Group 1 - The company plans to list on the Hong Kong stock exchange, which is a key step in its global development strategy, providing funding to support supply chain and brand expansion, as well as facilitating overseas acquisitions and enhancing global brand image and recognition [1] - The company experienced short-term performance pressure in Q3 due to adjustment periods and promotional activities, with Q3 revenue at 1.736 billion, down 11.63%, and net profit at 227 million, down 23.64% [2] - Despite the short-term challenges, the company expects a sequential improvement in Q4, maintaining stable overall operations for the year, with projected net profits of 1.6 billion and 1.79 billion for 2025 and 2026, respectively, corresponding to PE ratios of 18x and 16x [3] Group 2 - In Q3, the company's gross margin was 74.68%, up 4 percentage points, driven by product mix optimization and cost reduction efforts, including lower freight rates and improved procurement negotiation capabilities [2] - The sales expense ratio in Q3 was 49.91%, up 4.5 percentage points, attributed to the early promotional activities for the Double 11 shopping festival and increased brand promotion expenses [2] - The company is currently in a steady adjustment phase, focusing on improving operational performance after the adjustment period [3]

Core Viewpoint - Proya, a leading Chinese beauty brand, has submitted an application for H-share listing on the Hong Kong Stock Exchange after eight years of being listed on A-shares, despite facing challenges such as declining net profits [1][10]. Company Development - Proya was founded in 2003 by Hou Junchen and his brother-in-law Fang Youyou, launching its first brand in 2006 [2]. - The company went public on the Shanghai Stock Exchange in 2017, marking a significant milestone in its growth trajectory [2]. - Proya has expanded its brand portfolio from a single brand to multiple brands, including Proya, Yefuti, Kuirufu, Caitang, Yuansheng Bota, and Off&Relax, with four key brands projected to exceed 500 million yuan in retail sales by 2024 [2][3]. Market Position - Proya ranked 15th among domestic cosmetics groups in 2019, became the largest domestic cosmetics group in 2021, and is projected to rank 5th in 2024, maintaining its position as the top domestic cosmetics group for four consecutive years [3]. - In 2024, Proya became the first Chinese cosmetics group to surpass 10 billion yuan in sales revenue [3]. Sales Channels - The rapid growth in Proya's retail sales is attributed to its focus on online sales channels, which accounted for over 90% of revenue since 2022, reaching 95.4% in the first half of 2024 [4]. - Online direct sales made up 75.5% of total online revenue, while online distribution accounted for 19.6% [4]. Financial Performance - In Q3 2023, Proya reported revenue of 1.736 billion yuan, a year-on-year decline of 11.63%, with net profit dropping by 22.30% [14][15]. - The company's stock price has been on a downward trend, with a decline of over 12% since the beginning of the year [10]. Leadership Transition - In September 2024, Hou Yameng, born in 1988, succeeded Fang Youyou as the general manager, marking a generational shift in leadership [9]. - Under Hou Yameng's leadership, Proya aims to implement a "Double Ten" strategy to enter the top ten global cosmetics companies within the next decade [9]. IPO Objectives - Proya's H-share IPO aims to enhance global brand visibility, attract international investors, and support its international expansion strategy [16]. - The funds raised will be allocated to R&D, brand building, and digital transformation initiatives [16].

Core Viewpoint - Proya, a leading Chinese cosmetics company, has submitted an application for a listing on the Hong Kong Stock Exchange, aiming to become the first domestic beauty brand to achieve an "A+H" share listing, amidst increasing competition in the domestic beauty market [1][5]. Financial Performance - In the first half of 2025, Proya's main brand generated revenue of 3.979 billion yuan, a slight decrease of 0.08% year-on-year. Despite overall revenue and net profit growth in the first three quarters of this year, the growth rates have dropped to single digits, with both metrics showing a year-on-year decline in the third quarter [1][7]. - Proya's revenue for 2022, 2023, and 2024 was 6.385 billion yuan, 8.905 billion yuan, and 10.778 billion yuan, respectively, while net profit for the same years was 817 million yuan, 1.194 billion yuan, and 1.552 billion yuan [6]. Market Position and Strategy - Proya's stock price has decreased by 13.30% from the beginning of the year to November 4, 2023, with an average price-to-earnings ratio of 21.21 times, compared to significant increases in the stock prices of other beauty companies listed in Hong Kong [1]. - The company is focusing on a multi-brand strategy, with significant revenue growth from brands like Caitang (21.11% increase), Yuanshe Bota (80.18% increase), and Off&Relax (102.52% increase) in the first half of 2025 [7]. Research and Development - Proya has prioritized "research and product innovation" as the primary use of funds raised from the Hong Kong listing, aiming to enhance its research capabilities to overcome growth bottlenecks [9]. - Research and development expenses from 2022 to 2025 have been 128 million yuan, 174 million yuan, 210 million yuan, and 95 million yuan, representing 2%, 1.95%, 1.95%, and 1.77% of revenue, respectively [9]. Management Changes and Internationalization - Proya has undergone significant management changes since the second generation took over, with new appointments aimed at injecting fresh energy into the company and accelerating its internationalization strategy [11][12]. - The company has introduced a "Double Ten Strategy," aiming to rank among the top ten global cosmetics companies in the next decade, which reflects its ambition to transition from mere scale growth to becoming a strong industry benchmark [13].

Core Viewpoint - Proya, a leading beauty brand with annual revenue exceeding 10 billion, is seeking to list on the Hong Kong Stock Exchange, aiming to become the first beauty company with both A and H shares amid a slowing domestic market and increasing competition [1] Group 1: Financial Performance - Proya's main brand experienced its first negative growth in five years, with revenue of 3.979 billion in the first half of 2025, a slight decline of 0.08% year-on-year [3] - For the first three quarters of 2025, Proya's revenue reached 7.098 billion, with a net profit of 1.026 billion, showing only 1.89% and 2.65% growth respectively, significantly slowing compared to the same period in 2024 [2] - The company's sales expenses from 2022 to the first three quarters of 2025 totaled 15.443 billion, while R&D expenses were only 654 million, indicating a sales-to-R&D expense ratio of 23.61 times [6] Group 2: Brand and Market Dynamics - The revenue share of Proya's main brand has been declining, from 82.74% in 2022 to 74.27% in the first half of 2025, raising concerns about its competitive strength [3] - Proya has been implementing a multi-brand strategy, with significant growth in its sub-brands, such as a 21.11% increase in the彩棠 brand and a 102.52% surge in Off&Relax, but these brands still account for less than 25% of total revenue [3] - The company heavily relies on online sales, with 95.39% of revenue coming from online channels in the first half of 2025, but it faced a decline in customer numbers on major platforms like Tmall and Vipshop [3][4] Group 3: Management and Strategic Changes - Proya's management team has undergone significant changes since the second generation took over in 2024, with multiple high-level positions being filled by individuals with international backgrounds from major beauty companies [7][8] - The company announced a substantial cash dividend of 315 million, representing nearly 40% of its net profit for the first half of 2025, raising questions about the necessity of seeking additional financing through the Hong Kong listing [7]

Core Insights - The company experienced slight pressure on performance during the third quarter due to the seasonal downturn, with revenue for the first three quarters of 2025 reaching 7.098 billion, a year-on-year increase of 1.89%, and net profit attributable to shareholders at 1.026 billion, a year-on-year increase of 2.65% [1] Financial Performance - In Q3 alone, the company reported revenue of 1.736 billion, a year-on-year decrease of 11.63%, and net profit attributable to shareholders of 227 million, a year-on-year decrease of 23.64% [1] - The decline in Q3 performance is attributed to the pre-promotion expenses for the Double 11 shopping festival, which affected the company's financials [1] Brand and Channel Analysis - The main brand, Pechoin, saw a single-digit decline in revenue for the first three quarters, while the ROI on Tmall and Douyin platforms was 3.2 and 2.5, respectively, with return rates of 38% and 35% [2] - The brand Caitang experienced double-digit revenue growth, with Tmall and Douyin ROI at 2 and 1.7, respectively [2] - The brand OR saw revenue more than double, while the brand Yuefuti had single-digit growth, and the brand Yuanshi Bota approached double growth [2] - Online revenue growth was low single-digit, maintaining the same proportion of total revenue as in the first half of the year, while offline revenue saw a high double-digit decline [2] Margin and Cost Structure - In Q3 2025, the gross margin was 74.68%, an increase of 3.96 percentage points year-on-year, while the net margin was 13.19%, a decrease of 2.01 percentage points year-on-year [3] - The increase in gross margin is attributed to category structure optimization and cost reduction measures, including lower freight rates and improved procurement negotiation capabilities [3] - The company increased its promotional expenses due to the early timing of the Double 11 event, leading to a narrowing of the gross profit margin by 0.54 percentage points [3] Operational Efficiency - The inventory turnover days for Q1-Q3 2025 were 119 days, a decrease of 10 days year-on-year, while accounts receivable turnover days increased by 4 days to 16 days [3] - The company continues to optimize inventory management, contributing to the reduction in inventory turnover days [3] - The operating cash flow for Q3 2025 was -95 million, a year-on-year increase of 63.25% [3]

Investment Rating - The investment rating for the company is "Outperform the Market" [6][4][20] Core Views - The company's Q3 performance faced pressure due to seasonal factors and increased marketing expenses ahead of the Double 11 shopping festival, but it maintains a strong long-term growth outlook through strategic adjustments and brand positioning [1][4] - The main brand, Proya, continues to lead in sales on major platforms, indicating strong market presence despite short-term challenges [1][4] - The company has submitted an application for listing H shares on the Hong Kong Stock Exchange, which could enhance its capital structure and market reach [1] Financial Performance Summary - For the first three quarters of 2025, the company achieved revenue of 7.098 billion, a year-on-year increase of 1.89%, and a net profit of 1.026 billion, up 2.65% year-on-year [1] - In Q3 alone, revenue was 1.736 billion, down 11.63% year-on-year, with net profit decreasing by 23.64% to 227 million [1] - The gross margin for Q3 was 74.68%, an increase of 3.96 percentage points year-on-year, while the net margin was 13.19%, a decrease of 2.01 percentage points [3] Brand and Channel Performance - The main brand Proya saw a slight decline in revenue, while sub-brands like Caitang and OR experienced double-digit growth [2] - Online revenue growth was low single digits, while offline revenue saw a high double-digit decline [2] Cost and Efficiency Metrics - The company has optimized its cost structure, leading to improved gross margins despite increased marketing expenses [3] - Inventory turnover days decreased to 119 days, a reduction of 10 days year-on-year, indicating better inventory management [3] Future Earnings Forecast - The forecast for net profit for 2025-2027 has been slightly adjusted downwards to 1.644 billion, 1.751 billion, and 1.835 billion respectively, reflecting increased marketing investments [4][5] - The projected PE ratios for the same period are 18, 17, and 17 times [4]

Core Insights - The company reported a total revenue of 53.56 billion yuan for the first half of 2025, reflecting a year-on-year increase of 7.24% compared to 2024 and 21.09% compared to 2023 [1] Channel Breakdown - Online revenue reached 51.09 billion yuan, showing a growth of 9.17% year-on-year from 2024 and 23.68% from 2023, with a significant contribution of 95.39% to total revenue [1] - Offline revenue was only 2.47 billion yuan, which represents a decline of 21.49% compared to 2024 and 13.63% compared to 2023 [1] Brand Performance - Revenue from various brands in the first half of 2025 included: - Proya: 39.79 billion yuan - Caitang: 7.05 billion yuan - OR: 2.79 billion yuan - Yuefuti: 1.66 billion yuan - Original Pot: 0.97 billion yuan [4] - By product category, skincare (including cleansing) generated 41.99 billion yuan, color cosmetics brought in 8.37 billion yuan, and hair care products accounted for 3.2 billion yuan [4]

Core Viewpoint - Proya has reported strong financial performance with 2024 revenue exceeding 10 billion yuan for the first time, reaching 10.778 billion yuan, and a net profit growth of 30% year-on-year [1][2] Financial Performance - In Q1 2025, Proya achieved revenue of 2.36 billion yuan, representing an 8.1% year-on-year increase, with a net profit of 390 million yuan [1] - The 2024 revenue of Proya was 8.581 billion yuan, showing a year-on-year growth of 19.55% [2] - The main brand Proya generated 8.58 billion yuan in revenue, accounting for 79.7% of total revenue, with a year-on-year growth of 19.6% [3] Management Changes - The management transition marked a strategic shift for the company, with co-founder Fang Yu-you stepping down as general manager, succeeded by his nephew Hou Ya-meng [2] - Despite the leadership change, Proya aims to establish itself among the top ten global cosmetics companies in the next decade [2] Brand and Product Development - Proya has diversified its brand portfolio, including popular skincare and makeup brands, with significant growth in sub-brands like Off&Relax and Cai Tang [3] - The company has accelerated product launches in 2025, introducing several new products within five months [5] Sales and Marketing Strategy - Proya's online sales reached 10.234 billion yuan, accounting for 95.06% of total revenue, while offline sales decreased by 13.63% to 532 million yuan [3] - The company has invested heavily in marketing, with sales expenses amounting to 5.161 billion yuan, representing 47.88% of revenue, and an increase of 29.93% year-on-year [4] Research and Development - Proya has established R&D centers in multiple locations and formed a joint venture for core anti-aging ingredients, although R&D expenses remain below 2% of revenue [5]

Core Insights - The Chinese beauty brand Proya has achieved its first 10 billion yuan revenue milestone, with total revenue reaching 10.778 billion yuan in 2024, marking a year-on-year growth of approximately 21% [1][3] - Proya's net profit attributable to shareholders for 2024 was 1.552 billion yuan, reflecting a year-on-year increase of 30% [1] - The brand's online sales channel remains dominant, contributing 95% to total revenue, although high marketing expenses associated with this channel are putting pressure on profit margins [1][7] Revenue and Profit Growth - Proya's total revenue for 2024 was 10.778 billion yuan, a 21.04% increase compared to the previous year, but this growth rate has significantly declined from 39.45% in 2023 [3] - The core brand Proya generated 8.581 billion yuan in revenue, up 19.55%, which is a notable decrease from the previous years' growth rates of around 36% [3] Brand Strategy and Product Development - Proya is intentionally reducing the core brand's contribution to overall revenue, with its share decreasing from 82.74% in 2022 to 79.69% in 2024 [5] - The company is focusing on the sunscreen category, launching new products and appointing Liu Yifei as the global spokesperson for its sunscreen line [5] - The color cosmetics brand Caitang has become the second-largest revenue source, generating 1.191 billion yuan, but its growth has sharply declined from previous years [6] Online Sales Performance - Proya's online sales reached 10.234 billion yuan in 2024, a year-on-year increase of 23.68%, with online sales accounting for an increasing proportion of total revenue [7] - The brand's flagship store on Tmall achieved the highest sales in the beauty category, indicating strong online performance [7] Marketing and Expenses - Proya's sales expenses for 2024 were 5.161 billion yuan, representing 47.88% of total revenue, an increase from 44.61% the previous year [8] - Marketing expenses rose significantly, with promotional costs increasing by 30.22% year-on-year [8] - Despite revenue growth, Proya's sales net profit margin was 14.71%, only slightly up from the previous year, indicating challenges in profitability [8]