Core Viewpoint - The company has raised its profit forecast for 2025-2026 by 13% to 11.3 billion and 13.9 billion yuan, respectively, due to the continuous release of brand potential and enhanced competitive advantages [1] Group 1: Revenue Growth - The multi-category layout of the Han Shu brand and the sustained high growth of Newpage have driven rapid revenue growth in the first half of 2025, with expected revenue of 40.9-41.1 billion yuan, representing a year-on-year increase of 16.8%-17.3% [2] - Newpage's GMV on major platforms like Tmall, Douyin, and JD.com has increased by over 140% year-on-year in the first half of 2025, following a strategic upgrade to cover a full age range for skincare [2] Group 2: Profit Margin Improvement - The optimization of the channel structure and the increase in the proportion of high-profit brands have led to a profit margin improvement in the first half of 2025, with an expected net profit of 5.4-5.6 billion yuan, reflecting a year-on-year increase of 30.9%-35.8% [3] - The proportion of self-broadcasting and product card GMV on Douyin has increased, contributing to a profit margin improvement, with the overall profit margin expected to rise by 1.6 percentage points to 13.4% [3] Group 3: Brand Expansion Strategy - The company plans to continue expanding its brand matrix, having launched new brands in May and August, with further launches planned for the second half of 2025 [4] - The long-term strategy includes focusing on six major brands across skincare, hair care, and maternal and infant products, aiming for significant growth in the cosmetics sector over the next decade [4]

Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 93.18 CNY [7][5]. Core Views - The company achieved a revenue of 10.778 billion CNY in 2024, representing a year-over-year growth of 21.04%. The net profit attributable to shareholders was 1.552 billion CNY, up 30.00% year-over-year [3][6]. - In Q1 2025, the company reported a revenue of 2.359 billion CNY, an increase of 8.13% year-over-year, and a net profit of 390 million CNY, reflecting a year-over-year growth of 28.87% [3][6]. - The main brand, Proya, focused on the whitening segment, launching new products such as the "Optical Series" and upgrading existing lines to enhance its market position [4][5]. Financial Performance Summary - **Revenue and Profit Growth**: - 2024 revenue: 10.778 billion CNY, growth of 21.04% - 2024 net profit: 1.552 billion CNY, growth of 30.00% - 2025 Q1 revenue: 2.359 billion CNY, growth of 8.13% - 2025 Q1 net profit: 390 million CNY, growth of 28.87% [3][6]. - **Brand Performance**: - Proya brand revenue in 2024: 8.581 billion CNY, growth of 19.55% - Other brands like Cai Tang and OR also showed significant growth, with OR achieving a revenue of 368 million CNY, up 71.14% [4][5]. - **Profitability Metrics**: - Gross margin for 2024 was 71.39%, with a net profit margin of 14.40% - The company’s net profit margin improved to 16.54% in Q1 2025 [4][6]. Future Projections - The company is expected to achieve net profits of 1.845 billion CNY in 2025, 2.177 billion CNY in 2026, and 2.610 billion CNY in 2027, with respective growth rates of 18.9%, 18.0%, and 19.9% [5][6]. - The projected PE ratios for 2025, 2026, and 2027 are 20x, 17x, and 14x respectively [5][6].