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].

Investment Rating - The report maintains a "Buy" rating for the company, with a current price of HKD 30.70 and a fair value estimate of HKD 33.66 [4][9]. Core Insights - The company's performance is under short-term pressure, but there is optimism regarding the long-term value of its collagen products due to ongoing restructuring efforts [1][9]. - In 2025, the company reported revenue of RMB 55.2 billion, a slight decline of 0.4% year-on-year, and a net profit of RMB 19.1 billion, down 7.2% year-on-year [9][10]. - The report highlights a competitive industry landscape and changes in product structure that have led to a decrease in gross margin by 1.8 percentage points to 80.3% [9][10]. Financial Projections - Revenue is projected to grow from RMB 6.07 billion in 2026 to RMB 7.89 billion in 2028, with growth rates of 10.0%, 13.1%, and 14.9% respectively [2][10]. - The net profit is expected to increase from RMB 19.8 billion in 2026 to RMB 23.9 billion in 2028, with growth rates of 4%, 9%, and 11% respectively [10][11]. - The report anticipates a decline in overall gross margin to around 78%-79% during 2026-2028 due to a shift in product mix [10][11]. Business Segment Analysis - The efficacy skincare segment generated revenue of RMB 43.4 billion in 2025, showing a slight increase of 0.8% year-on-year, driven by enhanced marketing efforts [9][10]. - The medical beauty dressing segment saw revenue of RMB 11.6 billion, down 4.8% year-on-year, primarily due to price maintenance and channel sales control [9][10]. - Brand performance varied, with "可复美" (Kefumei) revenue declining by 1.6% to RMB 44.7 billion, while "可丽金" (Kelin) revenue increased by 9.2% to RMB 9.2 billion, benefiting from online channel expansion [9][10]. Channel Performance - Online direct-to-consumer (DTC) sales reached RMB 34.0 billion, down 5%, while e-commerce platform direct sales increased by 35% to RMB 5.1 billion [9][10]. - Offline direct sales grew by 32% to RMB 2.2 billion, supported by an increase in the number of cosmetic chain stores [9][10]. - Revenue from distributors decreased by 2% to RMB 13.8 billion due to pricing and channel management pressures [9][10]. Investment Recommendations - The company is in a critical phase of product matrix upgrade and channel structure optimization, with short-term performance adjustments expected to be absorbed [10][11]. - The report suggests that with the launch of new medical beauty products and improved online channel efficiency, the company is likely to return to a growth trajectory by 2026 [10][11].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has reported its 2025 annual performance, achieving revenue of 5.519 billion yuan, a year-on-year decrease of 0.4%, and a net profit attributable to shareholders of 1.915 billion yuan, down 7.2% year-on-year [2] - The company plans to distribute a total dividend of 1.2104 yuan per share, amounting to approximately 1.29 billion yuan [2] - The company is expected to return to a growth trend in 2026, driven by new product launches and improved channel structures [8] Revenue Summary - In 2025, the company's revenue was 5.519 billion yuan, with a breakdown by product category showing functional skincare products at 4.337 billion yuan (+0.8% YoY), medical dressings at 1.16 billion yuan (-4.8% YoY), and health food and others at 0.22 billion yuan (+17.9% YoY) [3] - By brand, revenue from Kefu Mei was 4.47 billion yuan (-1.6% YoY), Keli Jin at 0.918 billion yuan (+9.2% YoY), and others at 0.22 billion yuan (+17.9% YoY) [3] - Revenue by channel showed DTC online sales at 3.402 billion yuan (-5.2% YoY), e-commerce platform sales at 0.509 billion yuan (+34.8% YoY), offline sales at 0.225 billion yuan (+32.3% YoY), and distribution at 1.383 billion yuan (-1.5% YoY) [3] Profitability Summary - The company's gross margin for 2025 was 80.34%, a decrease of 1.76 percentage points year-on-year, with a net profit margin of 34.70%, down 2.52 percentage points year-on-year [4] - The company’s operating expenses ratio for 2025 was 41.92%, an increase of 1.02 percentage points year-on-year, with significant increases in sales expenses [5] Product and Channel Development - The company is focusing on product development and channel construction to drive high-quality brand growth, with plans to launch new products and expand into new markets [6][7] - The company is enhancing its online operations and expanding its offline store presence, including entry into overseas markets such as Singapore and Malaysia [7] Financial Forecast - The company forecasts revenues of 6.113 billion yuan, 6.932 billion yuan, and 7.821 billion yuan for 2026, 2027, and 2028 respectively, with net profits of 1.950 billion yuan, 2.139 billion yuan, and 2.334 billion yuan for the same years [8][10] - The expected earnings per share (EPS) for 2026, 2027, and 2028 are 1.82 yuan, 2.00 yuan, and 2.18 yuan respectively, with corresponding price-to-earnings (PE) ratios of 16, 14, and 13 [8][10]

Core Viewpoint - The company is experiencing steady growth in revenue and net profit, with a focus on cost control and the performance of key products and new launches [1][2]. Group 1: Financial Performance - In H1 2025, the company reported revenue of 31.13 billion RMB, a year-on-year increase of 22.5%, and a net profit attributable to shareholders of 11.82 billion RMB, up 20.2% [1]. - The adjusted net profit for H1 2025 was 12.05 billion RMB, reflecting a 17.4% year-on-year growth [1]. - The gross margin for H1 2025 was 81.7%, a decrease of 0.7 percentage points year-on-year, primarily due to changes in product mix and an increase in the proportion of skincare products [1]. Group 2: Cost Management - The company has effectively controlled expenses, with sales expense ratio, management expense ratio, and R&D expense ratio at 34%, 2.7%, and 1.3% respectively, showing a decrease of 1.1, an increase of 0.1, and a decrease of 0.6 percentage points year-on-year [1]. - The net profit margin for H1 2025 was 38%, down 0.6 percentage points year-on-year, but the gross sales difference improved year-on-year [1]. Group 3: Product Development and Market Performance - The company launched the upgraded Collagen Stick 2.0 under its main brand, which focuses on basal membrane barrier repair and achieved top sales during the 618 shopping festival [3]. - The company is focusing on new product launches, including the Rejuvenation Series and the Star Cream, which continue to perform well in the market [3]. - The DTC online direct sales channel and e-commerce platform sales saw significant growth, with revenue of 18.16 billion RMB and 3.91 billion RMB respectively, reflecting year-on-year increases of 13% and 134% [2].