Core Insights - The entry of new players like JD Health into the medical beauty sector is expected to drive industry standardization and growth, addressing existing issues such as unclear pricing and unqualified practitioners [1][6][10] Group 1: JD Health's Strategy - JD Health opened its first self-operated medical beauty store in Beijing, achieving over 3,000 orders since its pre-sale in September [1] - The company aims to leverage its supply chain advantages to provide transparent pricing and quality services, although some users find its prices not significantly lower than competitors [3][5] - JD Health plans to expand its offline medical beauty market by establishing a subsidiary and applying for the "JD Medical Beauty" trademark [3][5] Group 2: Industry Landscape - The medical beauty industry in China is currently fragmented, dominated by small private institutions, with no major players yet established [6] - The market is projected to reach a scale of 381.6 billion yuan by 2025, driven by increasing consumer demand and a projected annual growth rate of 10% to 15% [6] - New entrants like JD Health and SoYoung are shifting from being intermediaries to establishing their own offline chains, indicating a potential industry transformation [5][10] Group 3: Challenges and Opportunities - The medical beauty sector faces challenges such as high operational costs and regulatory hurdles, which can slow down the establishment of new stores [7][9] - The industry has been plagued by issues like counterfeit products and unqualified practitioners, highlighting the need for larger companies to enter and enforce standards [8][9] - Recent regulatory changes aim to standardize pricing and improve transparency, which could enhance consumer trust and drive market growth [9][10]

Group 1 - The domestic medical beauty industry is experiencing intensified competition, leading to the accelerated arrival of the "affordable medical beauty" era [1] - JD Health officially opened its first self-operated medical beauty store, JD Medical Beauty (Beijing Guomao Store), on October 15, with over 3,000 orders sold since the pre-sale began in September, and all service slots for October fully booked [1] - JD Health entered the medical beauty sector in July this year, adding a medical beauty department to its health check-up center, aiming to address pain points in the traditional medical beauty industry such as unclear drug and device sources, incomplete qualifications of medical staff, aggressive sales tactics, and price transparency [1] Group 2 - JD Medical Beauty emphasizes user satisfaction and repurchase rates as key performance indicators (KPIs) for its medical team, rather than sales figures, and commits to transparent pricing without aggressive sales tactics [1] - The medical beauty product market is facing profit compression, leading to a general decline in performance among leading medical beauty product manufacturers and chain medical beauty institutions in the first half of the year [2]

Group 1 - The domestic medical beauty industry is experiencing intensified competition, leading to the accelerated arrival of the "affordable medical beauty" era [1] - JD Health opened its first self-operated medical beauty store, JD Medical Beauty (Beijing Guomao Store), on October 15, with over 3,000 orders sold since the pre-sale began in September, and all service slots for October are fully booked [1] - JD Health began its foray into the medical beauty sector in July this year, adding a medical beauty department to its health check-up center [1] Group 2 - JD Medical Beauty aims to address pain points in the traditional medical beauty industry, such as unclear sources of drugs and devices, incomplete qualifications of medical staff, aggressive sales tactics, and price transparency [1] - The company does not assess its medical staff based on sales performance but rather on user satisfaction and repurchase rates, with a commitment to transparent pricing and no aggressive sales tactics [1] - The medical beauty industry is facing challenges, with leading medical beauty product manufacturers experiencing a decline in performance in the first half of the year, impacting the performance of chain medical beauty institutions [2]

Core Insights - JD Medical Beauty has opened its first self-operated independent store, JD Medical Beauty (Guomao Store), which has quickly gained popularity, selling over 3,000 orders since its pre-sale in September and fully booking service slots for October [1][5] Group 1: Service Model - The traditional medical beauty industry faces issues such as unclear sources of drugs and devices, incomplete qualifications of medical staff, aggressive sales tactics, and price opacity, which have deterred many consumers [1] - JD Medical Beauty addresses these pain points by leveraging JD Health's strong supply chain capabilities and healthcare service resources, establishing four service pillars: selected drugs and devices, certified physicians, rejection of sales tactics, and transparent pricing [1][3] Group 2: Quality Control - The store adheres to a "streamlined projects, only select premium" principle, sourcing the latest and most effective medical beauty projects globally, with all instruments and drugs coming from reputable manufacturers and supporting full traceability [3] - All doctors at JD Medical Beauty are experienced licensed practitioners who undergo rigorous assessments and regular training to ensure their skills are aligned with industry advancements [3] Group 3: Customer Experience - JD Medical Beauty has changed the traditional sales-driven model by not using sales volume as a KPI for medical staff, instead focusing on customer satisfaction and repurchase rates [3] - The pricing of medical beauty projects is uniformly displayed across JD APP, JD Medical Beauty WeChat Mini Program, and offline stores, eliminating the common practice of online low-price bait and high in-store upselling [3][5] Group 4: Promotional Strategy - To encourage more consumers to experience its services, JD Medical Beauty is offering a 300 yuan no-threshold opening gift voucher, valid for 24 hours after claiming, with limited availability [5] - The company is committed to a user-centered service philosophy, aiming to provide safe, transparent, worry-free, and effective medical beauty services [5]

Investment Rating - The report assigns a positive outlook on Beauty Farm Medical and Health Industry, indicating a strong potential for growth following the acquisition of Siyanli [1][5]. Core Insights - The acquisition of Siyanli for RMB 1.25 billion is a strategic move to enhance Beauty Farm's market position in the premium beauty sector, consolidating its leadership alongside Narui'er and Siyanli [1][10]. - The transaction structure includes a mix of cash, acquisition loans, and share issuance, ensuring financial stability and effective integration of Siyanli's operations [2][9]. - The merger is expected to significantly increase the number of stores in key urban areas, enhancing market share and operational synergies [3][10]. - The integration of Siyanli's customer base and resources is projected to boost overall membership and revenue potential, particularly in high-end commercial properties [4][11]. - Siyanli's valuation is attractive, with a lower P/E ratio compared to Beauty Farm and the industry average, providing a margin of safety for investors [5][12]. Summary by Sections Acquisition Details - Beauty Farm announced the acquisition of 100% equity in Siyanli for RMB 1.25 billion, marking a key step in its growth strategy [1][8]. - The acquisition is financed through a combination of internal cash, bank loans, and share issuance, with a total cash consideration of approximately RMB 840 million [2][9]. Market Position - The acquisition will increase Beauty Farm's store network from 552 to 734, solidifying its position as a leader in China's high-end beauty services market [3][10]. - The top 20 core cities contribute about 40% of the beauty services market, with significant revenue generated from first-tier cities [3][10]. Integration and Synergies - The merger is expected to enhance competitive advantages by integrating three leading brands and increasing coverage in high-end commercial properties [4][11]. - The addition of Siyanli's 60,000 members will increase the overall member base by 44%, facilitating cross-selling opportunities [4][11]. Financial Impact - Siyanli's valuation at 14.8x LTM P/E is significantly lower than Beauty Farm's 29.5x, indicating a favorable investment opportunity [5][12]. - The acquisition is anticipated to replicate the successful integration of Narui'er, with potential for improved operational efficiency and profitability [5][14].

Investment Rating - The report gives a "Buy" rating for the cosmetics and medical beauty industry, particularly highlighting the potential of specific companies like Water Sheep Co., Ltd. [13] Core Insights - The cosmetics and medical beauty sector has underperformed the market recently, with the Shenwan Beauty Care Index rising by 1.3% from September 29 to October 10, 2025, which is lower than the overall market performance [3][4] - The upcoming Tmall Double 11 event is expected to boost sales, with domestic brands actively participating with competitive discounts [8] - Water Sheep Co., Ltd. is identified as a leading technology-driven beauty company, with stable revenue projections and improving profit margins [9][10] Summary by Sections Industry Performance - The cosmetics and medical beauty sector has shown weaker performance compared to the market, with the Shenwan Cosmetics Index increasing by 1.2%, lagging behind the Shenwan A Index by 0.4 percentage points [3][4] - The top-performing stocks in the sector include Jiaheng Home Care (+35.0%), Yiyi Co., Ltd. (+18.6%), and Yanjing Co., Ltd. (+15.6%) [5] Upcoming Events - Tmall's Double 11 sales event is set to begin on October 15, 2025, with major domestic brands like Proya and Maogeping expected to participate actively [8] Company Focus: Water Sheep Co., Ltd. - Water Sheep Co., Ltd. has a dual business model of proprietary and CP agency brands, with projected revenues stabilizing between 4 to 5 billion yuan from 2021 to 2024 [9] - The company is expected to achieve net profits of 258 million, 331 million, and 398 million yuan for the years 2025, 2026, and 2027, respectively, reflecting significant growth [10][13] Market Trends - The overall retail sales of cosmetics in August 2025 grew by 5.1%, indicating a recovery in consumer demand [17] - The domestic market is seeing a shift in market share, with local brands gaining ground against international competitors [25] E-commerce Insights - Data shows that domestic brands are performing well on platforms like Douyin and Tmall, with significant growth in GMV for brands like Proya and Maogeping [14][15] Company Developments - Proya has filed for an IPO in Hong Kong, with stable revenue growth and a strong online presence [19] - The report highlights the strategic moves of various companies, including partnerships and new product launches, to enhance their market positions [24][23]

Core Insights - The "double festival" period has transformed the interaction between Hong Kong and Shenzhen into a deep integration of commercial ecosystems and innovation factors, moving beyond mere shopping and tourism [1][5][6] Group 1: Consumer Trends - During the recent "double festival," over 500,000 visitors from Hong Kong flocked to Huaqiangbei, making it a top destination for cross-border consumption [2] - The integration of technology, food, culture, and trendy experiences in Huaqiangbei has created an immersive holiday experience, shifting consumer behavior from casual browsing to deep engagement [2] - The rise of cross-border medical beauty services in Huaqiangbei is attracting more Hong Kong residents due to lower prices and tailored treatment plans [3] Group 2: Business Opportunities - Many entrepreneurs from Huaqiangbei are taking advantage of the holiday to explore business opportunities in Hong Kong, participating in various exhibitions and creative salons [4] - The trend of "vacation-style business expansion" is becoming common among Shenzhen entrepreneurs, who are combining leisure with market research and networking [4] Group 3: Long-term Collaboration - The frequent two-way flow of people during the "double festival" is fostering a deeper resonance of innovation elements, commercial culture, and urban spirit between Shenzhen and Hong Kong [5][6] - The collaboration between Hong Kong and Shenzhen is characterized by a symbiotic ecosystem, where different innovation entities and resources support each other, enhancing the region's resilience and vitality [5] - The ongoing cross-border interaction is expected to convert short-term consumer activity into sustained collaborative engagement, strengthening long-term cooperation between the two cities [6]

Core Points - The South Korean government has implemented a visa-free entry policy for Chinese group tourists starting from September 29 until June 30 of the following year, allowing groups of three or more to stay for 15 days [1][2] - The policy aims to boost tourism during the Chinese National Day holiday and is expected to have a significant economic impact, as each additional 1 million Chinese tourists can increase South Korea's GDP by 0.08 percentage points [2][10] - The interest in traveling to South Korea has increased among Chinese tourists, with a reported 152.2% year-on-year increase in group participation during the holiday period [3] Visa Policy and Economic Impact - The visa-free policy is limited to group tours, while individual travelers still need to apply for a visa, which may reduce its attractiveness compared to other destinations like Singapore and Thailand [2] - The South Korean government aims to attract 5.36 million Chinese tourists this year, highlighting the economic importance of Chinese visitors to South Korea [2][10] - The tourism sector in South Korea is relatively small, contributing about 3% to the GDP, indicating potential for growth in this area [10] Industry Response - Travel agencies in Guangdong have reported a 40% increase in inquiries for trips to South Korea following the announcement of the visa-free policy, with a shift in demand towards diverse experiences [3][4] - South Korean retailers and the tourism industry are preparing for the influx of Chinese tourists by hiring Chinese-speaking staff and enhancing services, such as mobile payment options [4][5] - The policy is seen as a reciprocal gesture to China's unilateral visa-free policy for South Korean tourists, which has already led to a significant increase in visitors to China [5][6] Market Trends - There is a growing trend among Chinese tourists towards personalized and in-depth travel experiences, which may limit the effectiveness of the group tour visa-free policy [6][7] - The competitive landscape in the Asia-Pacific region poses challenges for South Korea, necessitating a focus on value propositions such as cultural experiences and convenient services [8] - The overall increase in Chinese tourist numbers to South Korea has been notable, with a 16.8% rise in visitors from January to July compared to the previous year [9]

Core Viewpoint - Huachuang Securities reports that Meili Tianyuan Medical Health (02373) is a leading company in the domestic beauty and medical beauty service sector, with a strong brand reputation and operational capabilities. The company is expected to see performance growth due to deepening digital transformation, improved industry chain layout, and store expansion [1] Financial Overview - For the first half of 2025, the company reported revenue of 1.46 billion (up 28% year-on-year) and a net profit attributable to shareholders of 160 million (up 35%). Adjusted net profit reached 190 million (up 38%) [2] - The gross margin was 49.3% (up 2 percentage points), and the net margin was 11.7% (up 0.6 percentage points). The expense ratios for sales, management, and R&D were 17.2%, 16.2%, and 1.4%, respectively [2] Business Segmentation - Revenue breakdown: 55% from beauty services (51% from direct stores and 5% from franchises), 34% from medical beauty, and 11% from sub-health services. - Beauty services generated 810 million (up 30%) with a gross margin of 42.1% (up 2 percentage points) [3] - Medical beauty services generated 500 million (up 13%) with a gross margin of 56.9% (up 2 percentage points) [3] - Sub-health services generated 150 million (up 108%) with a gross margin of 63.1% (up 9 percentage points) [3] Operational Data - The company continues to expand its brand influence, with stable growth in store and membership numbers. - Beauty: 238 direct stores (down 1 from the end of 2024) and 276 franchise stores (unchanged), with membership increasing by 46% to 112,000 [4] - Medical beauty: 27 stores (down 1) [4] - Sub-health: 11 stores (unchanged) [4] Digital Transformation and Supply Chain - The company is accelerating its digital transformation by building online capabilities for customers, business, and organization, enhancing operational efficiency and customer service experience. Additionally, it is investing in upstream supply chains to ensure stable supply and cost advantages for core products [5] Team and Service Innovation - The core management and technical team remains stable, providing strong support for the company's development. The company continues to innovate in services by launching new beauty, medical beauty, and sub-health adjustment projects to meet diverse consumer needs, with a focus on expanding store presence in first- and second-tier cities [6]

Core Viewpoint - Meili Tianyuan Medical Health (02373) is a leading company in the domestic beauty and medical beauty service sector, with strong brand reputation and operational capabilities. The company is expected to see performance growth driven by deepening digital transformation, improved industry chain layout, and store expansion [1] Financial Overview - For the first half of 2025, the company reported revenue of 1.46 billion (up 28% year-on-year) and a net profit attributable to shareholders of 160 million (up 35%). Adjusted net profit reached 190 million (up 38%) [2] - The gross margin was 49.3% (up 2 percentage points), and the net margin was 11.7% (up 0.6 percentage points). The expense ratios for sales, management, and R&D were 17.2%, 16.2%, and 1.4%, respectively [2] Business Segmentation - Revenue breakdown: 55% from beauty services (51% from direct stores and 5% from franchises), 34% from medical beauty, and 11% from sub-health services. - Beauty services generated 810 million (up 30%) with a gross margin of 42.1% (up 2 percentage points) [3] - Medical beauty services generated 500 million (up 13%) with a gross margin of 56.9% (up 2 percentage points) [3] - Sub-health services generated 150 million (up 108%) with a gross margin of 63.1% (up 9 percentage points) [3] Operational Data - The company continues to expand its brand influence, with stable growth in store and membership numbers. - Beauty: 238 direct stores (down 1 from the end of 2024) and 276 franchise stores (unchanged), with membership increasing by 46% to 112,000 [4] - Medical beauty: 27 stores (down 1) [4] - Sub-health: 11 stores (unchanged) [4] Strategic Initiatives - The company is accelerating its digital transformation, enhancing online capabilities for customers, business, and organization to improve operational efficiency and customer service experience [5] - The company is also investing in upstream supply chains to ensure stable supply and cost advantages for core products and consumables, laying a solid foundation for long-term business development [5] Team and Innovation - The core management and technical teams remain stable, providing strong support for the company's development. The company continues to innovate in services, launching new beauty, medical beauty, and sub-health adjustment projects to meet diverse consumer needs [6] - Store expansion is focused on increasing presence in first- and second-tier cities to broaden market coverage [6]