Market Overview - On March 24, US stock markets closed lower, with the Dow Jones Industrial Average down 0.18% at 46,124.06 points, the S&P 500 down 0.37% at 6,556.37 points, and the Nasdaq down 0.84% at 21,761.89 points [3] - Major technology stocks mostly declined, with Google down nearly 4%, Microsoft down over 2%, and Meta down nearly 2%. Tesla and Apple saw slight increases, both under 1% [3] Individual Stock Movements - Estee Lauder experienced a significant drop, closing down over 9%. The company confirmed discussions regarding a potential business merger with Puig, but no final decision or agreement has been reached [6] - Energy stocks saw a broad increase, with ExxonMobil and Schlumberger rising over 2%, while Occidental Petroleum and ConocoPhillips increased by over 1% [5] - Bank stocks collectively rose, with Citigroup up nearly 2%, and both Bank of America and Wells Fargo up over 1% [4] - Airline stocks showed mixed results, with Delta Air Lines up over 2%, while Southwest Airlines and American Airlines fell by over 1% [6] - Semiconductor stocks mostly rose, with the Philadelphia Semiconductor Index up 1.26%. Notable gainers included GlobalFoundries up nearly 5% and ON Semiconductor up over 4% [6] Chinese Stocks - Chinese stocks listed in the US saw a slight decline, with the Nasdaq Golden Dragon China Index down 0.43%. Notable decliners included Hesai Technology down over 14% and Yatsen Holding down over 11% [8]

Group 1 - Investment Rating: Buy (Initiating Coverage) [1] - Core Viewpoint: The report analyzes the rapid rise of the Han Shu brand and how Shangmei Co., Ltd. is advancing towards a multi-brand strategy [7][8] - Revenue and Profit Growth: The company has achieved significant revenue and profit growth, with a projected revenue of 91.72 billion, 111.55 billion, and 134.07 billion yuan for 2025-2027, representing year-on-year growth of 35%, 22%, and 20% respectively [8] Group 2 - Market Data: As of March 23, 2026, the current price is HKD 58.40, with a total market capitalization of approximately 23.25 billion HKD [4] - Performance Relative to Hang Seng Index: Over the past 12 months, Shangmei Co., Ltd. has outperformed the Hang Seng Index with a 35% increase compared to the index's 2.9% increase [5] - Brand Matrix Formation: The company is forming a strong brand matrix with Han Shu as the leading brand, contributing significantly to revenue growth [20] Group 3 - Multi-Channel Strategy: The company has established a comprehensive multi-channel strategy, leveraging platforms like Douyin for marketing and sales [10][20] - Product Innovation: The introduction of new products like the Hong Man Yao series has driven brand upgrades and sales growth [38] - R&D Investment: The establishment of research centers and collaboration with scientists has enhanced product development and innovation capabilities [34]

Group 1: Industry Overview - The overall attention from institutions has seen a rebound, particularly in the pharmaceutical, building materials, and communication sectors [1][2] - Weekly, the total number of companies surveyed in the A-share market decreased, remaining significantly lower than the same period in 2025, indicating a continued low level of survey activity [11][18] - Monthly, the total number of companies surveyed in February 2026 also fell compared to January, with a total of 451 surveys conducted, down from 1305 in February 2025 [18][20] Group 2: Sector-Specific Insights - The pharmaceutical, building materials, and communication sectors experienced an increase in survey activity compared to the previous week, with notable rises in the number of surveys conducted [11][17] - In the last month, the electronic, mechanical equipment, pharmaceutical, basic chemicals, and electric power equipment sectors received the highest attention from institutions [18][21] Group 3: Individual Company Focus - Companies such as Fuirjia, Guangli Technology, and Changlan Technology have garnered significant market attention, with Fuirjia receiving 18 surveys in the last month, indicating strong interest in its dental repair materials and digital equipment [31][32] - Aidi Te, involved in dental repair materials and digital equipment, has seen a favorable market demand, with two surveys conducted last week, reflecting growing industry demand driven by increased patient visits and rising per capita spending on dental care [30]

Investment Rating - The report maintains a "Positive" outlook on the cosmetics and medical beauty industry, despite recent underperformance compared to the market [2][4]. Core Insights - The cosmetics and medical beauty sector has shown weaker performance than the market, with the Shenwan Beauty Care Index declining by 4.8% from March 13 to March 20, 2026, underperforming the Shenwan A Index by 0.7 percentage points [4][5]. - Upcoming earnings reports from key companies such as Lin Qingxuan and Shangmei will be critical for assessing market trends and performance [4][9]. - Notable company performances include: - Aimei Ke reported a revenue of 2.453 billion yuan for 2025, down 18.94% year-on-year, with a net profit of 1.291 billion yuan, down 34.05% [10]. - Juzi Biotechnology's revenue was 5.519 billion yuan, a slight decrease of 0.4%, with a net profit of 1.915 billion yuan, down 7.2% [10] [11]. Summary by Sections Industry Performance - The cosmetics and medical beauty sector is currently underperforming the market, with specific indices showing declines [4][5]. - The Shenwan Cosmetics Index fell by 3.4%, while the Shenwan Personal Care Index dropped by 4.4% [4]. Company Highlights - Aimei Ke's Q4 2025 revenue was 588 million yuan, down 9.61% year-on-year, with a net profit of 198 million yuan, down 46.85% [10]. - Juzi Biotechnology's effective skincare products generated 4.337 billion yuan in revenue, a 0.8% increase, while medical dressings saw a 4.8% decline [11]. Market Trends - The report highlights the importance of upcoming earnings disclosures from major companies, which are expected to provide insights into market recovery and performance [4][9]. - The overall retail sales of cosmetics in January-February 2026 grew by 4.5%, indicating a relative resilience in the beauty sector compared to the overall retail market [14]. E-commerce and Brand Performance - The report provides data on e-commerce performance, noting that domestic brands are gaining market share, with significant growth in GMV for brands like Shangmei [13]. - The report emphasizes the competitive landscape, with domestic brands increasingly challenging international players in market share [21][23].

Summary of Conference Call Notes Industry Overview: Northeast Retail - **Mid-to-High-End Consumer Recovery**: CR (China Resources) reported a year-on-year growth of over 10% in January and February, outperforming Q4. Luxury goods continue to see growth, indicating a positive trend in consumer spending [1] - **Sector Allocation**: With the earnings release period in March-April, consumer sectors may serve as a defensive play, as overall valuations are currently at a low level [2] Medical Aesthetics - **Profit Shift to End Institutions**: Companies such as AMK, Jinbo, and Haohai Medical Beauty reported earnings misses. The acceleration of product certifications has led to a deteriorating market competition landscape and price declines [3] - **Long-term Benchmarking**: The sector is being compared to South Korean companies with gross margins of 80% and net margins of 30%. Short-term focus is on Four Rings Pharmaceutical, which is expected to release new products, while the long-term profit chain is shifting downstream to end institutions [4] Cosmetics - **Negative News Already Priced In**: The leading companies in the sector have performed well during the March-April earnings period, with companies like Juzhibio and Shangmei meeting expectations. The 38 promotional event has seen low expectations and intensified competition already factored into prices [5] - **Future Market Concentration**: The market is expected to concentrate around leading brands, with valuations for brands like Mao Ge Ping and Ruo Yu Chen at 20-25x PE, while Shangmei, Juzhibio, Pola, and Linqingxuan are around 15x PE [6] Gold and Jewelry - **Negative Beta Industry Amid Price Fluctuations**: Data from January and February exceeded expectations, but companies like CHJ and ZDF are under pressure due to high base effects. Fluctuating gold prices are impacting wedding and self-gifting demands [7] - **Long-term Focus on VAT Benefiting Brands**: Brands such as Cai Bai and Hong Kong-listed brands are expected to benefit from VAT changes [8] Individual Company Updates - **Xirui**: The annual report may present a buying opportunity, as recent declines are attributed to rising oil prices and U.S. stagflation. The annual report will disclose current orders, and multiple new aircraft models in 2026 are expected to drive demand and support performance in 2026-2027, currently trading at 11x PE [9] - **Focus Technology**: Attention is on the commercialization pace of AI products on the buyer's side. The 2025 earnings are expected to meet forecasts, with a target of over 20% cash income recovery for China Manufacturing Network in 2026. The AI business is gradually improving [10]

Investment Rating - The report maintains an "Outperform" rating for Giant Biogene with a target price of HKD 36.20, implying a potential upside of 17.9% from the current price of HKD 30.70 [2][3]. Core Insights - The company’s 2025 results were broadly in line with expectations, with total revenue of RMB 5.52 billion, a slight decline of 0.4% year-on-year. The attributable net profit was RMB 1.91 billion, down 7.1% year-on-year, but exceeded estimates by 2.1% [4][15]. - Revenue for 2026 is projected to grow to RMB 6.06 billion, representing a year-on-year increase of 9.8%, with net profit expected to reach RMB 2.00 billion, reflecting a growth of 4.6% [3][14]. - The company is focusing on the commercialization of its medical aesthetics business, with two Class III medical device products approved and set to launch in 2026. This is expected to create a dual-growth engine alongside its skincare products [6][17]. Financial Performance - For 2025, the gross margin was 80.3%, down 1.8 percentage points year-on-year, while the net profit margin was 34.7% [4][15]. - The company’s revenue breakdown shows functional skincare products generated RMB 4.34 billion, a 0.8% increase year-on-year, while medical dressings fell to RMB 1.16 billion, a decline of 4.8% [4][15]. - The report highlights a healthy balance sheet with cash and cash equivalents of RMB 6.31 billion as of the end of 2025, and no interest-bearing debt [19]. Product Performance - The KomfyMed brand saw a slight revenue decline of 1.6% to RMB 4.47 billion, while the Collgene brand achieved a 9.2% increase to RMB 0.92 billion, driven by online channel expansion [5][16]. - The management has set clear targets for new product launches in 2026, including the Focus Series essence and Zhixu Series, with expectations for significant sales growth [8][18]. Market Outlook - The report anticipates that the company will return to growth in 2026, with a focus on new product performance and the medical aesthetics business as key drivers [3][14]. - The competitive landscape is noted to be intensifying, which may impact profit growth, leading to a revised P/E multiple of 17x for 2026 [3][14].

Investment Rating - The report maintains an "Outperform" rating for Giant Biogene with a target price of HKD 36.20, implying a potential upside of 17.9% from the current price of HKD 30.70 [2][3]. Core Insights - The company’s 2025 results were broadly in line with expectations, with total revenue of RMB 5.52 billion, a slight decline of 0.4% year-on-year. The attributable net profit was RMB 1.91 billion, down 7.1% year-on-year, but exceeded estimates by 2.1% [4][15]. - Revenue for 2026 is projected to grow to RMB 6.06 billion, representing a year-on-year increase of 9.8%, with attributable net profit expected to reach RMB 2.00 billion, reflecting a growth of 4.6% [3][14]. - The gross profit margin is expected to decline slightly from 80.3% in 2025 to 79.7% in 2026, while the net profit margin is projected to be 33.1% [10][14]. Financial Performance - The company achieved a gross margin of 80.3% in 2025, which was slightly below expectations, while the selling expense ratio was better than anticipated at 37.3% [4][15]. - Functional skincare products generated revenue of RMB 4.34 billion, growing 0.8% year-on-year, outperforming forecasts by 8.7%. In contrast, medical dressings saw a decline of 4.8% year-on-year to RMB 1.16 billion, falling short of projections by 21.6% [4][15][16]. Future Focus Areas - Key focus area 1 is the commercialization timeline and sales ramp-up of the medical aesthetics business, with two Class III medical device products approved and expected to launch in 2026. The company aims to leverage its network of approximately 4,700 hospitals and clinics [6][17]. - Key focus area 2 involves the sales performance of new products in 2026, particularly the Focus Series essence and the Zhixu Series. Management anticipates significant growth from these new launches, with specific sales targets set for the first year [8][18]. Balance Sheet and Dividends - As of the end of 2025, the company reported cash and cash equivalents of RMB 6.31 billion, a 56.5% increase year-on-year, with no interest-bearing debt. The total dividends declared for 2025 were RMB 1.29 billion, representing a payout ratio of approximately 67% [19].

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report highlights the launch of JD's cross-border e-commerce platform Joybuy in six European countries, marking a shift to comprehensive retail operations and emphasizing a self-operated model to enhance competitive differentiation [25][27] - The report suggests focusing on high-quality companies in sectors benefiting from emotional consumption themes, including gold jewelry, offline retail, cosmetics, and medical aesthetics [7][30][31] Industry Overview - The retail and social service indices reported a decline of 4.55% and 4.00% respectively during the week of March 16-20, 2026, with the retail index down 12.57% year-to-date [6][15] - The hotel and restaurant sector showed the smallest decline this week, while it has the highest growth year-to-date at 3.19% [18][20] Company-Specific Insights - Joybuy's self-operated model is expected to create a competitive edge through quality control and service reliability, with over 60 logistics warehouses established in Europe [27][28] - The report recommends several companies based on their growth potential: - **Old Puhuang**: Expected net profit growth of 226%-233% in 2025, driven by channel expansion and brand enhancement [32][41] - **Chao Hong Ji**: Anticipated net profit growth of 125%-175% in 2025, supported by differentiated product strength and multi-channel marketing [35] - **Mao Ge Ping**: Expected revenue growth of 31.3% in H1 2025, benefiting from its position as a high-end domestic cosmetics brand [35] - **Meili Tianyuan Medical Health**: Projected net profit growth of 34% in 2025, leveraging strong market positioning in high-end beauty [35] Market Dynamics - The report emphasizes the importance of adapting to consumer trends, with a focus on emotional value and innovative product safety in cosmetics and personal care [30][31] - Companies are encouraged to explore opportunities in the evolving landscape of cross-border e-commerce, particularly those with strong brand and supply chain capabilities [27][30]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The approval of the first type I recombinant collagen for medical aesthetics opens new growth opportunities for the company, with expectations for a performance recovery in 2026 [1] - The company reported a revenue of 55.2 billion yuan in 2025, a slight decrease of 0.4% year-on-year, and a net profit attributable to shareholders of 19.15 billion yuan, down 7.2% year-on-year [8] - The company has adjusted its profit forecasts for 2026-2027 due to increased industry competition and short-term impacts on sales, with net profits expected to be 19.8 billion yuan in 2026 and 22.7 billion yuan in 2027 [1] Financial Performance Summary - Revenue projections for 2024A to 2028E are as follows: 5,539 million yuan (2024A), 5,519 million yuan (2025A), 6,034 million yuan (2026E), 6,917 million yuan (2027E), and 8,292 million yuan (2028E) [1] - Net profit attributable to shareholders is projected to be 2,062 million yuan (2024A), 1,915 million yuan (2025A), 1,978 million yuan (2026E), 2,270 million yuan (2027E), and 2,658 million yuan (2028E) [1] - The company's earnings per share (EPS) is expected to be 1.93 yuan (2024A), 1.79 yuan (2025A), 1.85 yuan (2026E), 2.12 yuan (2027E), and 2.48 yuan (2028E) [1] - The current price-to-earnings (P/E) ratio is 14.10 for 2024A, 15.19 for 2025A, 14.70 for 2026E, 12.81 for 2027E, and 10.94 for 2028E [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The approval of the first type I recombinant collagen for medical aesthetics opens new growth opportunities for the company, with expectations for performance recovery in 2026 [1] - The company reported a total revenue of 55.19 billion yuan in 2025, a slight decrease of 0.37% year-on-year, and a net profit attributable to shareholders of 19.15 billion yuan, down 7.15% year-on-year [8] - The company has adjusted its profit forecasts for 2026 and 2027 downwards due to increased industry competition and short-term impacts on sales, with new profit estimates of 19.8 billion yuan and 22.7 billion yuan respectively [1] Financial Performance Summary - Revenue projections for the company are as follows: 2024A: 55.39 billion yuan, 2025A: 55.19 billion yuan, 2026E: 60.34 billion yuan, 2027E: 69.17 billion yuan, 2028E: 82.92 billion yuan [1] - Net profit projections are: 2024A: 20.62 billion yuan, 2025A: 19.15 billion yuan, 2026E: 19.78 billion yuan, 2027E: 22.70 billion yuan, 2028E: 26.58 billion yuan [1] - The company's earnings per share (EPS) are projected to be: 2024A: 1.93 yuan, 2025A: 1.79 yuan, 2026E: 1.85 yuan, 2027E: 2.12 yuan, 2028E: 2.48 yuan [1] - The price-to-earnings (P/E) ratios for the current price and latest diluted EPS are: 2024A: 14.10, 2025A: 15.19, 2026E: 14.70, 2027E: 12.81, 2028E: 10.94 [1]