Core Viewpoint - The article discusses the "turnaround" investment opportunity presented by Shanghai Jahwa, highlighting its potential for recovery despite recent financial underperformance. The market's optimistic response is reflected in a 4.2% increase in stock price following the earnings report [1]. Financial Performance - Shanghai Jahwa reported revenues of 5.679 billion yuan and 1.704 billion yuan for 2024 and Q1 2025, respectively, with net profits of -833 million yuan and 217 million yuan, indicating a year-on-year decline in both metrics [1]. - The primary cause of the 2024 losses was attributed to goodwill impairment of approximately 610 million yuan, with actual operational losses being less severe [2]. Strategic Reforms - The company is actively addressing historical issues, including reducing social inventory and restructuring product and channel strategies. By the end of 2024, inventory decreased by 13.3% compared to the beginning of the year, and inventory turnover days for department store channels dropped from 342 days to 89 days [3]. - The transition from an online agency model to a self-operated model has improved pricing control and operational efficiency, leading to better performance during promotional events [3]. Growth Logic - Shanghai Jahwa is reshaping its growth strategy to align with industry trends, focusing on R&D innovation and brand development to enhance competitiveness. The company aims to leverage its professional expertise to drive growth [4]. - The introduction of upgraded products, such as the new mosquito repellent series and skincare lines, reflects the company's commitment to professional branding and product efficacy [4]. Market Trends - The consumer demand for cosmetics is increasingly rational and function-oriented, making professional capabilities essential for differentiating brands in a competitive market. Shanghai Jahwa's established expertise positions it well to capitalize on this trend [5]. Channel Development - The company has successfully integrated its online capabilities, with over 70% of sales for the Yuze brand coming from online channels. The focus on self-broadcasting has led to significant growth in GMV for brands like Yuze and Six Gods [6]. - Overall, Shanghai Jahwa's strategic depth and reform benefits suggest a positive outlook, indicating that the company is at a performance low point with potential for a turnaround and value reassessment [6].