Investment Rating - The report maintains a "Buy" rating for the company with a target price of 116.85 CNY [3][4][10] Core Views - The company is expected to achieve earnings per share of 4.44, 5.13, and 5.88 CNY for the years 2025, 2026, and 2027 respectively, indicating a positive growth trajectory [3][10] - The report highlights the importance of ongoing research and development, which has been recognized at international levels, as a key driver for sustainable growth in the competitive cosmetics industry [9] - Recent investments, including a significant stake in a domestic makeup brand, are seen as strategic moves to enhance market insights and expand the company's ecosystem [9] - The report suggests that the company's current market valuation is based on overly pessimistic short-term assumptions, presenting an opportunity for left-side positioning [9] Financial Summary - Projected revenue growth from 8,905 million CNY in 2023 to 14,156 million CNY in 2027, with a compound annual growth rate (CAGR) of approximately 9.5% [3][12] - Operating profit is expected to increase from 1,503 million CNY in 2023 to 2,837 million CNY in 2027, reflecting a strong growth rate [3][12] - Net profit attributable to the parent company is forecasted to grow from 1,194 million CNY in 2023 to 2,330 million CNY in 2027, with a notable increase in net profit margin from 13.4% to 16.5% [3][12] - The company’s gross margin is projected to improve from 69.9% in 2023 to 73.6% in 2027, indicating enhanced operational efficiency [3][12]

Core Insights - Shanghai Shangmei Cosmetics Co., Ltd. reported a revenue of 4.108 billion yuan for the first half of 2025, representing a year-on-year growth of 17.3% [1] - The company's gross profit reached 3.102 billion yuan, with a year-on-year increase of 15.8% [1] - Net profit for the period was 556 million yuan, showing a significant year-on-year growth of 34.7%, indicating improved profitability [1] - Basic earnings per share stood at 1.32 yuan [1] Revenue Drivers - The revenue increase was primarily driven by the steady advancement of the core business in cosmetics production and sales, with the main brand "Han Shu" making a significant contribution [1] - "Han Shu" brand achieved the highest monthly average GMV among beauty brands on Douyin, with several new products topping category rankings [1] - The brand "newpage" generated 397 million yuan in revenue during the first half of 2025, marking a substantial year-on-year increase of 146.5% [1] - The online sales of "newpage" for the first half of 2025 surpassed the total sales for the entire year of 2024 [1] R&D Investment - Research and development expenditure for the first half of 2025 reached 103 million yuan, reflecting a year-on-year growth of 31.7% [1] - The proportion of R&D investment relative to revenue increased from 2.2% in the first half of 2024 to 2.5% in the first half of 2025, indicating a further increase in investment intensity [1]