Investment Rating - The report gives an "Accumulate" rating for the company, marking its first coverage [5][8]. Core Views - The company is a technology-driven beauty manufacturing enterprise, firmly implementing a "major clients, major products" strategy. The Chinese cosmetics market is continuously expanding, driving growth in the cosmetics OEM industry. The company has established a good reputation in the industry and has built strong relationships with numerous brand clients [6][10]. Summary by Sections 1. Market Growth - The Chinese cosmetics market is projected to reach CNY 579.1 billion by 2025, with a year-on-year growth of 6.1%. The skincare market is expected to grow to CNY 318.6 billion, with a year-on-year increase of 5.7%. The OEM industry has seen a compound annual growth rate of 15.1% from CNY 21.41 billion in 2017 to CNY 49.76 billion in 2023 [6][21][22]. 2. Company Performance - In the first half of 2025, the company achieved revenue of CNY 371 million, a year-on-year increase of 39.3%, and a net profit of CNY 16.94 million, up 14.95% year-on-year. The company is expanding its market share despite a decline in gross margin due to changes in client and product structure [41][44]. 3. R&D and Market Expansion - The company holds 138 patents, including 120 invention patents, and has participated in drafting 7 national standards. It focuses on new raw material applications and formula development to support both new and existing brand clients. The company aims to penetrate overseas markets through participation in international exhibitions [48][55]. 4. Financial Forecast and Valuation - The forecasted net profits for 2025, 2026, and 2027 are CNY 54 million, CNY 65 million, and CNY 74 million, respectively. The corresponding price-to-earnings ratios are 36.5, 30.6, and 26.8 times. The report compares the company with peers, noting an average PE of 38.1 times for comparable companies in 2025 [8][41].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is positioned as a leading player in the ODM (Original Design Manufacturer) sector for skincare products, with significant growth potential driven by R&D and testing capabilities, as well as expanding overseas markets [1][4] - The company has demonstrated strong revenue growth, with a 48.27% year-on-year increase in revenue for 2024 and a 40.15% increase in Q1 2025 [3][4] - The company is focusing on a "big client, big product" strategy to enhance service quality and product value, which is expected to drive market share growth domestically and internationally [4] Financial Performance Summary - In 2024, the company achieved revenue of 6.95 billion yuan, a 48.27% increase year-on-year, and a net profit of 453.9 million yuan, a 10.28% increase [3] - For Q1 2025, the company reported revenue of 1.62 billion yuan, a 40.15% increase year-on-year, and a net profit of 8.62 million yuan, an 8.81% increase [3] - The company’s revenue projections for 2025, 2026, and 2027 are 9.66 billion yuan, 11.21 billion yuan, and 12.85 billion yuan respectively, with year-on-year growth rates of 39.0%, 16.1%, and 14.6% [5] - The projected net profit for 2025, 2026, and 2027 is 610 million yuan, 800 million yuan, and 1.01 billion yuan respectively, with corresponding EPS of 0.54, 0.72, and 0.91 yuan per share [5] Product and Market Insights - The company’s main product categories, including skincare (excluding masks), masks, and hair care, have shown significant revenue growth, with skincare revenue increasing by 49.56% year-on-year [4] - The company has successfully registered new raw materials with the National Medical Products Administration, which is expected to enhance its product offerings [4] - The overseas revenue for 2024 reached 526.29 million yuan, a remarkable 361.52% increase year-on-year, indicating strong international market potential [4]