Industry Overview - The global beauty and personal care industry is showing a clear trend towards premiumization, with high-end makeup, online channels, and sunscreen penetration rates continuously increasing [1] - The fragrance and flavor industry is steadily growing, with a projected market size of $32.3 billion by 2024 according to Precedence Research, indicating significant development potential in the Chinese market due to its low concentration [1] Company Performance - The company is leveraging its technological and market advantages to accelerate growth in the face of industry opportunities [1] - In 2023, the company invested CNY 113 million in R&D, a year-on-year increase of 40.79%, and launched high-margin sunscreen agents such as P-S and EHT, while also advancing high-end personal care raw materials [1] - The company maintains stable revenue growth supported by solid customer resources, with major clients like DSM, Procter & Gamble, and L'Oréal contributing over 60% of revenue [1] - The company is expanding its customer base to include small and medium-sized clients, enhancing pricing power and gross margins, while strengthening market coverage through a direct sales and distribution model [1] Capacity Expansion - Ongoing fundraising projects are expanding production capacity, with a strategic focus on large clients ensuring efficient production and sales coordination [1] - The company's active ingredient production capacity utilization rate is expected to reach 54.98% in 2024, with a stable production and sales rate exceeding 90% in 2023 [1] - The company has strong cost transfer capabilities, allowing it to effectively manage cost pressures from raw material price fluctuations, thereby maintaining robust profitability and reinforcing its competitive advantage in the industry [1] Profit Forecast and Investment Recommendation - As a leading global supplier of beauty raw materials, the company is continuously optimizing its product layout and has stable customer resources [2] - The projected net profits attributable to the parent company for 2025-2027 are CNY 400 million, CNY 490 million, and CNY 540 million respectively, with a 2025 PE valuation of 22 times, corresponding to a reasonable value of CNY 18.70 per share, and a buy rating is recommended [2]

Group 1: Performance Overview - The company's performance decline is attributed to price reductions in sunscreen agents due to decreased market demand and increased competition [3][4] - In Q1 2025, the decline in performance is expected to continue, influenced by adverse weather conditions in Europe and North America, leading to lower sales during the peak season [4] - The gross profit margin of the main business has decreased, impacting net profit and earnings per share [4] Group 2: Market and Product Development - The company has a production capacity of 12,800 tons/year for amino acid surfactants and 3,000 tons/year for the new anti-dandruff agent, which have been successfully launched [5][6] - The sunscreen product market share exceeds 20% globally, with the company being a leading manufacturer in this sector [6] - The company is focusing on enhancing market development and providing customized solutions to downstream clients [5][6] Group 3: Strategic Responses - To counteract market fluctuations, the company is concentrating resources to maintain its leading position in sunscreen agents and is investing in research and development [4] - The management system and processes are being improved to enhance operational efficiency and cost control [4] - The company is also accelerating the construction of overseas bases to strengthen its risk management capabilities [4] Group 4: Future Outlook - The global personal care market is expected to grow steadily, with sunscreen and hair care products remaining high-demand categories [6] - The company is building a personal care production base in Malaysia, with products expected to be launched in the second half of the year [7] - Future price adjustments for products will depend on market supply and demand, costs, and the company's strategic development [8]