Investment Rating - The investment rating for the company is "Buy" [1][7] Core Views - The company is expected to achieve a revenue of RMB 25.7 billion to RMB 26.0 billion in the first half of 2025, representing a year-on-year growth of 30.4% to 31.9%. The net profit is projected to be between RMB 6.65 billion and RMB 6.75 billion, indicating a year-on-year increase of 35.0% to 37.0% [2] - The company's strong performance is driven by its high-end brand strategy, which has led to increased consumer recognition and value creation through high-quality products and services [3] - The launch of the "Wen Dao Dong Fang" perfume series is expected to create new growth points, targeting the light luxury market with a price range of RMB 500 to 800, differentiating itself from both international brands and lower-priced domestic products [4][5] - The company is positioned as a rare high-end domestic beauty brand with strong pricing power, supported by a robust brand moat and ongoing expansion into high-end retail channels [5][6] Financial Summary - The company forecasts revenues of RMB 50.54 billion, RMB 65.03 billion, and RMB 82.58 billion for 2025, 2026, and 2027 respectively, with net profits of RMB 11.85 billion, RMB 15.06 billion, and RMB 19.18 billion for the same years [6][9] - The compound annual growth rate (CAGR) for net profit from 2024 to 2027 is projected at 29.6%, with earnings per share expected to be RMB 2.42, RMB 3.07, and RMB 3.91 for 2025, 2026, and 2027 respectively [6][9] - The company maintains a gross margin of approximately 84% across the forecast period, indicating strong profitability [9][11]

Core Viewpoint - Lin Qingxuan, a high-end domestic beauty brand, faces challenges in its IPO journey due to regulatory issues regarding its product claims and high sales expenses despite a high gross margin of 82.5% from its Camellia Oil product [1][2][5]. Group 1: Financial Performance - Lin Qingxuan's Camellia Oil, priced over 500 RMB, contributed 4.48 billion RMB in revenue in 2024, accounting for 37% of total revenue, with a gross margin of 82.5%, significantly higher than competitors like Proya (64.5%) and Pechoin (75.8%) [2][4]. - The company's sales expenses were 5.09 billion RMB, 4.87 billion RMB, and 6.88 billion RMB from 2022 to 2024, representing 73.66%, 60.37%, and 56.86% of revenue, respectively, which remains high compared to Proya's 47.88% and Shanghai Jahwa's 46.69% [2][3]. - Lin Qingxuan's net profit margin was only 15.4% in 2024, indicating profitability challenges despite high gross margins [2]. Group 2: Market Position and Expansion - Lin Qingxuan's store count increased from 366 to 506 between 2022 and 2024, with significant growth in new first-tier and second-tier cities, while online sales grew from 45.2% to 59.1% of total revenue [3][4]. - The brand holds a 1.4% market share in the high-end skincare segment, ranking 13th among top brands, and a 2.2% share in the anti-wrinkle market, placing it in the top ten [4][6]. Group 3: Regulatory and Competitive Challenges - The company faced regulatory scrutiny, receiving fines for false advertising regarding its anti-aging claims, with a total of over 200 complaints related to product efficacy and refund issues [1][4][6]. - Lin Qingxuan's pricing strategy is challenged by competitors like Proya and Winona, which offer lower-priced products, and the brand's online sales face increasing costs and lower margins compared to offline sales [4][6]. Group 4: Investment and Valuation - Lin Qingxuan's valuation dropped from 31.75 billion RMB in 2021 to 15.59 billion RMB in 2024, reflecting broader market trends and internal issues, with significant share reductions by early investors [5][6]. - The company has multiple agreements that could pressure its management to buy back shares if it fails to go public by the end of 2026, indicating potential financial strain [6][7].

Core Viewpoint - Lin Qingxuan, a pioneer in the skincare industry, is on the verge of an IPO in Hong Kong, positioning itself as a leading high-end domestic skincare brand in China, with significant growth in revenue and profitability [4][5][6]. Group 1: Company Overview - Lin Qingxuan has sold 30 million bottles of its "essence oil" over 13 years, showcasing its market education efforts [4]. - The company is projected to achieve a revenue of 1.2 billion yuan in 2024, with a gross margin of 82.5% [5]. - Lin Qingxuan's gross margin is competitive, second only to the high-end brand Mao Geping, and comparable to international brands like L'Oréal and Estée Lauder [5][6]. Group 2: Market Position and Strategy - Lin Qingxuan ranks first among high-end domestic skincare brands in China and is the only domestic brand in the top 15 high-end skincare brands [6]. - The brand emphasizes its high-end positioning in its prospectus, highlighting a shift in consumer confidence towards domestic brands [6][8]. - The company has a balanced product category distribution, with its flagship product, camellia oil, accounting for 37% of sales [18]. Group 3: Growth and Expansion - Lin Qingxuan's offline store count has grown from 366 to 506 in two years, with a compound annual growth rate of 17.6%, making it the fastest-growing high-end domestic skincare brand in terms of store count [23]. - The company has a strong online presence, with online revenue growing by 81.08% to 714 million yuan in 2024, accounting for 59.1% of total revenue [25]. - Lin Qingxuan's marketing strategy includes a focus on experiential retail and personalized skincare solutions, targeting high-income consumers [24]. Group 4: Innovation and R&D - The company has invested in R&D, with 42 core ingredients developed, and aims to deepen its technological capabilities in the camellia oil sector [32]. - Lin Qingxuan has established long-term supply agreements for camellia flowers and operates two factories in Shanghai, including a carbon-neutral facility [32]. - The brand's R&D expenditure is currently below industry standards, indicating room for improvement in innovation [37]. Group 5: Future Challenges and Vision - Lin Qingxuan aims to become a leading global cosmetics group, competing with established international brands [33]. - The company faces challenges in marketing expenses and needs to enhance its R&D investment to keep pace with industry leaders [36][37]. - The brand's future plans include expanding its product matrix and targeting younger demographics, indicating a strategic shift towards broader market appeal [37].