Investment Rating - The report maintains a "Buy" rating for the company, indicating a potential upside of 15% to 35% from the current price [2][8]. Core Insights - The company has demonstrated strong performance during the 618 promotional event, leading in GMV rankings in the skincare category on major platforms [4]. - The company is focusing on product upgrades and enhancing its research and development capabilities, aiming to solidify its position as a leading domestic brand and expand globally [7]. - The financial forecasts suggest a steady increase in net profit and earnings per share (EPS) over the next few years, with projected net profits of RMB 18.72 billion, RMB 22.06 billion, and RMB 25.78 billion for 2025, 2026, and 2027 respectively [6][7]. Financial Summary - The company reported a net profit of RMB 817 million in 2022, with projections of RMB 1.872 billion for 2025, reflecting a year-on-year growth of 20.61% [6][9]. - Revenue is expected to grow from RMB 6.385 billion in 2022 to RMB 12.776 billion in 2025, indicating a robust growth trajectory [9]. - The company's price-to-earnings (P/E) ratio is projected to decrease from 28 in 2022 to 17 in 2025, suggesting an attractive valuation as earnings grow [6][9].

Core Viewpoint - China Lianhe Credit Rating Co., Ltd. maintains the long-term credit rating of Proya Cosmetics Co., Ltd. at AA, with a stable outlook for both the company and its convertible bonds, indicating strong financial health and operational performance [1][3][4]. Company Overview - Proya Cosmetics Co., Ltd. specializes in the research, production, and sales of cosmetics, maintaining competitive advantages in brand recognition, product diversity, and R&D capabilities [4][9]. - The company has a diverse brand portfolio including Proya, Caitang, Off&Relax, and others, covering various segments of the cosmetics market [9][14]. Financial Performance - For 2024, Proya reported a total revenue of 107.78 billion yuan, a year-on-year increase of 21.04%, and a profit of 18.89 billion yuan, up 26.34% from the previous year [4][10]. - As of March 2025, the company had cash assets of 47.34 billion yuan, with a low debt burden reflected in an asset-liability ratio of 28.15% [6][10]. Operational Strategy - The company successfully implemented a "big single product strategy," enhancing its market share in key categories and achieving significant sales growth through online channels [5][15]. - Proya's production capacity increased to 40.118 million units per year, with a focus on flexible production and inventory management [21][22]. R&D and Innovation - In 2024, Proya increased its R&D investment by 21.21%, totaling 2.10 billion yuan, and obtained 25 new patents, enhancing its technological edge [5][16]. - The company has established a European innovation center in Paris to strengthen its R&D capabilities [15]. Industry Context - The cosmetics industry in China is characterized by low technical barriers and high competition, with many players and a low market concentration [12][13]. - The online retail market for cosmetics is growing, with Proya ranking among the top companies in various categories on platforms like Tmall and Douyin [5][12]. Future Outlook - The stable rating outlook suggests that Proya's operational performance and competitive position are expected to improve further, driven by enhanced R&D and brand development [4][5].