Investment Rating - The report maintains an "Outperform" rating for the industry [4]. Core Insights - The report highlights the potential for valuation recovery in the home furnishing sector in Q4, with many companies currently at historical low valuations and attractive dividend yields, suggesting a timely opportunity for left-side positioning [3]. - The introduction of new HNB products by British American Tobacco (BAT) in European markets is expected to enhance market share, with a target of reaching 50 million consumers of smoke-free products by 2030 and transitioning to a smoke-free enterprise by 2035 [3]. Summary by Sections Home Furnishing - The report notes that in August, the residential construction area decreased by 28.4% year-on-year, while the sales area of residential properties saw a 10% decline [8]. - Despite the pressure on the real estate sector, the report emphasizes the opportunity for investment in home furnishing companies due to their low valuations and high dividend yields [8]. - Key companies to watch include leading brands in soft furnishings and custom furniture, such as Kuka Home, Sophia, and Oppein [8]. Paper and Packaging - As of September 19, 2025, the prices for various paper products showed mixed trends, with double glue paper at 4800 RMB/ton (down 18.75 RMB), while corrugated paper increased to 2791.25 RMB/ton (up 20 RMB) [8]. - The report suggests focusing on companies with strong supply chain management and fiber supply, such as Nine Dragons Paper and Sun Paper [8]. Light Industry Consumption - In August, sales of sanitary napkins on e-commerce platforms increased by 5.8% year-on-year, with the Nais Princess brand showing a significant growth of 41% [10]. - The report anticipates a boost in sales for personal care brands as the e-commerce sales season approaches, highlighting companies like Dengkang Oral Care and Steady Medical [10]. Export Chain - The report notes that the recent interest rate cut by the Federal Reserve may lead to improved demand in the U.S. real estate sector, positively impacting export-oriented home furnishing companies [10]. - Companies to monitor in the export chain include Zhongxin Co., Jiangxin Home, and Zhejiang Natural [10]. New Tobacco Products - The report discusses the launch of BAT's GLO HILO in several European markets, projecting a continued increase in market share for HNB products [10]. - It recommends focusing on companies that have established partnerships in the electronic cigarette and HNB product sectors, such as Smoore International [10].

Investment Rating - The investment rating for the company is "Buy" and is maintained [10]. Core Views - The company achieved revenue, net profit attributable to the parent, and net profit excluding non-recurring items of 842 million, 85 million, and 69 million yuan respectively in H1 2025, representing year-on-year growth of 20%, 18%, and 26% [2][6]. - In Q2 2025, the figures were 411 million, 42 million, and 34 million yuan, with year-on-year growth of 20%, 20%, and 24% [2][6]. - The company is expected to continue benefiting from product structure optimization and the rise of e-commerce, with strong sales performance anticipated for the new recombinant protein toothpaste in H2 [2][12]. Revenue Summary - Revenue from e-commerce channels grew significantly, while offline channels remained stable. In H1 2025, e-commerce and other revenues increased by 81% year-on-year, while offline revenue decreased by 1%, accounting for 39% and 61% of total revenue respectively [11]. - The adult toothpaste segment saw a 23% increase in revenue, while the adult toothbrush segment grew by 4%. Revenue from oral medical and beauty care products increased by 55% [11]. Profitability Summary - The company experienced improvements in product structure and increased investment in e-commerce, leading to a rise in gross sales and stable net profit margins. In Q2 2025, the gross profit margin improved by 4.2 percentage points year-on-year [11]. - The online and offline gross profit margins increased by 11.3 and 1.5 percentage points respectively in H1 2025 [11]. Product Development and Market Strategy - The company is focusing on the launch of new products, with the recombinant protein toothpaste expected to be promoted heavily in the second half of the year. The product is designed to aid in the repair of damaged teeth and gums [12]. - The company is leveraging the growth of e-commerce platforms, particularly Douyin, to enhance brand visibility and market share, with a significant portion of sales now coming from online channels [8][12]. Financial Forecast - The company is projected to achieve net profits attributable to the parent of 200 million, 260 million, and 330 million yuan for the years 2025, 2026, and 2027 respectively, with corresponding price-to-earnings ratios of 34, 27, and 21 times [12].

Summary of the Conference Call for Dengkang Oral Care Company Overview - Dengkang Oral Care is a leading enterprise in China's oral care industry, particularly dominant in the sensitive toothpaste segment with a market share exceeding 60% [2][4] - The company was established in 2001, evolving from a chemical factory founded in 1939, and has received numerous national and provincial honors [4] Financial Performance - In the first half of 2025, Dengkang's revenue grew nearly 20% year-on-year, with net profit attributable to shareholders increasing by 17.59% to 85 million yuan [2][8] - The company's gross margin improved to 52.61%, a rise of nearly 6 percentage points year-on-year, with e-commerce channel gross margins reaching 60% [2][9] Market Position - Dengkang holds over 60% market share in the sensitive toothpaste segment, ranking third overall in the market with aspirations to move to second place [2][7] - The company ranks second in adult and children's electric toothbrushes and first in children's electric dental care [7] Product and Brand Strategy - The product matrix includes toothpaste, toothbrushes, mouthwash, and oral antibacterial paste, segmented into adult and children's care [5] - Dengkang has launched multiple generations of sensitive toothpaste technology and is developing new products like recombinant protein toothpaste [2][11] E-commerce and Digital Strategy - E-commerce is a significant growth driver, with revenue exceeding 300 million yuan in the first half of 2025, achieving over 8 percentage points increase in gross margin [2][10] - The company has established a full-scenario digital marketing operation model to enhance management efficiency and cost optimization [3][14] Industry Insights - The overall Chinese oral care market is growing, driven by online sales, with an average compound growth rate of about 4% over the past four to five years, reaching a total scale of approximately 50 billion yuan [6] - Online retail sales in the first half of 2025 reached 9.3 billion yuan, a year-on-year increase of 15% [6] Future Development Plans - Dengkang plans to enhance its international strategy and increase equity investment over the next three years, aiming for significant growth [3][15] - The company is focused on high-quality development, innovation, and lean management to improve scale and sustainability [15] Marketing Innovations - The company has adopted an interest e-commerce model to strengthen marketing, successfully launching a new high-tech toothpaste with significant clinical validation [12] - Dengkang's unique county development model aims to build channel barriers in lower-tier cities while promoting group purchases and special channels [13] Conclusion - Dengkang Oral Care is positioned for robust growth with a strong market presence, innovative product development, and a strategic focus on digital transformation and international expansion [2][15]

Group 1: Financial Performance - The company's revenue in the first half of 2025 increased by 19.72% year-on-year, driven primarily by the performance of adult toothpaste and the growth of e-commerce channels [3][4] - Sales expenses grew by 44.89%, mainly directed towards enhancing e-commerce platform promotions, resulting in significant improvements in revenue scale and operational efficiency [3] - The gross margin of the e-commerce channel improved due to product structure optimization and operational efficiency enhancements [7] Group 2: Cost Reduction and Efficiency - The company is focused on cost reduction and efficiency improvement through strategies such as end-to-end collaboration, lean management, and data-driven decision-making [2][3] - Continuous implementation of cost reduction measures aims to create value for investors [2] Group 3: Product Development and Innovation - The company plans to enhance its product structure and iterate categories, transitioning from traditional toothpaste and toothbrushes to smart oral care products to increase overall customer value and profitability [4][5] - R&D expenditure remains stable at 3%-3.5%, focusing on three key technology areas: sensitivity solutions, modernization of traditional Chinese medicine applications, and smart innovations in electric oral care products [5][6] Group 4: Market Strategy and Growth - The company aims to develop four key business areas: oral care, smart oral care, oral medical, and innovative businesses, with a dynamic resource allocation strategy to support collaborative growth across these sectors [6] - The "7-Day Special Repair Toothpaste" is positioned as a high-end product, with plans to maintain growth momentum through enhanced online and offline channel integration [3][4] Group 5: Future Outlook and Shareholder Returns - The company is committed to a stable dividend policy, responding to regulatory calls for improved investor returns while ensuring sustainable profit distribution based on business performance [7] - The company anticipates continued growth in the oral medical and beauty care product lines, with a projected growth rate of 54.85% [5]

Core Viewpoint - The company, Dengkang Oral Care, reported a strong performance in the first half of 2025, focusing on brand development, channel expansion, technological innovation, supply chain optimization, and digital transformation, achieving significant revenue and profit growth [1][2]. Financial Performance - The company achieved a revenue of 842 million yuan, representing a year-on-year increase of 19.72% - The net profit attributable to shareholders was 85.1553 million yuan, up 17.59% year-on-year - The net profit after deducting non-recurring items was 69.3782 million yuan, reflecting a growth of 25.67% - The basic earnings per share stood at 0.49 yuan - The net cash flow from operating activities was 65.5439 million yuan, an increase of 22.86% [1]. Strategic Focus - The company adheres to the operational philosophy of "compliance, innovation, efficiency, and high quality," concentrating on four key areas: oral care, smart oral health, oral medical services, and innovative business - It employs six strategic approaches: high-end, professional, international, digital, lean, and capitalized to strengthen its core business and cultivate a second growth engine in smart oral health [1]. Product Portfolio - The company owns core brands such as "Dengkang" and "Lengsuangling," along with high-end and children's oral care brands, forming a comprehensive product matrix for various consumer demographics - The "Lengsuangling" brand has over 30 years of industry experience and is recognized as a leader in sensitive toothpaste, recently included in the first batch of "China Consumer Famous Brands" by the Ministry of Industry and Information Technology [2]. Product Development - The company completed several new product developments, including the "Yiyan 7-Day Repair Toothpaste" and various mid-to-high-end toothpaste products, significantly increasing the proportion of high-end toothpaste in its product lineup - The company has established a sensitive technology platform and deepened research on biomaterials to solidify its product matrix [2].

Investment Rating - The investment rating for the company is "Buy" with a maintained outlook [4][15]. Core Views - The report highlights strong growth in e-commerce and product upgrades, particularly for the "Cold Acid Spirit" brand, which shows significant brand momentum [2][6]. - The company achieved a revenue of 840 million yuan in the first half of 2025, representing a year-on-year increase of 19.7%, with a net profit of 85 million yuan, up 17.6% year-on-year [6][8]. - The report anticipates continued growth in net profit for 2025-2027, with expected figures of 200 million yuan, 260 million yuan, and 310 million yuan respectively, reflecting growth rates of 25.8%, 26.5%, and 21.0% [6][8]. Financial Data and Valuation - Projected revenue for 2023A is 1,376 million yuan, with a growth rate of 5%, increasing to 2,485 million yuan by 2027E, with a growth rate of 16% [3][8]. - Net profit is expected to grow from 141 million yuan in 2023A to 310 million yuan in 2027E, with a growth rate of 5% in 2023A and 21% in 2027E [3][8]. - Earnings per share (EPS) is projected to rise from 0.82 yuan in 2023A to 1.80 yuan in 2027E, with a corresponding decrease in price-to-earnings (P/E) ratio from 54.0 to 24.6 over the same period [3][8]. Product and Channel Performance - The company has seen significant growth in its product categories, with adult toothpaste and electric oral care products showing year-on-year increases of 23% and 54.9% respectively in H1 2025 [6][8]. - E-commerce sales have surged by 86.6% in H1 2025, contributing to a 36% share of total sales, indicating a successful channel strategy [6][8]. - The overall gross margin improved to 52.6% in H1 2025, up 5.7 percentage points year-on-year, driven by product upgrades and effective marketing strategies [6][8].

Core Viewpoint - The article emphasizes the transformation in the new consumption era, particularly in the beauty and personal care sectors, driven by product innovation and emotional value consumption, contrasting with the previous era dominated by traffic dividends [2][3]. Group 1: New Consumption Trends - The new consumption wave is characterized by structural product innovation rather than traffic-driven growth, with a focus on emotional value and unique product offerings to meet evolving consumer demands [2][4]. - The beauty sector is experiencing continuous iteration of collagen components, while daily chemical products are upgrading in functionality and emotional appeal, exemplified by products like Zhenjia fragrance laundry detergent and Cold Acid Spirit toothpaste [2][4]. Group 2: Channel and Media Evolution - New channels and media are accelerating product innovation and market penetration, with platforms like Douyin facilitating product testing and brand exposure [3][4]. - Retail formats such as membership stores and warehouse supermarkets are playing a crucial role in product development and consumer engagement, helping brands refine their offerings before broader market launches [3]. Group 3: Opportunities in Traditional Industries - There is a notable trend of product innovation within traditional industries such as daily chemicals, personal care, health products, beauty, snacks, and more, as companies adapt to new consumer needs and market dynamics [4]. - Established brands are facing challenges in responding to rapid market changes, providing opportunities for new brands to leverage insights for product differentiation and market share growth [4].

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage in the market [5][41]. Core Views - The company is recognized as a leading domestic brand in the oral care industry, with strong brand momentum and a focus on high-quality products [5][14]. - The report highlights the company's robust growth potential driven by its innovative product lines and expanding e-commerce channels, which are expected to enhance profitability [10][16]. Summary by Sections Company Overview - The company specializes in the research, production, and sales of oral care products, including well-known brands like "Cold Acid Spirit" and "Beilele" [7][14]. - It aims to provide effective oral health solutions through a diversified product strategy that includes adult toothpaste, toothbrushes, electric toothbrushes, and children's oral care products [7][14]. Financial Performance - The company is projected to achieve revenues of RMB 18.6 billion, RMB 21.9 billion, and RMB 25.5 billion from 2025 to 2027, with year-on-year growth rates of 19.3%, 17.5%, and 16.5% respectively [6][41]. - The net profit attributable to shareholders is expected to reach RMB 2.0 billion, RMB 2.5 billion, and RMB 3.0 billion during the same period, with growth rates of 25.5%, 22.0%, and 20.9% respectively [8][41]. Market Position and Competitive Advantage - The company has established a multi-channel marketing system that includes distribution, direct supply, and e-commerce, enhancing its market reach and operational efficiency [25][28]. - It has built a strong brand matrix, particularly with its core brand "Cold Acid Spirit," which holds over 60% market share in the sensitive toothpaste segment [30][34]. Product Development and Innovation - The company is committed to increasing its R&D investment, focusing on both independent and collaborative innovation to maintain its industry-leading position [34][40]. - It has a robust pipeline of new products aimed at addressing various consumer needs, including sensitivity, whitening, and orthodontic care [38][40]. Valuation and Comparables - The current price-to-earnings (P/E) ratios for the company are projected to be 39, 32, and 26 for the years 2025, 2026, and 2027 respectively, compared to an average of 45 for comparable companies in the personal care sector [41][43].

Investment Rating - The report gives a "Strong Buy" investment rating for the company [1][7]. Core Views - The company is expected to achieve net profits of 202 million, 253 million, and 322 million yuan for the years 2025 to 2027, corresponding to PE ratios of 37x, 29x, and 23x respectively. The company's product demand is stabilizing, effectiveness is being enhanced, and e-commerce is increasing product prices. The company has strong offline channel barriers and smooth e-commerce expansion [1][7]. Financial Data and Valuation - Total revenue (in million yuan) is projected to grow from 1376 in 2023 to 2819 in 2027, with year-on-year growth rates of 5%, 13%, 20%, 22%, and 23% respectively [2]. - Operating profit (in million yuan) is expected to increase from 147 in 2023 to 373 in 2027, with year-on-year growth rates of 2%, 27%, 25%, 26%, and 27% respectively [2]. - Net profit attributable to shareholders (in million yuan) is forecasted to rise from 141 in 2023 to 322 in 2027, with year-on-year growth rates of 5%, 14%, 25%, 26%, and 27% respectively [8]. Company Overview - The company has a total share capital of 172 million shares and a market capitalization of 7.5 billion yuan. The current stock price is 43.33 yuan, with a net asset value per share of 8.7 yuan and a return on equity (ROE) of 11.2% [3][8]. Sales and Product Strategy - The company has successfully created a high-end product, "7 Days Repair," which has driven sales acceleration and product structure optimization. The e-commerce strategy has shifted to focus on high-end products, with significant growth in sales through platforms like Douyin [7][14]. - The "7 Days Repair" product is priced at 39.9 yuan, which is about double the price of traditional products, and has gained significant market share on e-commerce platforms [21][47]. Management and R&D - The company has a strong management team with extensive industry experience, which has allowed it to adapt to market changes effectively. The R&D investment remains stable at 3-3.5% of revenue, positioning the company well for future product launches [50][51][53]. - The company is focusing on a comprehensive channel layout, with a solid offline presence and proactive engagement in e-commerce, particularly on platforms like Douyin [55].

Group 1 - The report highlights the emergence of new consumer demands driven by generational changes, with the Z generation becoming the main consumer force, leading to a restructuring of the competitive landscape in the consumer goods sector [3][5][11] - The growth of domestic brands is emphasized, particularly in categories such as personal care, pet products, and home goods, where companies like Baiya Co., Ltd. and Dengkang Oral Care are gaining market share through innovative products and effective marketing strategies [5][19][24] - The report identifies significant opportunities in the AI-driven product categories, such as AI mattresses and AI glasses, which are expected to see high growth in the medium to long term [5][19][29] Group 2 - The housing market is projected to stabilize, with policies encouraging home upgrades and replacements, which will drive demand for home goods, particularly in the AI mattress segment [6][9] - The packaging industry is undergoing a global supply chain restructuring, leading to accelerated consolidation and improved profitability for leading companies [7][10] - The report notes that the export sector is expected to see a reduction in the impact of tariff policies, allowing for better growth prospects in overseas markets [10][19] Group 3 - The report discusses the rise of IP-derived products, particularly in the emotional consumption space, where younger consumers are increasingly drawn to products that fulfill social and emotional needs [34][37][43] - Companies like Bluku and Chengyuan Co., Ltd. are highlighted for their innovative approaches in the IP toy market, leveraging strong brand partnerships and diverse product offerings to capture market share [44][49][56] - The report emphasizes the importance of digital marketing and e-commerce strategies in driving sales for companies in the consumer goods sector, particularly in the context of changing consumer behaviors [50][52][61]