Summary of the Medical Aesthetics and Cosmetics Industry Conference Call Industry Overview - The medical aesthetics industry in China has a significantly lower penetration rate compared to the US and South Korea, indicating substantial growth potential. The current penetration rate is approximately 2 per 1,000 people, while the US and South Korea have rates of 5‰ and 8‰ respectively, suggesting a large market opportunity for growth [2][3][4] - The consumer repurchase rate for medical aesthetics is high, with stable demand for light medical aesthetics services, which provides a solid foundation for industry development [2][3] Market Dynamics - The medical aesthetics industry is divided into two main segments: medical aesthetics and cosmetics. The medical aesthetics segment remains robust post-pandemic, with a focus on product and material development [3][4] - The upstream raw material sector has high gross margins, with companies like Aimeike achieving margins of 85%-90%. The typical markup at the consumer level is over three times the factory price, ensuring profitability for institutions and sales personnel [2][4] Capital Market Trends - Capital markets are increasingly focused on upstream manufacturers, particularly the transition from hyaluronic acid to active materials such as recombinant collagen and PDRN. This shift is driven by rising consumer demand for facial treatments [7] - The market for light medical aesthetics accounts for approximately 70% in leading hospitals, with new medical aesthetics primarily divided into photonic and injection categories [8] Product Market Size - The market size for hyaluronic acid and botulinum toxin at the factory level is estimated to be between 50 to 100 billion yuan. The markup for mature products typically ranges from 2 to 3 times, with high-end products potentially reaching 3 to 4 times [9] - The regenerative materials market has seen rapid growth, with several companies achieving sales exceeding 1 billion yuan since 2021. However, these materials are not fully replacing hyaluronic acid but rather expanding the market [10][11] Material Development and Trends - The development of regenerative materials is significant, with a focus on micro-spheres that stimulate natural repair and collagen regeneration. These materials are expected to enhance treatment effectiveness and safety in soft tissue filling and skin management [15][16] - The future of the medical aesthetics industry is expected to shift towards active micro-spheres and humanized collagen, with a focus on extracellular matrix and various collagen types [15] Cosmetics Industry Overview - The cosmetics industry has seen a clear trend towards domestic brand replacement, with domestic brands now accounting for over 50% of the market. Brands are leveraging e-commerce and live streaming to enhance growth, with increased R&D investments focusing on efficacy and ingredient-driven strategies [2][21] - The market has shifted from high-end luxury products to a broader consumer base, with skincare products maintaining steady growth despite the pandemic [21][22] Sales Dynamics - The sales of domestic cosmetics exhibit seasonal variations, with the first half of the year accounting for about 40% of total sales and the second half for 60%. Major shopping events like 618 and Double Eleven significantly impact annual sales [24] R&D Investment Differences - There is a notable difference in R&D investment between the medical aesthetics and cosmetics industries. The medical aesthetics sector focuses on material iteration, while the cosmetics industry emphasizes brand building and marketing to enhance consumer loyalty [25] Future Outlook - The future of domestic cosmetics companies appears optimistic, with expectations of revenue growth driven by channel changes and ingredient innovations. Companies like Perfect Diary and Proya are projected to reach revenue levels of 20 to 30 billion yuan in the next 3 to 5 years [30]

Group 1 - The core viewpoint is that in H1 2025, the cosmetics retail sales growth has reversed its decline, achieving a growth rate of 2.9% due to consumption-boosting policies and improved income expectations [1][2] - The demand for cosmetics is expected to remain strong in H2 2025, with the off-peak season in July and August showing increased growth, indicating positive demand expectations [1][2] - The competitive landscape is improving, with domestic brands making significant progress, and leading domestic brands are now sharing market share equally with international brands [2] Group 2 - In the cosmetics sector, the revenue growth rate for key covered companies in H1 2025 is around 8%, with net profit growth slightly lower than revenue growth [2] - Specific companies in the cosmetics sector include: - Shiseido: H1 2025 revenue of 4.11 billion yuan, up 17.3%, net profit of 520 million yuan, up 30.6% [2] - Proya: H1 2025 revenue of 5.36 billion yuan, up 7.2%, net profit of 800 million yuan, up 13.8% [2] - Water Sheep: H1 2025 revenue of 2.5 billion yuan, up 9.0%, net profit of 123 million yuan, up 16.5% [2] - Marubi: H1 2025 revenue of 1.77 billion yuan, up 30.8%, net profit of 190 million yuan, up 5.2% [2] Group 3 - The second category of companies is capitalizing on consumer trends, with notable performances including: - Mao Geping: H1 2025 revenue of 2.59 billion yuan, up 31.3%, net profit of 670 million yuan, up 36.1% [3] - Juzi Biotechnology: H1 2025 revenue of 3.11 billion yuan, up 22.5%, net profit of 1.18 billion yuan, up 20.2% [3] - The third category includes companies showing marginal improvements or initial signs of strategic transformation, such as Shanghai Jahwa, Huaxi Biological, and Betaini [3] Group 4 - In the personal care sector, two companies reported revenue and net profit growth, indicating a strong market potential: - RuYuchen: H1 2025 revenue of 1.32 billion yuan, up 67.6%, net profit of 70 million yuan, up 85.6% [3] - Runben: H1 2025 revenue of 900 million yuan, up 20.3%, net profit of 190 million yuan, up 4.2% [3] Group 5 - In the medical beauty sector, the performance is mixed, with some companies experiencing declines: - Aimeike: H1 2025 revenue of 1.3 billion yuan, down 21.6%, net profit of 790 million yuan, down 29.6% [4] - Langzi: H1 2025 revenue of 2.79 billion yuan, down 4.3%, net profit of 270 million yuan, up 64.1% [4] - Overall, the medical beauty sector reported a revenue of 1.333 billion yuan, down 6.1%, with a gross margin of 54.54% [4]

Group 1: New Technologies and Market Developments - New Stone announced the delivery of its 10,000th unmanned delivery vehicle, marking the world's first fleet of this scale and indicating a significant shift from technology validation to large-scale commercialization in the unmanned delivery industry [1] - New Stone's achievement demonstrates the reliability of technology and commercial viability, significantly reducing costs through scale, providing a model for industry profitability [1] - The competition in the industry is now focused on road rights and cost, with New Stone leading due to its advantages in road rights across hundreds of cities and a cost of around 70,000 yuan, although competitors like Momo and Jiushi have achieved lower pricing [1] Group 2: Consumer Trust and Market Competition - Luo Yonghao announced plans to evaluate pre-packaged meals available on the market, emphasizing a neutral stance by not engaging in live commerce, which could enhance consumer trust in the industry [2] - This initiative comes at a critical time for the industry, potentially pushing companies to strengthen quality control and shifting competition from price wars to brand trust [2] Group 3: Pricing Strategies in the Aesthetic Medicine Market - New Oxygen launched the "Miracle Youth Needle 3.0" at a price of 2,999 yuan, aiming to address high prices and rampant black market practices in the aesthetic medicine sector [3] - This move targets the issue of inflated prices in the market, potentially leading to a more rational pricing system, although it may also trigger price wars and increase market competition [3] Group 4: E-commerce and Brand Expansion - Alibaba's AliExpress launched the "Super Brand Going Global Plan," aiming to achieve higher sales at half the cost of Amazon, directly challenging Amazon's dominance in the mid-to-high-end brand market [4] - In the first half of the year, AliExpress saw a 70% year-on-year increase in new brands, with over 500 brands doubling their sales and more than 2,000 brands exploring new overseas markets [4] - This initiative signifies a shift from a focus on cost-effectiveness to targeting the mid-to-high-end market, reshaping the landscape of cross-border e-commerce and prompting a shift towards refined operations and cost control [4]

Investment Rating - The report maintains a "Positive" outlook on the beauty and personal care industry, highlighting the resilience of domestic brands and the impact of new consumption trends [2]. Core Insights - The beauty and personal care sector experienced a robust recovery in H1 2025, with a retail sales growth of 2.9%, reversing the previous decline due to favorable consumption policies and improved income expectations [5][6]. - Domestic brands are gaining market share, with top local brands now competing closely with international counterparts, indicating a significant shift in consumer preferences [10][11]. - The report categorizes companies into three groups based on performance: those with strong brand matrices benefiting from multi-brand strategies, those capitalizing on consumer trends like domestic brands and collagen products, and those showing signs of strategic improvement [20][23]. Summary by Sections Industry Overview - The beauty market is projected to grow steadily, with a forecasted retail sales decline of 1.1% in 2024, followed by a recovery in H2 2025 [5][6]. - The domestic market share is expected to increase, with local brands achieving significant breakthroughs in both skincare and makeup segments [10][11]. Company Performance - **Cosmetics Sector**: - Major companies like Up Beauty and Proya reported revenue growth of 17.3% and 7.2% respectively in H1 2025, with net profits increasing by 30.6% and 13.8% [20][21]. - Other notable performers include Marubi and Water Sheep, with revenue growth of 30.8% and 9.0% respectively [21][22]. - **Personal Care Sector**: - Companies like Ruibin and Zhenjia showed remarkable growth, with Ruibin's revenue increasing by 67.6% and Zhenjia's by 157.11% in H1 2025 [5][20]. - **Medical Aesthetics Sector**: - Companies like Aimeike and Langzi reported mixed results, with Aimeike's revenue declining by 21.6% while Langzi's net profit surged by 64.1% [20][24]. Investment Recommendations - The report recommends investing in companies with strong brand matrices and low PE multiples, such as Up Beauty and Proya, as well as those benefiting from the Douyin traffic boost like Marubi and Water Sheep [20][24]. - It also suggests focusing on high-value segments and innovative products from brands like Ruibin and Furuida, and highlights opportunities in the maternal and infant sector with companies like Shengbeila and Haiziwang [20][24].

Core Viewpoint - New Oxygen has launched a new product, Miracle Youth 3.0 - Su Tian Yan, priced at 2999 yuan, which is the lowest price in the history of youth injections, significantly lower than competitors priced between 13,000 yuan and 24,000 yuan [1] Product Details - The new product is based on polylactic acid microspheres that stimulate collagen regeneration for skin anti-aging [1] - The product is custom-produced by Xihong Pharmaceutical, featuring microsphere diameters of 25-35 micrometers with a smooth surface, produced using microfluidic technology in a sterile environment [1] Market Context - New Oxygen's CEO, Jin Xing, stated that Su Tian Yan is a product customized with Xihong Bio, and it is similar to the youth injection from LZ, although the models differ slightly [1] - Previously, New Oxygen faced pressure from upstream manufacturers due to significantly reducing the prices of the youth injections they were distributing, leading to supply issues [1]

Core Points - The article highlights the alarming trend of cosmetic surgery institutions targeting students with promotional offers, which often lead to consumer traps and illegal practices [1][2] - Legal cases illustrate the risks associated with unregulated cosmetic procedures, emphasizing the need for consumers to be cautious and informed [3][4] Group 1: Industry Practices - Many cosmetic institutions are using deceptive marketing strategies, such as "discounts for students" and "free services," to attract young consumers [1] - The industry is rife with irregularities, including unfulfilled service promises and hidden conditions that complicate refund processes [2] Group 2: Legal Cases - A case involving a consumer named Lu Lu illustrates how a beauty institution failed to provide promised services, leading to a court ruling that mandated a full refund of 13,780 yuan [2] - Another case involving a consumer named Jin Wei highlights the dangers of private cosmetic procedures, resulting in severe health complications and a court ruling that required compensation of over 230,000 yuan from the practitioner [3] Group 3: Consumer Warnings - Legal experts warn that cosmetic procedures should only be performed in licensed medical facilities by certified professionals due to the high risks involved [4] - Consumers are advised to be cautious of promotional offers and to thoroughly evaluate the legitimacy of cosmetic institutions before proceeding with treatments [4]

Core Points - The medical beauty industry has been rapidly developing in recent years, but some unscrupulous businesses exploit consumers' desire to enhance their appearance through false advertising and illegal medical practices, leading to significant health risks and financial losses for consumers [2][3] - The National Health Commission emphasizes that medical beauty services must be provided by qualified medical institutions, and non-medical beauty establishments are prohibited from offering such services [2] - The commission advises against minors undergoing medical beauty procedures due to their ongoing physical and psychological development, which can lead to adverse effects [2][3] Summary by Categories - **Industry Concerns** - The medical beauty sector is facing challenges due to the actions of bad actors who mislead consumers and promote harmful beauty standards [2] - There is a call for societal efforts to foster a healthy and natural aesthetic appreciation, particularly among minors [3] - **Regulatory Guidance** - Medical beauty services should only be conducted by licensed medical institutions, and any services offered by non-medical beauty establishments are considered illegal [2] - The public is encouraged to report any illegal medical beauty practices to local health authorities or through the hotline [3]

Core Viewpoint - The beauty and medical aesthetics industry is experiencing a stark contrast, with medical aesthetic companies facing significant pressure while domestic beauty brands are actively entering the medical aesthetics market [3][4][5] Medical Aesthetics Industry Performance - Among 22 medical aesthetics companies, 14 reported a year-on-year decline in revenue during the first half of the year, with "medical aesthetics trio" member Aimeike experiencing a decline exceeding 20% [4][5] - The medical aesthetics market has been growing rapidly, with a projected market size of nearly 3,700 billion by 2025, growing at an annual rate of 17.4% since 2020 [4] Competitive Landscape - The medical aesthetics industry is facing intensified competition, particularly in upstream raw materials and equipment, leading to declining revenues for companies like Aimeike and Haohai Biological [6][7] - The consumer market is becoming more rational, with 73% of mid-to-high-income consumers planning to reduce or maintain their medical aesthetics spending in 2024 compared to 2023 [7] Domestic Beauty Brands' Strategies - Over 20 domestic beauty companies are entering the medical aesthetics sector, with brands like Naturating and Youshiyan launching new products aimed at the medical aesthetics market [10][12] - Baijuerling has launched three medical aesthetics brands, focusing on injection regeneration, post-operative care, and medical equipment, indicating a comprehensive approach to the medical aesthetics industry [16][20] Market Challenges and Opportunities - The market for medical aesthetics is becoming increasingly competitive, with established brands like 可复美 and 薇诺娜 already dominating the "medical device" segment, making differentiation a key challenge for new entrants [22][25] - Despite the challenges, the structural adjustment in the medical aesthetics industry presents opportunities for collaboration and innovation, as companies explore new product offerings and partnerships [25][27]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Views - The retail industry is experiencing a shift towards emotional consumption, with brands that possess differentiated product capabilities and deep consumer insights gaining traction [31] - The report highlights the strong performance of the jewelry sector, particularly in high-end and fashion segments, driven by consumer preferences and innovative marketing strategies [31][39] Summary by Sections Retail Market Overview - The retail index closed at 2384.72 points, down 0.51% for the week, outperforming the Shanghai Composite Index, which fell 1.30% [6][13] - Year-to-date, the retail index has increased by 6.51%, lagging behind the Shanghai Composite Index's 13.97% rise [13][15] Key Industry Dynamics - The report emphasizes the successful autumn ordering meeting of Chao Hong Ji, showcasing strong demand for new products rooted in traditional craftsmanship and innovative designs [25][26] - The jewelry sector, particularly the high-end and fashion categories, is benefiting from emotional consumption trends, with brands like Lao Pu Gold and Chao Hong Ji recommended for investment [31][39] Company Performance Highlights - Lao Pu Gold reported a revenue of 12.354 billion yuan for H1 2025, a 250.9% increase year-on-year, with a net profit of 2.268 billion yuan, up 285.8% [33][36] - Chao Hong Ji achieved a revenue of 4.102 billion yuan in H1 2025, reflecting a 19.5% increase, with a net profit of 331 million yuan, up 44.3% [39][40] - The report also highlights the performance of other companies such as Mao Ge Ping and Ru Ben, which are experiencing significant growth in the cosmetics sector [32][42] Investment Recommendations - The report suggests focusing on high-quality companies in the emotional consumption theme, particularly in the jewelry and cosmetics sectors, with specific recommendations for Lao Pu Gold, Chao Hong Ji, and Mao Ge Ping [7][31][32]

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