Summary of the Conference Call for Mao Geping Beauty Industry Overview - The domestic high-end cosmetics market is led by Mao Geping, which leverages the founder's professional background and Eastern aesthetics to maintain a leading position. The market potential is significant, with a scale reaching hundreds of billions, but still lags behind Western Europe, Japan, and South Korea [2][7]. Company Performance - As of 2024, the overall revenue of Mao Geping is close to 3.9 billion yuan, with makeup revenue at 2.3 billion yuan and skincare revenue at 1.4 billion yuan. The net profit reached 881 million yuan, reflecting over 30% growth in the first half of the year [4]. - By June 30, 2024, 367 out of 372 counters were profitable, with single counter revenue increasing from 2-2.5 million yuan in 2021 to 4.78 million yuan in 2024, a year-on-year growth of over 15% [3][14]. Marketing and Brand Strategy - The company utilizes the founder's personal brand and participation in major events like the Olympics to enhance brand exposure. The Tmall flagship store has over 7 million followers, and the Douyin official store has over 4.2 million followers, indicating strong marketing influence [8][9]. - Collaborations with national teams and cultural institutions, such as the Palace Museum, have been pivotal in brand building, with co-branded products launched for significant events [11]. Product Positioning and Pricing - Mao Geping positions itself in the high-end beauty market, with makeup products priced at 177.5 yuan and skincare products at 312.2 yuan for 2024. The company emphasizes a combination of online and offline sales strategies [6][10]. Channel Development - As of August 6, 2025, the number of counters reached 445, with a focus on first-tier cities and partnerships with retailers like Sephora. The company has expanded its presence in cities like Shanghai, Beijing, and Hong Kong [13]. - Online sales channels have been developed since entering Tmall in 2018, with an online sales ratio of 47.8% by the end of 2024. Despite high sales expenses, the gross margin remains high, with makeup gross margins exceeding 80% [15]. Customer Insights - The company has over 12 million online members, with a significant contribution from core offline members. The online repurchase rate is approximately 25-30%, while offline repurchase rates reach 30-35% [16]. Future Directions - Future strategies include expanding the perfume business, enhancing product lines, and maintaining a family management model to ensure strategic consistency. The company aims to continue leveraging major events and collaborations to enhance brand positioning and influence [10][17].

Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [1]. Core Viewpoints - The company is positioned as a high-end beauty brand in China, leveraging its founder's expertise in Eastern aesthetics and professional quality to create a competitive edge in the cosmetics market [5][6]. - The company has shown significant revenue growth, with projected revenues reaching 3.885 billion yuan in 2024, up 34.6% year-on-year, and net profits expected to hit 881 million yuan, reflecting an 88% increase [4][6]. - The brand's strong market presence is supported by a family-run business model, extensive experience in the beauty industry, and effective marketing strategies that resonate with younger consumers [5][6][25]. Summary by Sections 1. Market Overview - The Chinese cosmetics market is projected to grow at a compound annual growth rate (CAGR) of approximately 8.4% from 2023 to 2028, reaching 175.2 billion yuan by 2028 [10]. 2. Company Profile - Founded in 2000, the company has established itself as a leader in high-end domestic cosmetics, with a focus on integrating art and product development [5][14]. - The company operates under a family business model, with significant ownership held by the founder and family members, ensuring a cohesive strategic direction [22][24]. 3. Financial Performance - The company reported revenues of 2.886 billion yuan in 2023, with a projected increase to 3.885 billion yuan in 2024, and net profits expected to rise from 662 million yuan to 881 million yuan in the same period [4][6][26]. - The gross margin remains high, with cosmetic products achieving over 80% gross margin, indicating strong profitability compared to peers [29][30]. 4. Brand Development and Marketing - The brand has successfully built a strong identity through collaborations with cultural institutions and participation in major events, enhancing its market positioning [36][37]. - The company has expanded its online presence significantly, with online sales accounting for 47.8% of total revenue in 2024, reflecting a strategic shift towards digital marketing [5][6][9]. 5. Product and Channel Expansion - The company has diversified its product offerings, with color cosmetics generating 2.304 billion yuan in sales in 2024, and skincare products contributing 1.429 billion yuan [5][6]. - The company continues to explore new product categories, including the introduction of a fragrance line in 2025, which is expected to drive future growth [5][6].