derived from mainland China - The Group operates in a **single operating segment**, primarily engaged in the R&D, manufacturing, and sales of beauty and health products based on bioactive ingredients[116](index=116&type=chunk) - During the period, all of the Group's revenue was derived from customers located in **mainland China**, and all non-current assets were located in **mainland China**[117](index=117&type=chunk) [Revenue and Other Income Analysis](index=41&type=section&id=Revenue%20and%20Other%20Income%20Analysis) Revenue from contracts with customers is entirely from the sale of goods within mainland China, recognized at a point in time. Other income primarily consists of interest income and government grants Revenue Analysis (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | 3,112,662 | 2,540,432 | | Category of goods or services: Sale of goods | 3,112,662 | 2,540,432 | | Geographical markets: Mainland China | 3,112,662 | 2,540,432 | | Timing of revenue recognition: Goods transferred at a point in time | 3,112,662 | 2,540,432 | Other Income Analysis (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Government grants | 4,742 | 13,241 | | Interest income | 63,396 | 38,991 | | Others | 662 | 196 | | **Total** | **68,800** | **52,428** | [Components of Profit Before Tax](index=42&type=section&id=Components%20of%20Profit%20Before%20Tax) Profit before tax is calculated after deducting costs such as inventories, depreciation, amortization, marketing and promotion expenses, and including interest income and share-based payment expenses - Cost of inventories, consumables, and customized products was **RMB 417.86 million**[121](index=121&type=chunk) - Depreciation of property, plant and equipment was **RMB 33.83 million**, and depreciation of right-of-use assets was **RMB 3.26 million**[121](index=121&type=chunk) - Marketing and promotion expenses were **RMB 969.43 million**, and equity-settled share-based payment expenses were **RMB 22.62 million**[121](index=121&type=chunk) [Income Tax and Dividends](index=43&type=section&id=Income%20Tax%20and%20Dividends) Income tax expense increased due to higher taxable profit, with some subsidiaries enjoying a 15% preferential corporate income tax rate. The company declared a final dividend and a special dividend for 2024 but no interim dividend Income Tax Expense Analysis (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current tax: deducted during the year | 277,250 | 169,763 | | Deferred tax | (15,546) | 4,877 | | **Total tax expense for the year** | **261,704** | **174,640** | - Corporate income tax in mainland China is accrued at a statutory rate of **25%**, with certain subsidiaries enjoying a **15% preferential tax rate**[123](index=123&type=chunk) - On June 13, 2025, shareholders approved a 2024 final dividend of **RMB 0.6021 per share** and a special dividend of **RMB 0.5921 per share**, totaling **RMB 1.28 billion**[125](index=125&type=chunk) - During the period, the company neither paid nor declared an interim dividend[126](index=126&type=chunk) [Earnings Per Share Calculation](index=44&type=section&id=Earnings%20Per%20Share%20Calculation) Basic and diluted earnings per share are calculated based on profit for the period attributable to ordinary equity holders of the parent, considering the weighted average number of ordinary shares issued and the dilutive effect of the Restricted Share Unit Scheme and Share Option Scheme Earnings Per Share Calculation (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent used for basic EPS calculation | 1,182,083 | 983,164 | | **Number of Shares** | **2025** | **2024** | | Weighted average number of ordinary shares issued for basic EPS calculation | 1,034,853,754 | 988,391,916 | | Dilutive effect - weighted average number of ordinary shares: Restricted Share Unit Scheme | 9,336,447 | 5,479,715 | | Dilutive effect - weighted average number of ordinary shares: 2023 Share Options | 5,028,154 | 19,033,962 | | **Total** | **1,049,218,355** | **1,012,905,593** | [Property, Plant and Equipment](index=44&type=section&id=Property%2C%20Plant%20and%20Equipment) During the reporting period, the company acquired assets worth RMB 161.24 million and disposed of assets with a net book value of RMB 5.59 million, generating a net gain of RMB 1.61 million - For the six months ended June 30, 2025, the Group acquired assets at a cost of **RMB 161.24 million**[129](index=129&type=chunk) - Assets with a net book value of **RMB 5.59 million** were disposed of, resulting in a net gain on disposal of **RMB 1.61 million**[129](index=129&type=chunk) [Trade Receivables and Payables](index=45&type=section&id=Trade%20Receivables%20and%20Payables) As of the end of the reporting period, both trade receivables and payables were primarily aged within one year, indicating effective liquidity management Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 466,319 | 140,804 | | 1 to 2 years | 148 | 440 | | 2 to 3 years | 5 | 5 | | Over 3 years | – | 33 | | **Total** | **466,472** | **141,282** | Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 293,939 | 279,253 | | 1 to 2 years | 3,042 | 3,300 | | 2 to 3 years | 3,009 | 4,155 | | **Total** | **299,990** | **286,708** | [Share Capital Movements and Commitments](index=45&type=section&id=Share%20Capital%20Movements%20and%20Commitments) The company's share capital increased due to the issuance of ordinary shares, and contractual commitments as of the reporting period end were primarily for buildings, plant, and machinery - Issued and fully paid ordinary shares increased from **1,028,220,000 shares** as of December 31, 2024, to **1,070,904,000 shares** as of June 30, 2025, with share capital increasing from **RMB 65 thousand** to **RMB 68 thousand**[132](index=132&type=chunk)[133](index=133&type=chunk) - The increase in share capital primarily resulted from the issuance of **35,000,000 ordinary shares** through private placement and shares issued to employees under the 2023 Share Option Scheme[133](index=133&type=chunk) Contractual Commitments (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Buildings | 115,538 | 45,591 | | Plant and Machinery | 138,202 | 87,251 | | **Total** | **253,740** | **132,842** | [Related Party Transactions and Fair Value of Financial Instruments](index=47&type=section&id=Related%20Party%20Transactions%20and%20Fair%20Value%20of%20Financial%20Instruments) Key management personnel compensation is disclosed as related party transactions, and the fair value measurement and hierarchy of financial instruments are detailed to ensure financial transparency Key Management Personnel Remuneration (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Salaries, bonuses, allowances, and benefits in kind | 1,333 | 1,851 | | Contributions to retirement benefit plans | 174 | 225 | | Equity-settled share-based payment expenses | 6,977 | 14,564 | | **Total** | **8,484** | **16,640** | - Fair value measurements of financial instruments are categorized into Level 1 (quoted prices in active markets) and Level 2 (significant observable inputs), with no transfers into or out of Level 3 during the reporting period[139](index=139&type=chunk)[141](index=141&type=chunk) Assets Measured at Fair Value (As of June 30, 2025) | Indicator | Level 1 (RMB thousands) | Level 2 (RMB thousands) | Level 3 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Equity investments designated at fair value through other comprehensive income | 28,720 | – | – | 28,720 | | Financial assets at fair value through profit or loss: financial products | – | 1,917,487 | – | 1,917,487 | | **Total** | **28,720** | **1,917,487** | **–** | **1,946,207** | [Events After Reporting Period and Approval](index=48&type=section&id=Events%20After%20Reporting%20Period%20and%20Approval) No significant events occurred after the reporting period, and the interim financial statements were approved and authorized for issue by the Board on August 27, 2025 - No significant events occurred after the reporting period[142](index=142&type=chunk) - The interim financial statements were approved and authorized for issue by the Board on August 27, 2025[143](index=143&type=chunk) [Definitions](index=48&type=section&id=Definitions) This section provides definitions for key terms and abbreviations used throughout the interim report to ensure clear and consistent understanding for readers [Glossary of Terms](index=49&type=section&id=Glossary%20of%20Terms) This section defines key terms and abbreviations used in the interim report to ensure clear and consistent understanding for readers - This section includes definitions for terms such as "Board", "Business Day", "Company", "Directors", "Global Offering", "Group", "HKD", "Hong Kong", "HKEX", "Independent Third Party", and "Latest Practicable Date"[145](index=145&type=chunk) - It also includes definitions for "Listing", "Listing Rules", "Macau", "Main Board", "PRC", "Prospectus", "Province", "Reporting Period", and "RMB"[146](index=146&type=chunk) - Furthermore, it defines terms like "SFO", "Shares", "Shareholder", "Subsidiary", "US", and "USD"[149](index=149&type=chunk)

Core Viewpoint - The beauty and medical aesthetics industry is experiencing a stark contrast, with medical aesthetic companies facing significant pressure while domestic beauty brands are actively entering the medical aesthetics market [3][4][5] Medical Aesthetics Industry Performance - Among 22 medical aesthetics companies, 14 reported a year-on-year decline in revenue during the first half of the year, with "medical aesthetics trio" member Aimeike experiencing a decline exceeding 20% [4][5] - The medical aesthetics market has been growing rapidly, with a projected market size of nearly 3,700 billion by 2025, growing at an annual rate of 17.4% since 2020 [4] Competitive Landscape - The medical aesthetics industry is facing intensified competition, particularly in upstream raw materials and equipment, leading to declining revenues for companies like Aimeike and Haohai Biological [6][7] - The consumer market is becoming more rational, with 73% of mid-to-high-income consumers planning to reduce or maintain their medical aesthetics spending in 2024 compared to 2023 [7] Domestic Beauty Brands' Strategies - Over 20 domestic beauty companies are entering the medical aesthetics sector, with brands like Naturating and Youshiyan launching new products aimed at the medical aesthetics market [10][12] - Baijuerling has launched three medical aesthetics brands, focusing on injection regeneration, post-operative care, and medical equipment, indicating a comprehensive approach to the medical aesthetics industry [16][20] Market Challenges and Opportunities - The market for medical aesthetics is becoming increasingly competitive, with established brands like 可复美 and 薇诺娜 already dominating the "medical device" segment, making differentiation a key challenge for new entrants [22][25] - Despite the challenges, the structural adjustment in the medical aesthetics industry presents opportunities for collaboration and innovation, as companies explore new product offerings and partnerships [25][27]

Investment Rating - The report initiates coverage with a "Buy" rating for the company Water Sheep Co., Ltd. [14] Core Insights - The cosmetics and medical beauty sector has underperformed the market, with the Shenwan Beauty Care Index declining by 2.5% from September 12 to September 19, 2025 [3][4] - The upcoming Double 11 shopping festival is expected to drive significant growth for domestic brands, with recommendations to focus on strong alpha stocks [9][10] - Water Sheep Co., Ltd. is highlighted for its dual business model of proprietary and CP brands, with stable revenue projections of 4-5 billion yuan from 2021 to 2024 and an expected gross margin of 63.01% in 2024 [10][11] Summary by Sections Industry Performance - The cosmetics and medical beauty sector has shown weaker performance compared to the market, with specific indices declining [3][4] - The Shenwan Cosmetics Index fell by 2.6%, while the Shenwan Personal Care Index decreased by 0.6% [4][6] Upcoming Events - The Double 11 shopping festival preparations are in full swing, with domestic brands like Up Beauty and Proya launching new products to capture market share [9] - Key influencers are negotiating promotional strategies to enhance sales during the festival [9] Company Focus: Water Sheep Co., Ltd. - Water Sheep Co., Ltd. is positioned as a leading tech-driven beauty company with a stable revenue forecast and improving profit margins [10][11] - The company has a well-structured brand matrix and is expanding its high-end product lines, with significant growth in its proprietary brands [11][12] - Expected net profits for Water Sheep Co., Ltd. are projected to be 258 million, 331 million, and 398 million yuan for 2025, 2026, and 2027, respectively, indicating substantial growth [14] Market Trends - The Chinese beauty market is witnessing a shift towards domestic brands, with significant market share gains for local players [27] - The overall retail sales of cosmetics showed a growth of 5.1% in August 2025, indicating a recovery in consumer spending [18][21] International Recognition - Chinese beauty brands performed notably at the IFSCC conference, showcasing their advancements in cosmetic science and securing significant awards [22][24]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Views - The retail industry is experiencing a shift towards emotional consumption, with brands that possess differentiated product capabilities and deep consumer insights gaining traction [31] - The report highlights the strong performance of the jewelry sector, particularly in high-end and fashion segments, driven by consumer preferences and innovative marketing strategies [31][39] Summary by Sections Retail Market Overview - The retail index closed at 2384.72 points, down 0.51% for the week, outperforming the Shanghai Composite Index, which fell 1.30% [6][13] - Year-to-date, the retail index has increased by 6.51%, lagging behind the Shanghai Composite Index's 13.97% rise [13][15] Key Industry Dynamics - The report emphasizes the successful autumn ordering meeting of Chao Hong Ji, showcasing strong demand for new products rooted in traditional craftsmanship and innovative designs [25][26] - The jewelry sector, particularly the high-end and fashion categories, is benefiting from emotional consumption trends, with brands like Lao Pu Gold and Chao Hong Ji recommended for investment [31][39] Company Performance Highlights - Lao Pu Gold reported a revenue of 12.354 billion yuan for H1 2025, a 250.9% increase year-on-year, with a net profit of 2.268 billion yuan, up 285.8% [33][36] - Chao Hong Ji achieved a revenue of 4.102 billion yuan in H1 2025, reflecting a 19.5% increase, with a net profit of 331 million yuan, up 44.3% [39][40] - The report also highlights the performance of other companies such as Mao Ge Ping and Ru Ben, which are experiencing significant growth in the cosmetics sector [32][42] Investment Recommendations - The report suggests focusing on high-quality companies in the emotional consumption theme, particularly in the jewelry and cosmetics sectors, with specific recommendations for Lao Pu Gold, Chao Hong Ji, and Mao Ge Ping [7][31][32]

Core Viewpoint - The article discusses the strategic transformation of Kid Wang and its subsidiary, Siyi, as they aim to become the preferred service provider for new families in China, leveraging technology and innovation in hair care services [1][4]. Group 1: Company Strategy and Positioning - Kid Wang has rebranded its subsidiary Siyi to Zhuhai Siyi Biotechnology Development Co., Ltd., marking a shift towards a technology-driven approach in hair care services [1]. - Siyi's "Technology Hair Care 3.0" strategy emphasizes innovation by integrating traditional Chinese medicine with modern technology, aiming to enhance scalp health and hair care [1][2]. - The hair care market in China is projected to reach 81.25 billion yuan by 2028, with a compound annual growth rate (CAGR) of 7.3% from 2023 to 2028, indicating a growing demand for hair care services [1][2]. Group 2: Research and Development Innovations - Siyi has established a strong competitive edge in technology, holding 48 patents, including 7 invention patents, and has developed over 200 products, significantly exceeding industry averages [2]. - The collaboration with Juzhi Biotechnology enhances Siyi's product offerings by providing bioactive ingredients for hair care, such as anti-aging scalp essence and anti-hair loss shampoo [2]. Group 3: Market Expansion and Synergy - Kid Wang and Siyi are leveraging their combined membership base of over 200 million and extensive store networks to enhance customer engagement and drive sales [3]. - Siyi plans to expand internationally, with its first store opening in Singapore's Orchard Road, which is expected to provide insights into overseas consumer behavior [3]. - The integration of Siyi's hair care services into Kid Wang's existing platforms is anticipated to increase customer loyalty and enhance the overall service offering [3]. Group 4: Financial and Operational Growth - Kid Wang has been actively pursuing mergers and acquisitions, having previously acquired LeYou International, which has contributed to its rapid growth and market presence [4]. - By mid-2025, Kid Wang aims to operate nearly 1,200 stores across over 200 cities in China, solidifying its position as a leading player in the mother and baby industry [4]. - The ongoing integration of Siyi is expected to strengthen Kid Wang's competitive advantage in local living and new family services, creating a more robust business ecosystem [4].

Group 1 - The consumer sector is showing signs of recovery, with the Consumption ETF (159928) gaining 0.23% and achieving a trading volume exceeding 560 million yuan, alongside a net subscription of 54 million units [1] - The Consumption ETF (159928) has reached a scale of over 19.7 billion yuan, leading its peers significantly [1] - The Hong Kong Stock Market's Consumption 50 ETF (159268) rose over 1%, with a trading volume exceeding 30 million yuan, and has seen net inflows for three out of the last five days, accumulating over 2.9 million yuan [3] Group 2 - High-level policies are focusing on boosting domestic demand, with measures implemented from 2023 to 2025 effectively stimulating consumption potential, leading to a steady increase in retail sales [5] - The pet food market is projected to reach 166.8 billion yuan in 2024, growing by 7.54% year-on-year, with cat food dominating the segment [5] - The beauty and skincare market is expected to surpass 430 billion yuan in retail sales by 2024, driven by consumer upgrades and a focus on product efficacy [5] Group 3 - The new-style tea beverage market in China is projected to exceed 400 billion yuan by 2028, with strong consumer demand driving the upstream industry [6] - The secondary dimension derivative market is experiencing rapid growth, expected to reach 168.9 billion yuan in 2024, with a significant portion of users from Generation Z [6] Group 4 - The liquor sector is entering a peak season, with improved sales performance reported by Moutai, and companies are innovating products and seeking channel reforms [7] - The dairy product sector is showing marginal improvements, while the beverage sector is performing well with new product launches [8] - The Consumption ETF (159928) has a significant weight in top stocks, with over 68% of its top ten holdings, including major liquor brands and dairy companies [8]

Core Insights - The emergence of new provincial billionaires, predominantly from the post-80s generation, signifies a shift in China's economic dynamics, reflecting the rise of new industries and consumption patterns [2][3][15] - The new billionaires are primarily associated with sectors such as new consumption, new technology, and new energy, indicating a transition from traditional industries to innovative sectors [2][15] Group 1: New Billionaires and Their Companies - Wang Ning, founder of Pop Mart, has seen the fastest wealth increase among new billionaires, with a net worth of approximately $218.5 billion, surpassing the previous billionaire in Henan [3][14] - The founders of Mixue Ice City, Zhang Hongchao and Zhang Hongfu, have also rapidly accumulated wealth, with a market value of around $134.5 billion, positioning them as strong contenders for the title of Henan's richest [5][6] - Zhu Yi, the new billionaire in Sichuan, has a net worth of approximately $114.5 billion, attributed to the success of his company, Baile Tianheng, which specializes in innovative drug development [10][11] - Chen Tian Shi, founder of Cambricon, has become the richest in Jiangxi with a net worth of about $243 billion, driven by the company's significant growth in the AI chip sector [13][14] Group 2: Industry Trends and Economic Implications - The shift in billionaire rankings indicates a healthier and more vibrant economic landscape in China, moving away from real estate dominance to a more diversified industry representation [3][15] - Companies like Pop Mart, Mixue Ice City, Baile Tianheng, and Cambricon are at the forefront of new consumption and technology, showcasing innovative business models and core technologies [9][15] - The rapid growth of these companies is reflected in their impressive revenue increases, with Baile Tianheng's revenue surging over 900% in 2024 and Cambricon's revenue increasing by 4347% in the first half of 2025 [15][16] Group 3: Educational Background and Industry Potential - Many of the new billionaires have strong educational backgrounds, with degrees from prestigious institutions, indicating the potential for high-value industries to generate significant wealth [16] - The focus on high-tech and new consumption sectors suggests a long-term trend towards innovation and economic restructuring in China, moving away from traditional growth engines [15][16]

Group 1 - The core technology of the company is "yeast-based low-immunity recombinant collagen production" [1] - The company has been deeply engaged in the biotechnology field for 25 years, with 186 patents and patent applications [3] - The collaboration with Northwest University on "yeast-based low-immunity recombinant collagen and its applications" won the "2024 China Petroleum and Chemical Industry Federation Technology Invention Award First Prize" and was recognized as "internationally leading" by experts [3] Group 2 - The company is perceived not only as a cosmetics manufacturer but also as a high-tech enterprise with global market potential [3] - International journalists expressed strong interest in the company's production processes and products, highlighting the blend of science, beauty, and health [5] - The company showcased popular skincare products, leading to interest in further reporting and potential collaborations from foreign journalists [5] Group 3 - The "Walk Through China: Meet Shaanxi" event is organized by various Chinese associations and aims to showcase the unique charm and strong development of Shaanxi [7]