Summary of Conference Call Notes Industry Overview: Northeast Retail - **Mid-to-High-End Consumer Recovery**: CR (China Resources) reported a year-on-year growth of over 10% in January and February, outperforming Q4. Luxury goods continue to see growth, indicating a positive trend in consumer spending [1] - **Sector Allocation**: With the earnings release period in March-April, consumer sectors may serve as a defensive play, as overall valuations are currently at a low level [2] Medical Aesthetics - **Profit Shift to End Institutions**: Companies such as AMK, Jinbo, and Haohai Medical Beauty reported earnings misses. The acceleration of product certifications has led to a deteriorating market competition landscape and price declines [3] - **Long-term Benchmarking**: The sector is being compared to South Korean companies with gross margins of 80% and net margins of 30%. Short-term focus is on Four Rings Pharmaceutical, which is expected to release new products, while the long-term profit chain is shifting downstream to end institutions [4] Cosmetics - **Negative News Already Priced In**: The leading companies in the sector have performed well during the March-April earnings period, with companies like Juzhibio and Shangmei meeting expectations. The 38 promotional event has seen low expectations and intensified competition already factored into prices [5] - **Future Market Concentration**: The market is expected to concentrate around leading brands, with valuations for brands like Mao Ge Ping and Ruo Yu Chen at 20-25x PE, while Shangmei, Juzhibio, Pola, and Linqingxuan are around 15x PE [6] Gold and Jewelry - **Negative Beta Industry Amid Price Fluctuations**: Data from January and February exceeded expectations, but companies like CHJ and ZDF are under pressure due to high base effects. Fluctuating gold prices are impacting wedding and self-gifting demands [7] - **Long-term Focus on VAT Benefiting Brands**: Brands such as Cai Bai and Hong Kong-listed brands are expected to benefit from VAT changes [8] Individual Company Updates - **Xirui**: The annual report may present a buying opportunity, as recent declines are attributed to rising oil prices and U.S. stagflation. The annual report will disclose current orders, and multiple new aircraft models in 2026 are expected to drive demand and support performance in 2026-2027, currently trading at 11x PE [9] - **Focus Technology**: Attention is on the commercialization pace of AI products on the buyer's side. The 2025 earnings are expected to meet forecasts, with a target of over 20% cash income recovery for China Manufacturing Network in 2026. The AI business is gradually improving [10]