Core Insights - The beauty industry in China is experiencing significant changes, with a focus on high-end fragrance brands, domestic beauty brands' performance, and the integration of science and global strategies in the market [2][3][4][5][6][7]. Industry Environment - Douyin e-commerce has revitalized the perception of "Chinese good ingredients," showcasing natural components from local brands and enhancing consumer trust through expert endorsements and interactive marketing [3]. High-End Fragrance Market - The fragrance category is witnessing growth despite overall market pressures, with projections indicating the Chinese perfume market will reach 24.9 billion yuan by 2025 and exceed 33.9 billion yuan by 2028, reflecting a compound annual growth rate of 8% [4]. Domestic Beauty Brands Performance - In the first half of 2025, the domestic beauty market grew by 3.1%, with leading brands like Proya achieving 5.36 billion yuan in revenue, while others like Huaxi Biological faced challenges [5]. Globalization and Scientific Innovation - The second half of the domestic beauty market is expected to focus on scientific advancements, segmentation of consumer scenarios, and globalization strategies [7]. Medical Beauty and Cosmetic Integration - The medical beauty sector is projected to grow at a compound annual growth rate of 10%-15% from 2024 to 2027, with brands increasingly merging beauty and medical aesthetics to meet consumer demands for comprehensive care [10]. E-commerce and Brand Strategies - E-commerce operators in the beauty sector are facing challenges, with only one company, Ruoyu Chen, showing significant growth amidst a broader industry slowdown [14]. New Product Launches and Brand Collaborations - Major brands like L'Oréal are expanding into the fragrance market with new high-end products, while emerging brands like Huaxizi are innovating in skincare with a focus on traditional Chinese medicine [16][17]. Market Trends and Consumer Behavior - The beauty market is seeing a shift towards affordable and effective products, with brands needing to adapt to changing consumer preferences and the competitive landscape [12][25].

Investment Rating - The report maintains a "Positive" outlook on the beauty and personal care industry, highlighting the resilience of domestic brands and the impact of new consumption trends [2]. Core Insights - The beauty and personal care sector experienced a robust recovery in H1 2025, with a retail sales growth of 2.9%, reversing the previous decline due to favorable consumption policies and improved income expectations [5][6]. - Domestic brands are gaining market share, with top local brands now competing closely with international counterparts, indicating a significant shift in consumer preferences [10][11]. - The report categorizes companies into three groups based on performance: those with strong brand matrices benefiting from multi-brand strategies, those capitalizing on consumer trends like domestic brands and collagen products, and those showing signs of strategic improvement [20][23]. Summary by Sections Industry Overview - The beauty market is projected to grow steadily, with a forecasted retail sales decline of 1.1% in 2024, followed by a recovery in H2 2025 [5][6]. - The domestic market share is expected to increase, with local brands achieving significant breakthroughs in both skincare and makeup segments [10][11]. Company Performance - **Cosmetics Sector**: - Major companies like Up Beauty and Proya reported revenue growth of 17.3% and 7.2% respectively in H1 2025, with net profits increasing by 30.6% and 13.8% [20][21]. - Other notable performers include Marubi and Water Sheep, with revenue growth of 30.8% and 9.0% respectively [21][22]. - **Personal Care Sector**: - Companies like Ruibin and Zhenjia showed remarkable growth, with Ruibin's revenue increasing by 67.6% and Zhenjia's by 157.11% in H1 2025 [5][20]. - **Medical Aesthetics Sector**: - Companies like Aimeike and Langzi reported mixed results, with Aimeike's revenue declining by 21.6% while Langzi's net profit surged by 64.1% [20][24]. Investment Recommendations - The report recommends investing in companies with strong brand matrices and low PE multiples, such as Up Beauty and Proya, as well as those benefiting from the Douyin traffic boost like Marubi and Water Sheep [20][24]. - It also suggests focusing on high-value segments and innovative products from brands like Ruibin and Furuida, and highlights opportunities in the maternal and infant sector with companies like Shengbeila and Haiziwang [20][24].

Group 1 - The overall performance of domestic beauty and skincare companies in the first half of 2025 remains stable, with Proya and Shiseido maintaining their positions as industry leaders, while Juzhibio leads in profit [1][2] - Proya's main brand shows a slight decline, indicating a near ceiling for single-brand growth in the domestic market, while Maogeping has entered the top five, representing the high-end trend in domestic beauty [2][10] - The financial performance of major companies shows varied results, with Proya reporting revenue of 5.362 billion yuan (up 7.21%), Shiseido at 4.108 billion yuan (up 17.30%), and Juzhibio at 3.113 billion yuan (up 22.50%) [3][4] Group 2 - Juzhibio's profit reached 1.182 billion yuan, a 20.60% increase, while Proya's profit was 799 million yuan (up 13.80%) and Maogeping's profit was 670 million yuan (up 36.10%) [5][6] - The beauty industry is facing challenges with brand positioning and organizational restructuring, particularly for established companies like Huaxi Biological and Beitaini, which have seen significant declines in performance [25][30] - Maogeping has successfully expanded into high-end skincare and fragrance markets, with a focus on diversifying its business to reduce reliance on single products [20][23] Group 3 - The emergence of new active ingredients, such as ergothioneine, is gaining attention in the beauty industry, with companies investing in research and development to innovate [39][42] - Marketing strategies are shifting towards brand strength and celebrity endorsements, with companies like Proya and Marubi actively engaging high-profile brand ambassadors [51][53] - Companies are increasingly focusing on building comprehensive sales channels that integrate online and offline strategies, as well as domestic and international markets, to adapt to changing consumer behaviors [58][60]

Core Viewpoint - The performance of various domestic beauty brands in the first half of the year shows a mixed picture, with some brands experiencing growth while others struggle with declining revenues and profits as the industry faces intensified competition and the end of the traffic dividend era [1][3][5]. Financial Performance - Up to now, several domestic beauty brands have reported their half-year results, with Proya, Shangmei, Mao Geping, and Shuiyang showing increases in both revenue and net profit [1]. - Shangmei's revenue reached 4.108 billion yuan, a year-on-year increase of 17.3%, with a net profit of 524 million yuan, up 30.65% [3]. - Mao Geping reported revenue of 2.588 billion yuan, a 31.3% increase, and a net profit of 670 million yuan, up 36.1% [3]. - Shuiyang's revenue was 2.5 billion yuan, growing 9.02%, with a net profit of 123 million yuan, up 16.54% [3]. - Proya's revenue was 5.362 billion yuan, a 7.21% increase, and a net profit of 799 million yuan, up 13.8%, but growth rates have slowed compared to previous years [3][4]. - Conversely, Beitaini and Yixian E-commerce continue to face growth challenges, with Beitaini's revenue down 15.43% to 2.372 billion yuan and net profit down 49.01% to 247 million yuan [4][5]. Strategic Adjustments - Beitaini is focusing on strategic adjustments and operational optimization, emphasizing high-value products and quality growth, which has led to improved gross margins and cash flow despite short-term revenue impacts [4][5]. - Yixian E-commerce is pursuing a strategic transformation driven by innovation, aiming to enhance product competitiveness through collaborative innovation among multiple brands [4][5]. - Proya is adopting a multi-brand strategy, acquiring various brands to strengthen its market position, including cosmetic brands and medical supplies [5][6]. Market Trends - The domestic beauty industry is witnessing a shift from high marketing-driven growth to a focus on strategic brand positioning and international expansion as the traffic dividend diminishes [5][9]. - Brands are increasingly looking for overseas growth opportunities, with Proya planning to issue H-shares for international expansion and Beitaini establishing regional headquarters in Thailand [9][10]. - Water Sheep is also pursuing a high-end transformation by acquiring luxury brands to enhance its market presence [6][10]. Competitive Landscape - The beauty industry is facing intensified competition, with brands needing to adapt to changing consumer behaviors and market dynamics [5][9]. - The low-price competition strategy adopted by Shangmei has raised concerns about its long-term sustainability as consumer rationality increases [7][9]. - Experts suggest that domestic beauty brands must enhance their brand structure and user value to compete effectively on a global scale [10].

Investment Rating - The investment rating for the company is "Buy" with a forecasted stock price increase of over 15% relative to the industry index in the next six months [4][16]. Core Insights - The company has maintained steady operations in the first half of 2025, with significant growth in the 彩棠 and OR brands, compensating for a slowdown in the 珀莱雅 brand [1]. - The company reported a revenue of 5.362 billion yuan in the first half of 2025, representing a year-on-year growth of 7.21%, and a net profit of 799 million yuan, up 13.80% year-on-year [1]. - The gross margin for the first half of 2025 was 73.38%, an increase of 3.56 percentage points year-on-year, while the net profit margin rose slightly to 15.41% [2]. Financial Performance Summary - **Revenue Growth**: The company’s revenue is projected to grow from 8.905 billion yuan in 2023 to 14.903 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 12.4% [1]. - **Net Profit**: The net profit is expected to increase from 1.194 billion yuan in 2023 to 2.248 billion yuan in 2027, with a CAGR of about 13.0% [1]. - **Earnings Per Share (EPS)**: The EPS is forecasted to rise from 3.01 yuan in 2023 to 5.67 yuan in 2027 [1]. - **Valuation Ratios**: The price-to-earnings (P/E) ratio is expected to decrease from 27.0 in 2023 to 14.4 in 2027, indicating improving valuation over time [1]. Strategic Initiatives - The company is committed to implementing its 6*N strategy, focusing on enhancing product capabilities and responding flexibly to market changes [3]. - It aims to strengthen its core product matrix and brand vitality while exploring overseas opportunities and expanding its market presence [3]. - The company is building a self-driven agile organization to support its brand portfolio, which includes various skincare and makeup brands [3].

Core Insights - The beauty industry in China is experiencing a significant performance divergence among leading companies, with a notable emphasis on quality improvement amidst a deep industry adjustment [1][2]. Group 1: Industry Performance - In the first half of 2025, retail sales of cosmetics in China increased by 2.9% year-on-year, with domestic brands capturing over 55% market share [2]. - Exports of cosmetics surged by 12% to 25.8 billion yuan, indicating strong overseas growth potential [2]. Group 2: Leading Companies - Leading companies like Proya, Mao Geping, and Shangmei continue to excel, while others like Huaxi Biological and Fulejia are lagging behind [2]. - Proya reported revenue of 5.362 billion yuan, a 7.21% increase, and a net profit of 799 million yuan, up 13.8% [4]. - Mao Geping achieved a revenue of 2.588 billion yuan, with a remarkable growth rate of 31.3%, and a net profit of 670 million yuan, reflecting a 36.1% increase [5]. - Shangmei's revenue reached 4.108 billion yuan, growing by 17.3%, with a net profit of 556 million yuan, up 34.7% [5]. - Juzhi Biological reported revenue of 3.113 billion yuan, a 22.5% increase, and a net profit of 1.182 billion yuan, up 20.2% [5]. Group 3: Underperforming Companies - Huaxi Biological reported a significant decline, with revenue dropping nearly 19.57% to 2.261 billion yuan and net profit falling 35.38% to 221 million yuan [6]. - Fulejia's revenue decreased by 8.15% to 863 million yuan, with a net profit decline of 32.54% to 230 million yuan, largely due to increased marketing expenses [9][11]. Group 4: Second-Tier Companies - Second-tier companies like Shanghai Jahwa, Marubi, and Shuiyang are showing improved performance [13]. - Shanghai Jahwa's revenue was 3.478 billion yuan, up 4.8%, with a net profit of 270 million yuan, increasing by 11.7% [14]. - Marubi achieved revenue of 1.769 billion yuan, a 30.83% increase, but net profit growth was only 5.21% [14]. - Shuiyang reported revenue of 2.5 billion yuan, a 9.02% increase, and a net profit of 123 million yuan, up 16.54% [14].

Core Viewpoint - The beauty industry in China is experiencing a significant performance divergence among leading companies, with a notable increase in quality, as evidenced by the half-year reports of domestic beauty brands [2]. Group 1: Leading Companies Performance - Leading beauty companies such as Proya, Mao Geping, and Shangmei continue to outperform, while Huaxi Biological and Fulejia are lagging behind [2][4]. - Proya reported a revenue of 5.362 billion yuan, a year-on-year increase of 7.21%, and a net profit of 799 million yuan, up 13.8%. However, its main brand experienced a slight revenue decline of 0.08% [5][6]. - Mao Geping, known as the "first stock of high-end domestic beauty," achieved a revenue of 2.588 billion yuan, with a net profit of 670 million yuan, both showing over 30% growth. The gross margin reached 84.2% [6]. - Shangmei's revenue was 4.108 billion yuan, growing 17.3%, with a net profit of 556 million yuan, up 34.7%. The "newpage" brand saw a revenue increase of 146.5% [6][7]. - Juzhi Biological reported a revenue of 3.113 billion yuan, a 22.5% increase, and a net profit of 1.182 billion yuan, up 20.2%, although growth rates have slowed compared to the previous year [7]. Group 2: Underperforming Companies - Huaxi Biological, referred to as the "first stock of hyaluronic acid," reported a revenue decline of 19.57% to 2.261 billion yuan and a net profit drop of 35.38% to 221 million yuan, marking its worst interim report since listing [9]. - The decline in Huaxi's revenue is attributed to a significant drop in its functional skincare business, which saw a 31.62% year-on-year decrease in 2024 [9]. - Fulejia's revenue was 863 million yuan, down 8.15%, with a net profit of 230 million yuan, a decrease of 32.54%. The company faced a substantial increase in sales expenses, which rose by 39.56% [11][12]. Group 3: Second-Tier Companies - Second-tier beauty companies such as Shanghai Jahwa, Marubi, and Shuiyang are showing improved performance [13][14]. - Shanghai Jahwa achieved a revenue of 3.478 billion yuan, a 4.75% increase, and a net profit of 266 million yuan, up 11.66%, attributed to online channel growth [15]. - Marubi reported a revenue of 1.769 billion yuan, a 30.83% increase, but its net profit only grew by 5.21%, indicating a potential profitability challenge [15][16]. - Shuiyang's revenue reached 2.5 billion yuan, a 9.02% increase, with a net profit of 123 million yuan, up 16.54%. The company is transitioning to a global high-end beauty brand management model [16].

Core Viewpoint - Proya (603605.SH) has become the first domestic beauty brand to surpass 10 billion in revenue but is currently facing pressure from slowing performance [1][2] Financial Performance - In the first half of 2025, Proya reported revenue and net profit attributable to shareholders of 5.362 billion and 799 million respectively, representing year-on-year growth of 7.21% and 13.8% [1] - The second quarter showed a significant slowdown, with revenue of 3.003 billion, a year-on-year increase of only 6.49%, down over 30 percentage points compared to the same period in 2024 [1] - The main brand's revenue declined slightly by 0.08% to 3.979 billion in the first half of 2025, compared to a growth rate of 38% in the same period last year [5] Marketing Strategy - Proya has significantly increased its marketing expenditures, signing at least three top celebrities as brand ambassadors in 2025, which is more than the total of the past five years [1][9] - Marketing expenses reached 2.659 billion in the first half of 2025, a year-on-year increase of 13.64% [7] - The company is focusing on cost control, with operating costs down over 5% year-on-year to 1.427 billion [1][11] Competitive Landscape - Proya is set to compete with its peer, Shiseido's parent company, Up Beauty (2145.HK), which reported a revenue growth rate of 16% in the first half of 2025 [3][15] - Proya's market share is currently around 2%, indicating significant room for growth compared to mature markets [6] Future Plans - Proya is planning to list on the Hong Kong Stock Exchange, aiming to enhance its international strategy and financing capabilities [13][14] - The company has identified potential acquisition targets to boost its performance, with a goal of increasing its overall revenue to 35 billion from its own brands and 15 billion through acquisitions over the next decade [15][16]

Group 1: Company Insights - Proya - Proya plans to increase its cash dividend payout ratio to nearly 40% of net profit attributable to shareholders by the first half of 2025, aiming for sustainable and excellent dividends [1] - The company is preparing for a Hong Kong IPO to support global expansion, enhance brand image, and improve shareholder returns [1] - Proya's gross margin improved to 73.38% in the first half of 2025, although sales expense ratio increased due to higher brand investments [1] - The company is focusing on its "big product" strategy and expanding its product categories, particularly in the "Chinese makeup, native beauty" concept [1] - Proya is targeting international markets, specifically Japan and Southeast Asia, while advancing its sustainability goals with plans for 5-10 year ESG targets [1] Group 2: Company Insights - Giant Network - Giant Network reported a revenue of 1.662 billion yuan for the first half of 2025, a year-on-year increase of 16.47%, with a net profit of 777 million yuan, up 8.27% year-on-year [2] - The self-developed game "Supernatural Action Group" has shown rapid growth in user base and revenue, with significant contributions expected in the future due to deferred revenue [2] - The company plans to extend the game lifecycle through enhanced content supply, optimized game performance, and collaboration with well-known IPs [2] - Giant Network aims to maintain user engagement through continuous content updates and exploration of UGC (User Generated Content) [2] - The company is optimistic about overseas markets and is exploring international opportunities for "Supernatural Action Group" [2]

Group 1 - The core viewpoint of the news is that Hanhe Capital has conducted research on the listed company Proya, highlighting its plans for sustainable dividends and global expansion through a potential Hong Kong listing [1] - Proya's cash dividend for the first half of 2025 is expected to reach nearly 40% of its net profit attributable to shareholders, indicating a commitment to maintaining strong and sustainable dividends [1] - The company has appointed new independent director Fan Mingxi and employee representative director, as well as a new board secretary, Xue Xia [1] Group 2 - Proya's gross profit margin increased to 73.38% in the first half of 2025, although the sales expense ratio rose due to increased brand investment [1] - The company's single product strategy has shown significant results, with plans for continued iteration and category expansion [1] - Proya is focusing on the Japanese and Southeast Asian markets for its international expansion, while also advancing its sustainability goals, some of which have been achieved ahead of schedule [1]