Core Insights - Shanghai Jahwa held its 2024 annual shareholder meeting on June 25, where management discussed strategic direction, operational philosophy, brand development, and channel reform [1] - CEO Lin Xiaohai expressed that the company's performance over the past year "basically met expectations" and emphasized the importance of operational capability moving forward [1] Strategic Focus - The company is deepening its "Four Focuses" strategy, which includes focusing on core brands, brand building, online presence, and efficiency [2] - Lin Xiaohai highlighted that the strategic transformation is showing initial results, with brands undergoing rebranding and repositioning [2] - The Yuze brand has strengthened its collaboration with renowned hospitals, leading to comprehensive upgrades in brand image and product offerings [2] - The Six God brand has introduced a new slogan to promote a "refreshing culture," targeting younger consumers [2] - The company has categorized its brands into three tiers for differentiated resource allocation, with Six God and Yuze in the top tier [2] Performance and Growth - The company's major brands achieved double-digit growth across online channels during the 618 shopping festival, attributed to organizational optimization and strategic focus [3] - Lin Xiaohai indicated that the organization is entering a "deep water zone" of reform, with a focus on enhancing operational capabilities and brand investment [4] - The company aims for double-digit revenue growth by 2025, which is positioned as a pivotal year for brand development and competitive advantage [4]

Investment Rating - The report maintains a "Positive" investment rating for the beauty industry [3] Core Insights - The beauty industry is experiencing stable growth, with a notable performance in the collagen restructuring segment [1][5] - The overall revenue growth for the cosmetics sector has shown slight improvement, with a year-on-year increase of 3.1% in Q1 2025, recovering from previous negative growth [12][19] - The average revenue growth for the cosmetics industry is projected to be 8% in 2024, followed by a decline to -5% in Q1 2025, indicating a trend of increasing differentiation among brands [19] Summary by Sections Cosmetics - The cosmetics industry has shown a steady growth rate, with Q1 2025 marking a recovery from three consecutive quarters of negative growth [12] - Online sales channels, particularly Tmall and Douyin, have seen significant growth, with a combined increase of 17% in Q1 2025 [12] - The average revenue growth for brands has been more resilient compared to upstream and downstream segments, with mid-sized brands like Marubi and Runben achieving good growth despite a generally weak market [19] Medical Beauty - The medical beauty sector has seen a convergence in revenue, while the collagen restructuring segment continues to maintain high growth rates [1][5] Revenue and Profitability - The average revenue growth for the cosmetics industry has been declining, with a notable differentiation in performance among brands [19] - The average gross margin for the brand segment has slightly increased, attributed to improved business structure and price control measures [20] Product Innovation - Brands are focusing on upgrading main product lines and expanding functional categories, particularly in sun protection and whitening, with increased competition expected [25] - New product launches include significant upgrades in major brands like Proya and Bethany, focusing on whitening and sun protection [24][25] Expenses and Profit Margins - The average sales expense ratio for brands has increased, reflecting heightened competition and rising platform costs [26] - The gross profit margin has generally decreased across the industry, although leading brands like Proya have managed to improve their margins through effective cost management [26][35] R&D and Management Expenses - There is a trend of increasing R&D investment among leading brands, with a shift towards foundational research [45] - Management expense ratios have shown a divergence, with leading companies optimizing their expenses while others have seen increases due to business adjustments [45]

Investment Rating - The report maintains a "Buy" rating for Shanghai Jahwa, indicating an expected stock price increase of over 15% compared to the benchmark index [4]. Core Views - The company reported a net profit of 2.17 billion yuan in Q1 2025, marking a turnaround from losses in the previous quarter, despite a 10.59% year-on-year decline in revenue [1][2]. - The company is undergoing strategic adjustments, including brand upgrades and channel optimization, which are expected to enhance profitability in the future [2][4]. Financial Performance Summary - In 2024, the company achieved revenue of 56.79 billion yuan, a year-on-year decrease of 13.93%, with a net profit of -8.33 billion yuan [1]. - For Q1 2025, revenue was 17.04 billion yuan, down 10.59% year-on-year, but the net profit showed a recovery to 2.17 billion yuan [1]. - The gross margin for Q1 2025 was 63.4%, with a net margin of 12.75% [1]. Business Segment Analysis - Personal care segment revenue in 2024 was 23.79 billion yuan, down 3.42% year-on-year, with a gross margin of 63.59% [2]. - The beauty segment saw a significant decline in revenue, down 29.81% to 10.50 billion yuan, but maintained a gross margin of 69.67% [2]. - The overseas business generated 14.15 billion yuan in revenue, a decrease of 11.43% year-on-year, with a gross margin of 48.32% [2]. Employee Stock Ownership Plan - The company announced an employee stock ownership plan aiming to raise up to 77.51 million yuan, with a share price set at 16.03 yuan per share [3]. - The plan includes participation from key executives and middle management, reflecting long-term confidence in the company's recovery [3]. Profit Forecast - The company is projected to achieve net profits of 3.42 billion yuan, 4.64 billion yuan, and 5.24 billion yuan for the years 2025, 2026, and 2027, respectively [4]. - The expected earnings per share (EPS) for the same years are 0.51 yuan, 0.69 yuan, and 0.78 yuan, with corresponding price-to-earnings ratios of 44x, 33x, and 29x [4].