Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Views - The company reported a total revenue of 1.299 billion yuan for the first half of 2025, a year-on-year decrease of 21.59%, and a net profit attributable to shareholders of 789 million yuan, down 29.57% year-on-year [2][6]. - The revenue decline is attributed to a high base effect from the previous year, particularly in the second quarter, where revenue dropped by 25% compared to the same period last year [12]. - The company has made strategic acquisitions, including REGEN, which is expected to enhance its position in the medical aesthetics market and contribute to future growth [12]. Summary by Sections Financial Performance - In Q1 and Q2 of 2025, the company's quarterly revenues were 660 million yuan and 640 million yuan, respectively, with declines of 18% and 25% [12]. - The sales of solution and gel products in the first half of 2025 were 740 million yuan and 490 million yuan, both showing a 24% decline year-on-year [12]. - The net profit for Q2 2025 was 350 million yuan, reflecting a 42% decrease, with a net profit margin of 54.4%, down 15.5 percentage points [12]. Strategic Initiatives - The acquisition of REGEN is expected to strengthen the company's market position in medical aesthetics, with products that complement existing offerings [12]. - The company aims to leverage its international expansion to drive additional revenue growth [12]. Earnings Forecast - The expected earnings per share (EPS) for 2025, 2026, and 2027 are projected to be 5.55 yuan, 6.48 yuan, and 7.46 yuan, respectively [12].

Investment Rating - The report maintains a "Buy" rating for the cosmetics and medical beauty sector, highlighting strong growth potential and investment opportunities in the industry [14][19]. Core Insights - The cosmetics and medical beauty sector has shown resilience, outperforming the market during the week of August 29 to September 5, 2025, with the Shenwan Beauty Care Index declining only 0.8% [3][4]. - The transition to autumn skincare marks the beginning of a consumption peak for the sector, with significant sales events such as the Autumn Beauty Consumption Festival and Double 11 approaching, creating new investment opportunities [9][10]. - Major companies in the sector are optimistic about their performance in the second half of 2025, as indicated by a recent conference involving over ten beauty care companies [9]. Summary by Sections Industry Performance - The Shenwan Cosmetics Index remained stable, outperforming the Shenwan A Index by 1.4 percentage points, while the Shenwan Personal Care Index fell by 1.8%, underperforming the Shenwan A Index by 0.3 percentage points [3][4]. Key Company Reviews - **Mao Geping (1318HK)**: Reported a revenue of 2.59 billion yuan for H1 2025, a year-on-year increase of 31%, with a net profit of 670 million yuan, up 36%. The color cosmetics segment saw a revenue of 1.42 billion yuan, while skincare generated 1.09 billion yuan, reflecting strong brand momentum [10][11]. - **Shangmei Co. (02145HK)**: Achieved a revenue of 4.108 billion yuan in H1 2025, a 17.3% increase, with a net profit of 556 million yuan, up 34.7%. The main brand, Han Shu, contributed significantly to growth, with a revenue of 3.344 billion yuan [16][17]. Investment Recommendations - Recommended companies include Shangmei Co., Porlaia, and Shanghai Jahwa, which have strong brand matrices and relatively low PE multiples. Other notable mentions are Marubi Biological and Mao Geping, which are positioned well to benefit from the rise of domestic beauty brands [10][19]. - The report suggests focusing on companies with strong R&D capabilities and product pipelines, particularly in the upstream medical beauty segment, with a recommendation for Aimeike [10][19]. Market Trends - The report notes a significant increase in online sales, with H1 2025 online revenue for Mao Geping reaching 1.297 billion yuan, a 39% year-on-year increase, marking a shift in consumer purchasing behavior towards online platforms [12][18]. - The overall cosmetics retail market showed a 4.5% growth in July 2025, indicating a robust recovery in consumer spending [23][26]. Strategic Developments - Porlaia's investment in Huazhi Xiao reflects a strategic move to enhance its multi-brand strategy and capitalize on the influence of Gen Z consumers [28]. - The report highlights the competitive landscape, noting that domestic brands are increasingly capturing market share, with a notable shift in consumer perception from "value for money" to "quality choice" [32].

Core Insights - The company held a two-year anniversary celebration and new product launch on September 4, 2025, highlighting its probiotic, smoking cessation, and medical beauty businesses, with a focus on differentiated product offerings and market expansion [1] Probiotic Business - The probiotic business is driven by multiple engines and aims to expand into overseas markets, focusing on three main areas: raw materials, ODM/OEM manufacturing, and proprietary brands [1] - In the raw materials segment, the company promotes five key strains targeting weight management, fatigue relief, constipation, and mental health, with a proprietary "Yanhuang Strain Library" containing over 6,500 valuable native strains from diverse ecological regions in China [1] - The ODM/OEM segment offers a comprehensive one-stop solution for probiotic products, leveraging over 20 years of industry experience and a robust innovation platform [1] - The proprietary brand segment targets direct-to-consumer sales, with products like Puribao, Purifiber, and Purichangbao, focusing on functional probiotic solutions tailored to Chinese consumers [1] Smoking Cessation Market - The upcoming smoking cessation product "Lesuke" (Varenicline Tartrate) is noted for its scarcity and differentiation in the market, with only four companies holding the necessary approvals in China [2] - The product effectively reduces smoking cravings without nicotine and stimulates dopamine release to alleviate withdrawal symptoms [2] - A comprehensive service system will be established, providing support from assessment to ongoing assistance in smoking cessation [2] - The product is backed by authoritative endorsements and aims to standardize the industry, being recognized as a first-line medication in the "Chinese Clinical Smoking Cessation Expert Consensus Gold Standard" [2] - Unique product design focuses on the "smoking control" market, avoiding homogenization with competitors [2] Medical Beauty Products - The medical beauty product "Jisuran" utilizes patented yeast peptide ingredients and medical-grade sodium hyaluronate, supported by research [3] - The product aims to leverage pharmacy traffic challenges by exploring new integration paths between medical beauty and pharmacies [3] Financial Projections - The company anticipates revenue growth from 792 million to 1.16 billion yuan from 2025 to 2027, with year-on-year growth rates of 24%, 22%, and 20% respectively [3] - Expected net profit for the same period is projected to grow from 106 million to 151 million yuan, with growth rates of 15%, 18%, and 21% respectively [3] - The company maintains a "recommended" rating based on the competitive strength of its probiotic business, the scarcity of smoking cessation drug approvals, and the differentiated approach in medical beauty products [3]

Core Insights - The medical beauty industry is witnessing a competitive showdown between two leading companies, Juzhi Biotechnology and Huaxi Biotechnology, with contrasting financial performances in the first half of 2025 [1][8][14] - Juzhi Biotechnology reported a revenue of 3.113 billion RMB and a net profit of 1.182 billion RMB, achieving a net profit margin of 38%, while Huaxi Biotechnology experienced a 19.57% decline in revenue to 2.261 billion RMB and a 35.38% drop in net profit to 221 million RMB, marking its worst performance in seven years [1][8] Juzhi Biotechnology: Growth Drivers and Potential Concerns - Juzhi's growth is attributed to the synergy of products, channels, and brand, with professional skin care products accounting for 99.7% of total revenue [3][4] - The revenue from functional skin care products reached 2.410 billion RMB, a 24.2% increase year-on-year, primarily driven by the sales of key products [3][4] - Despite strong revenue growth, the company faces challenges such as a slight decrease in gross margin to 81.7% and increased sales and administrative expenses, leading to a rise in overall expense ratio to 38.8% [3][4][5] - The company heavily relies on its two main brands, Kefu Mei and Keli Jin, which together contribute 97.8% of revenue, raising concerns about its growth potential and risk exposure [5][6] Huaxi Biotechnology: Struggles and Strategic Reforms - Huaxi's performance has been under pressure, with a significant decline in its functional skin care segment, which accounts for over 40% of its business, down 34% [8][9] - The company has implemented drastic cost-cutting measures, reducing sales expenses by 39.86% in the second quarter, and has shifted its focus from scale to efficiency in brand promotion [9][10] - Huaxi has also streamlined its R&D efforts by eliminating 88 non-technical brand incubation projects and reallocating resources towards high-barrier products and medical terminal businesses [10][11] - Despite these reforms, Huaxi faces ongoing challenges, including a shrinking traditional hyaluronic acid market and the need for new high-end products to achieve significant sales [11][12] Industry Dynamics and Future Outlook - The competition between Juzhi and Huaxi reflects a broader shift in the medical beauty industry from marketing-driven growth to a focus on technological advancements and product innovation [14][15] - As regulatory scrutiny increases and consumer demand for genuine technological efficacy rises, both companies must adapt their strategies to maintain competitive advantages [14][15] - The outcome of this rivalry will serve as a critical case study for the industry, highlighting the importance of balancing marketing with substantial R&D investments to ensure long-term sustainability [15]

Core Insights - The Chinese medical beauty market is projected to reach a scale of 265 billion yuan by 2024, with a CAGR of 15% from 2017 to 2024 [1] - The number of medical beauty consumers in China is expected to reach 31 million by 2024, with a CAGR of 9% from 2022 to 2024 [1] - The average number of medical beauty treatments per person in China is significantly lower than in developed markets such as South Korea, the United States, and Japan, indicating substantial growth potential [1] Industry Growth Potential - The medical beauty industry is anticipated to maintain steady growth in the high single digits over the next three years, with notable structural opportunities [1] - Certain medical beauty materials still present track dividends, particularly in areas such as natural and recombinant collagen, regenerative microspheres, and emerging materials like PDRN, ECM, silk protein, and PHA [1] - Companies with platform capabilities in upstream product development and downstream medical beauty institutions that possess high reputation and integrated resources are expected to thrive [1]

Group 1: Company Overview and Performance - The company achieved a revenue of 2,025 million yuan in the first half of 2025, representing a year-on-year growth of 4.62% [2] - Net profit reached 82.41 million yuan, with a year-on-year increase of 6.65% [3] - The adjusted net profit (扣非净利润) was 79.33 million yuan, showing a growth of 6.40% [3] Group 2: New Product Introductions - The medical beauty product "肌素然" focuses on skin repair and anti-aging, utilizing peptides as a core component [3] - The smoking cessation product "乐速克" offers a comprehensive solution for smoking control, aiming to help smokers manage their cravings scientifically [3] - The probiotics business leverages over 20 years of local strain research experience, showcasing strong R&D capabilities and product innovation [3] Group 3: Strategic Initiatives and Market Expansion - The company has made significant moves in extending its industrial chain through the acquisition of 民生中科 (Shandong) and exploring overseas markets [4] - The strategy emphasizes maintaining focus on major products while pursuing synergies through acquisitions [4] - The overseas market is viewed as having substantial potential, with plans to integrate into local markets rather than merely engaging in trade [4] Group 4: Competitive Advantages and Market Position - "肌素然" differentiates itself with patented ingredients and innovative membrane materials, targeting the medical beauty market [4] - The smoking cessation product "乐速克" is recognized as a first-line medication in clinical guidelines, with a unique full-cycle service model [5] - The probiotics segment is driven by a multi-engine strategy, focusing on raw materials, ODM/OEM, and proprietary brands [6] Group 5: Research and Development Capabilities - The "炎黄菌株库" (Yanhua Strain Library) is a proprietary resource established to support the development of probiotics tailored to the Chinese population [7] - The library has been built over several years, with a focus on local strains and their health benefits, ensuring a strong foundation for future innovations [7]

Group 1 - The medical beauty industry is expected to maintain robust growth in the high single digits over the next three years, with significant structural opportunities within the sector [1] - Certain medical beauty materials still present track dividends, such as natural and recombinant collagen, as well as regenerative microspheres, and materials like PDRN, ECM, silk protein, and PHA that have yet to see the first certification [1] - Companies with platform capabilities in upstream product development and downstream medical beauty institutions that possess high reputation, integrate upstream resources, and maintain differentiation through comprehensive solutions are highlighted as key players [1]

Core Viewpoint - The medical aesthetics industry is expected to maintain robust growth in the high single digits over the next three years, with significant structural opportunities within the industry [1] Group 1: Industry Growth - The medical aesthetics industry is projected to experience high single-digit growth in the next three years [1] Group 2: Structural Opportunities - There are notable structural opportunities in the industry, including: - Certain medical aesthetic materials still benefiting from market advantages [1] - Upstream companies with platform capabilities that empower product offerings [1] - Downstream medical aesthetic institutions that possess high reputation, integrate upstream resources, and maintain differentiation through comprehensive solutions [1]

Core Viewpoint - The influx of southbound capital has turned Hong Kong stocks into a "reservoir" for Asian capital, with significant investments flowing into the healthcare sector, particularly in companies like Four Seasons Pharmaceutical [1][3]. Group 1: Capital Inflow and Market Performance - As of September 3, 2025, southbound funds through the Hong Kong Stock Connect have totaled approximately 935.997 billion RMB, with the Hang Seng Healthcare sector seeing a net inflow of 163.683 billion RMB [1]. - Four Seasons Pharmaceutical has experienced a substantial increase in stock holdings via Hong Kong Stock Connect, rising from 528 million shares at the beginning of the year to 1.321 billion shares by September 3, representing an increase in ownership from 8.83% to 14.15% [1][3]. Group 2: Financial Performance and Business Segments - Four Seasons Pharmaceutical reported a revenue of approximately 1.146 billion RMB for the first half of 2025, marking a year-on-year growth of 20.7%, and achieved a net profit of approximately 103 million RMB, indicating a turnaround from previous losses [3][4]. - The medical aesthetics segment is the primary revenue driver, generating around 580 million RMB in the first half of 2025, a year-on-year increase of 81.3%, with segment profit soaring by 215.3% [4][5]. - The innovative drug segment also showed significant growth, with revenues reaching 58 million RMB, a 96.6% increase, primarily driven by the sales of diabetes medications [4][5]. Group 3: Strategic Developments and Future Outlook - The company has a robust cash reserve of nearly 3.9 billion RMB, and its current valuation is below the combined value of its medical aesthetics and cash reserves, suggesting that the market is undervaluing its innovative drug business [3][5]. - Four Seasons Pharmaceutical has announced a mid-term cash dividend of 0.99 RMB per share, continuing its history of consistent dividends since its listing in 2010, which reflects management's confidence in future cash flows and profitability [5][6]. - The company is actively expanding its product matrix in the medical aesthetics sector, with a comprehensive range of products and a focus on AI-driven development in collaboration with biotechnology firms [6][7]. Group 4: Innovation and Market Position - The innovative drug business is entering a harvest phase, with several key drugs approved for market, including those targeting cancer and diabetes, which are expected to significantly enhance revenue streams [8][10]. - The company is also exploring international markets, with a focus on emerging regions, which could provide additional growth opportunities [13][14]. - The current market valuation of Four Seasons Pharmaceutical is significantly lower than the combined value of its medical aesthetics and cash, indicating a potential for substantial valuation recovery as the innovative drug segment matures [12][16].

Summary of Aimeike's Conference Call Company Overview - Aimeike has established a leading position in the niche market with its Hi-Tech series, particularly the neck wrinkle injection product [2][3] - The company has been continuously launching new indication products such as Panda Needle and Thai Bubble Needle to strengthen its technological and channel advantages [2] Core Insights and Arguments - **Performance Decline**: Since Q1 2023, Aimeike's growth rate has slowed down, and its valuation has decreased due to a lack of blockbuster new products, weak consumer demand, and increased competition from upstream products like hyaluronic acid, leading to over 20% declines in gel and solution products [2][4][5] - **Acquisition of Regen**: In March 2023, Aimeike acquired Regen, which is expected to enhance production capacity and expand international channels in the short term. Regen reported a revenue of 80 million RMB and a profit of 50 million RMB in 2023 [2][6][7] - **Product Capacity Expansion**: The acquisition is projected to increase the production capacity of S-FILM products by five times, driving rapid growth in product offerings [2][8] - **Market Trends**: The medical aesthetics market is expected to improve, with Aimeike's profits projected to be 1.72 billion RMB in 2025, a decline of about 10%, but expected to exceed 2 billion RMB in 2026 with a growth rate close to 20% [4][9] Future Development Outlook - **International Expansion**: Aimeike plans to leverage Regen's international production capacity and channels to launch existing products like Hightide and Bonida globally, marking a significant step towards internationalization [2][9] - **New Product Cycle**: Aimeike is entering a new product cycle, with botulinum products expected to be approved and sold in Q4 2023 or Q1 2024. Following a low performance in 2025 due to high base effects from 2024, a gradual improvement is anticipated in Q3 and Q4 of 2025, leading to steady growth starting in 2026 [9][10] - **Valuation Impact**: The integration of Regen is expected to influence Aimeike's valuation, with projected multiples of 30x in 2025 and around 25x in 2026, driven by core product fundamentals, R&D pipeline, and international acquisition synergies [4][10] Additional Important Points - **Market Competition**: The domestic market has over 80 approved hyaluronic acid products, intensifying competition in the regenerative materials market [5] - **Sales Channel Development**: Aimeike is working on reclaiming domestic distribution rights and has a sales network covering 4,000 to 5,000 institutions nationwide, with good growth momentum for SFE products in both domestic and international markets [8]