Core Insights - The overall performance of the consumer sector is under pressure, with major beauty brands facing growth challenges, while Shanghai Jahwa has reported its most encouraging financial results in recent years [1] - In the first half of the year, Shanghai Jahwa achieved revenue of 3.48 billion yuan, a year-on-year increase of 4.8%, and a net profit of 270 million yuan, up 11.7%, marking the first dual growth in these metrics since Q2 2022 [1] - The second quarter showed even more impressive results, with revenue growth of 25.4%, domestic online channel growth of 34.6%, and beauty product revenue growth of 55.7% [1] Group 1: Strategic Shifts - The company has shifted its core growth engine from channels to brand value, implementing four key focus measures: focusing on core brands, brand building, online channels, and efficiency [2] - This strategic adjustment reflects a response to the fragmented nature of the current market, where brand value and emotional connection have become more significant than channel convenience [3] - The brand-driven approach aims to capture consumer mindshare, facilitating cross-channel growth and enhancing profitability [3] Group 2: Brand Strategy and Innovation - Shanghai Jahwa is deepening its brand strategy by identifying differentiated value across its brands, employing a combination of niche category breakthroughs, strategic flagship products, and marketing innovation [4] - Key brands like Liushen and Yuze are focusing on specific market segments, with Liushen launching an upgraded portable mosquito repellent product that quickly became a top seller on Tmall, indicating its potential as a billion-level flagship product [4] - Yuze is concentrating on skin barrier repair, launching a second-generation cream that utilizes artemisia extract, achieving double-digit growth that outpaces the brand's overall performance [4] Group 3: Marketing and Brand Development - Other brands within Shanghai Jahwa are also clarifying their category strategies, such as Baihua Ji returning to its roots with a focus on traditional Chinese beauty products [5] - The company is enhancing its marketing innovation to appeal to younger consumers, exemplified by Liushen's creation of a brand-specific festival to strengthen consumer connection [6] - This comprehensive approach aims to establish a sustainable growth path by anchoring consumer perception, building barriers, and driving sales across the product matrix [6]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) with a target price of 27.07 CNY [1][6] Core Views - The company has shown rapid revenue growth in Q2, with a year-on-year increase of 25% and a significant profit increase of 367%, driven primarily by online sales channels [9] - The company is focusing on core brands and innovation in niche markets, with successful new product launches receiving positive market feedback [9] - The company’s operational quality is improving, as indicated by a decrease in inventory turnover days and accounts receivable turnover days, along with a 40% increase in net cash from operating activities [9] - Despite challenges in overseas business, there is an expectation of gradual improvement in the second half of the year due to easing trade tensions and optimization in product and marketing strategies [9] Financial Forecast and Investment Recommendations - The earnings per share (EPS) forecast for 2025-2027 has been raised to 0.50, 0.72, and 0.94 CNY respectively, up from previous estimates of 0.48, 0.69, and 0.89 CNY [6][10] - The company’s DCF target valuation remains at 27.07 CNY, supporting the "Accumulate" rating [6][10] - Revenue projections for 2025-2027 are 6,302 million, 6,886 million, and 7,484 million CNY, reflecting a recovery trajectory after a challenging 2024 [7][10]