Core Viewpoint - Huaxi Biological (688363.SH) is under increasing performance pressure, leading to heightened market scrutiny of its actions [1] Group 1: Headquarters and Brand Operations - Recent market rumors suggested that Huaxi Biological plans to relocate its headquarters from Beijing to Hangzhou, which the company denied, stating it is adjusting its brand operation locations [2] - The company aims to leverage the brand operation ecosystem advantages in East China by consolidating some brand operation centers in the region [2] - Several beauty companies are indeed concentrated in the Jiangsu-Zhejiang-Shanghai area, such as Proya (603605.SH) and Beitaini (300957.SZ) [2] Group 2: Management Changes - Huaxi Biological has undergone significant changes in its board of directors, with key figures like Fan Yuan and Zou Songyan not re-elected [4] - Fan Yuan was notably responsible for the company's functional skincare business [3] Group 3: Product and Marketing Strategy - The company has closed its smaller revenue-generating skincare brand, Runxiquan, while increasing marketing investments in its main brand, Runbaiyan [4] - In August, Runbaiyan announced Zhang Yixing as its first global brand ambassador, which represents a significant marketing expenditure for Huaxi Biological, especially as the company has reduced its sales expenses [5] - For the first half of 2025, sales expenses were reported at 808 million yuan, a year-on-year decrease of 31.44%, accounting for 35.74% of revenue, down over 6 percentage points year-on-year [5] Group 4: Performance Outlook - The effectiveness of these adjustments in boosting Huaxi Biological's skincare product performance is currently under scrutiny [6]

Group 1 - The core viewpoint of the articles highlights Huaxi Biological's strategic shift towards innovative pharmaceuticals amid declining performance in its collagen protein brands [1][2] - Huaxi Biological's investment in Saint Nor Pharmaceutical through its subsidiary Bloomage Biotechnology amounts to HKD 138 million, acquiring approximately 9.44% of the company [1] - The company has faced significant challenges, with a 29.74% year-on-year decline in functional skincare product revenue in the first half of 2024, contributing to a 19.57% drop in overall revenue in the first half of 2025 [2] Group 2 - Multiple social media platforms reported the closure of Huaxi Biological's collagen protein brand "Runxiquan," with its Tmall flagship store and other online shops ceasing operations [1] - The brand had set a revenue target of CNY 1 billion from 2020 to 2024 but only achieved CNY 300 million, leading to significant downsizing of related teams from over 100 to around 10 [1] - The strategic partnership with Saint Nor Pharmaceutical is seen as a crucial move for Huaxi Biological to enhance its clinical and commercialization processes in the medical aesthetics pipeline [2]

Core Viewpoint - Huaxi Biological is continuously downsizing its C-end functional skincare business, specifically shutting down the Runxiquan brand, which was not a major contributor to its revenue and profit [1][2]. Group 1: Business Strategy and Focus - The closure of Runxiquan is part of Huaxi Biological's strategy to focus on its core business and main brands, emphasizing that collagen is not a strategic focus for the company [1][2]. - The company has faced significant pressure from a sharp decline in the performance of its C-end functional skincare brands, with revenue from this segment dropping from over 70% to 40.36% of total revenue by mid-2025 [3]. - Huaxi Biological's chairman has publicly stated the need for corporate restructuring and a return to a startup mentality, highlighting issues with over-reliance on external marketing resources [3]. Group 2: Market Position and Challenges - The company positions itself as a "synthetic biotechnology company," differentiating itself from other domestic beauty brands that rely heavily on consumer sales [4]. - Despite the challenges in the C-end market, Huaxi Biological maintains a competitive edge through its B-end raw materials and medical terminal segments [4]. - The company has diversified its raw material offerings beyond hyaluronic acid, including ingredients like Ectoin and PDRN, but hyaluronic acid remains its core product [6]. Group 3: Brand Management and Market Perception - Huaxi Biological's main brands, including Runbaiyan and Kuadi, have overlapping market positions and unclear differentiation in consumer perception, which complicates their market strategies [9][10]. - The company has shifted from a strategy of aggressive brand expansion to a more focused approach, indicating a need to clarify which brands are core and which are experimental [10][11]. - The overall trend in the domestic beauty industry reflects a shift towards brand structure rebalancing, as companies seek to maintain main brand advantages while managing the performance of sub-brands [11].

Core Viewpoint - Huaxi Biological is accelerating its transformation by shutting down the Runxiquan brand, which has not significantly contributed to its revenue and profit, as part of a strategy to focus on its main business and key brands [2][5][6]. Brand Adjustment - The closure of the Runxiquan brand has been confirmed, with its official stores on platforms like Taobao no longer searchable and its products cleared from its Douyin flagship store [4][6]. - Huaxi Biological emphasized that Runxiquan was never a major brand for the company and its existence did not meaningfully impact revenue or profit [4][7]. Financial Performance - In 2024, Huaxi Biological's functional skincare business generated revenue of 2.569 billion yuan, a year-on-year decline of 31.62% [8]. - The revenue contributions from the four main brands—Runbaiyan (922 million yuan), Kuaidi (649 million yuan), Mibeier (290 million yuan), and BM Jihuo (279 million yuan)—showed significant declines, with year-on-year drops of 22.63%, 41.69%, 31.76%, and 52.06% respectively [8][9]. - Overall, Huaxi Biological's revenue and net profit decreased by 19.57% and 35.38% respectively in the first half of 2025, following an 11.61% and 70.59% decline in 2024 [8][9]. Market Challenges - The functional skincare sector is facing a development bottleneck, with increasing competition and a saturated market limiting growth opportunities for brands like Runxiquan [7][12]. - Huaxi Biological's past success was heavily reliant on "traffic operation," and rising traffic costs have led to a stagnation in performance growth [9][12]. Strategic Transformation - The company is undergoing a significant internal transformation, particularly in its core business of skin science innovation, which involves changes in operations, products, channels, organization, and branding [10][11]. - The shift from a traffic-driven sales model to a science-based brand communication strategy aims to provide scientifically validated skincare solutions [11]. - Huaxi Biological is focusing on optimizing team structures and improving operational efficiency to enhance overall business quality [11].