Core Viewpoint - The ongoing dispute over exclusive agency rights between two companies, Ruoyuchen and Shuiyang, regarding the Spanish beauty brand Mesoestetic in China has raised questions about the legitimacy of their claims to exclusivity and has implications for the market dynamics of the oral beauty supplement sector [1][3][9]. Group 1: Company Developments - Ruoyuchen has announced it will become the exclusive general agent for Mesoestetic's oral beauty health product line in China, with irrevocable trademark rights and related authorizations, effective from January 1, 2026, to December 31, 2028 [1]. - Shuiyang, which has been the exclusive distributor for Mesoestetic since 2021, claims it remains the brand's exclusive distributor in China and is currently in discussions with the brand regarding the ongoing contract [1][5]. - The dispute has led to confusion in the market, with both companies asserting their exclusive rights, prompting inquiries from media sources [1][3]. Group 2: Market Impact - There has been a significant price reduction for Mesoestetic products, with reports of discounts up to 50% compared to previous prices, which some consumers attribute to the agency rights dispute [3][6]. - Ruoyuchen clarified that the current price drop is not a brand initiative but rather actions taken by the previous distributor, Shuiyang, and emphasized their commitment to maintaining market order and brand integrity [3][6]. - The oral beauty market in China is projected to grow significantly, with estimates suggesting it will exceed 25.57 billion yuan by 2025, reflecting a stable annual growth rate of over 3.8% [9].

Core Viewpoint - Two A-share listed companies, Ruoyuchen (003010.SZ) and Shuiyang Co., Ltd. (300740.SZ), claim exclusive rights to operate the Spanish beauty brand Mesoestetic's oral beauty product line in China, leading to a conflict over agency rights [2][4]. Group 1: Company Statements - Ruoyuchen announced it will become the exclusive general agent for Mesoestetic's oral beauty product line in China starting January 1, 2026, with full operational and pricing rights [2][5]. - Shuiyang Co., Ltd. asserts that its exclusive distribution agreement with Mesoestetic is still valid and accuses Ruoyuchen of making misleading statements [2][5]. - Both companies have not disclosed the expiration date of their respective agreements, leading to ambiguity regarding the transition of rights [5]. Group 2: Market Impact - The oral beauty product line constitutes approximately 98% of Mesoestetic's sales, indicating its significant revenue potential [3]. - Shuiyang Co., Ltd. reported a 50% year-on-year growth in GMV for its Mesoestetic products, with its star product, the Brightening Drink, ranking first in the Douyin oral whitening category [3]. Group 3: Strategic Developments - Ruoyuchen is transitioning from being an agent to developing its own brands, with its proprietary brands accounting for over 55% of revenue by Q3 2025 [7]. - Ruoyuchen recently submitted an application for a Hong Kong stock listing, marking its expansion into A+H share markets [6]. Group 4: Stock Performance - As of the latest report, Ruoyuchen's stock closed at 36.99 CNY per share, reflecting a daily increase of 9.99% and a total market capitalization of 11.51 billion CNY [8].

Core Viewpoint - The beauty industry is currently witnessing a dispute over the exclusive agency rights of the Spanish aesthetic brand Mestique in China, with both Shuiyang Co., Ltd. and Ruoyuchen claiming to hold these rights [2][3]. Group 1: Company Claims - Shuiyang International, a subsidiary of Shuiyang Co., Ltd., announced on December 15 that it is the exclusive distributor of the Mestique brand in China, having signed a long-term cooperation agreement since 2021 [3]. - Ruoyuchen has also circulated a statement claiming that starting January 1, 2026, it will become the exclusive distributor for Mestique's core oral beauty product line in China, with full rights to operate and market the brand [4][5]. Group 2: Market Position and Product Lines - Mestique, founded in 1985, offers a range of products including oral beauty, skincare, and health supplements, with its oral beauty product "Brightening Drink" being a top seller in the high-end market [2]. - The oral beauty product line constitutes approximately 98% of Mestique's business volume, highlighting its significance to the brand [4]. Group 3: Financial Implications - Shuiyang Co., Ltd. has seen its revenue from its own brands reach 1.039 billion yuan, accounting for 41.55% of total revenue, while its CP (China Partner) brands, including Mestique, generated 1.461 billion yuan, exceeding 50% of total revenue [6]. - The GMV of Mestique within Shuiyang Co., Ltd. increased from 50 million yuan in 2021 to over 500 million yuan by October 2024, indicating its critical role in the company's high-end transformation strategy [6][8]. Group 4: Future Outlook - The impending loss of the core agency rights for Mestique's oral beauty product line poses uncertainty for Shuiyang Co., Ltd.'s future performance, especially as it has been a key driver of growth [8]. - In contrast, Ruoyuchen has been expanding its own brand portfolio and has reported significant profit growth, with net profits increasing by 60.93% and 94.58% in 2023 and 2024, respectively [9].

Core Viewpoint - The recent announcements from two companies, Shuiyang International and Ruoyuchen, have put Meisidike in the spotlight regarding its exclusive distribution agreements in China for its oral beauty product line. Group 1: Company Announcements - Shuiyang International claims to be the exclusive distributor in China but does not specify the duration of the agreement [1] - Ruoyuchen has entered a strategic cooperation with Meisidike, with a contract running from January 1, 2026, to December 31, 2028, including an automatic renewal clause [3] - Ruoyuchen will be the exclusive general agent for Meisidike's oral beauty product line in China, which constitutes approximately 98% of the brand's total volume [3][4] Group 2: Operational Details - Ruoyuchen will have full control over the product line's pricing and distribution in the Chinese market [4] - Shuiyang International's announcement lacks clarity on the expiration date and the scope of the licensed product categories [5][6] - Legal experts note that the lack of specific details in the agreements makes it difficult to assess potential conflicts between the two companies [7] Group 3: Market Position and Performance - Meisidike, a Spanish medical beauty brand, has seen significant growth in China, with its sales reaching 5 billion yuan, accounting for half of the brand's global volume [7][10] - The brand's flagship product, the Brightening Drink, is priced at approximately 459.8 yuan per box, translating to 76.7 yuan per 30ml bottle [8] - Ruoyuchen's recent contract with Meisidike is seen as a strategic move to fill a gap in the high-end market segment, complementing its existing product offerings [11][12]

Group 1 - Chando has submitted its IPO application to the Hong Kong Stock Exchange, with funding primarily aimed at enhancing DTC capabilities and expanding its brand matrix [2] - L'Oreal has invested 442 million yuan in Chando, holding a 6.67% stake, while Huachuang Capital holds 4.20% [2] - Chando's revenue for H1 2025 reached 2.45 billion yuan, a 6.4% year-on-year increase, with its main brand contributing 2.32 billion yuan, a 35.6% increase [2] Group 2 - Coty has announced a strategic review of its mass beauty division, valued at approximately 1.2 billion USD (about 85.59 billion yuan), exploring options including partnerships and spin-offs [3] - The brands involved in this review include CoverGirl, Kylie Cosmetics, and Miss Sporty, along with its independent Brazilian business generating nearly 400 million USD annually [3] - Coty aims to focus on brands with strong profit potential and global growth opportunities, appointing Gordon von Bretten as the new president of consumer beauty [3] Group 3 - Mystique's whitening drink has faced backlash for allegedly causing menstrual irregularities, with numerous complaints regarding its effectiveness and ingredient transparency [4] - The company has responded by clarifying that all ingredients are listed on the packaging and that their marketing complies with regulations [4] - Mystique is a Spanish brand established in 1985, providing high-end beauty products globally [4] Group 4 - HARMAY has opened its first store in Changzhou, marking a significant expansion in Jiangsu province with multiple new locations planned [5] - The brand has opened nine new stores across various cities since March, indicating a shift from previous cautious expansion to aggressive growth [5] - HARMAY now operates 20 stores in 11 cities, including major first-tier and strong second-tier cities [5] Group 5 - CeraVe has partnered with the NBA as its official skincare and haircare partner, enhancing its visibility through various NBA events and digital platforms [6] - This collaboration follows previous marketing efforts involving NBA players, indicating a strategic move into sports marketing [6] Group 6 - SOSU Cosmetics has recalled its Peach Dreams eyeshadow palette due to arsenic levels exceeding EU regulations, posing potential health risks [7] - The brand, founded in 2015, has over 400 products and is sold in more than 2000 stores globally [7] Group 7 - The synthetic biology company Weiming Shiguang has secured several rounds of financing, with the latest round raising tens of millions of yuan to enhance its AI technology platform [8] - The company has completed multiple funding rounds since its establishment in 2021, indicating strong investor interest [8] Group 8 - POLA ORBIS has appointed Takahiro Tabata as the new CEO of Jurlique, aiming to strengthen the brand's operations in China [9] - Jurlique has faced declining sales, with a 9.8% drop in mid-2025, prompting this leadership change as part of a resource consolidation strategy [9] Group 9 - LG Household & Health Care has appointed former L'Oreal executive Lee Sun-joo as its new CEO, effective October 1 [11] - Lee brings over 30 years of experience in the beauty industry, having previously driven significant growth for Kiehl's in South Korea [11] Group 10 - Revlon has appointed Amber Garrison to lead Elizabeth Arden, focusing on brand innovation and market expansion [12] - Garrison's previous experience includes leading digital transformation efforts at Origins, indicating a strategic push towards high-end skincare and fragrance [12] Group 11 - L'Oreal has announced significant management changes within its executive committee, affecting six key positions across various regions and business sectors [13] - The restructuring aims to enhance the strategic importance of the U.S. market and improve operational efficiency [13] Group 12 - Procter & Gamble plans to gradually cease its manufacturing and commercial operations in Pakistan, transitioning to third-party distributors [14] - This decision is part of a global restructuring effort aimed at optimizing its portfolio and supply chain [14] Group 13 - New regulations for the online sale of medical devices have been implemented, requiring e-commerce platforms to establish quality management systems [15][16] - The regulations aim to enhance risk management and ensure compliance with safety standards in the sale of medical devices [15][16] Group 14 - Shanghai has introduced measures to support the cosmetics industry, including financial incentives for innovation and new raw materials [17][18] - The policy aims to promote high-quality development and establish "Shanghai manufacturing" as a new brand [17][18] Group 15 - Douyin has halted live promotions for medical dressings to improve user experience, implementing a dual mechanism for risk management [20] - The platform will allow qualified influencers to sell specific medical devices through live streams in the future [20]

Core Insights - The company reported a revenue of 2.5 billion yuan for the first half of 2025, representing a year-on-year increase of 9.02% [1] - The net profit attributable to shareholders reached 123 million yuan, up 16.54% year-on-year, while the net profit excluding non-recurring items was 121 million yuan, a slight increase of 1.04% [1] - The company is focusing on high-end brand development, with self-owned brand revenue accounting for over 40% of total revenue [1] Financial Performance - The gross margin for the first half of 2025 was 64.61%, an increase of 3.13 percentage points year-on-year [2] - In Q2 2025, the gross margin improved to 65.27%, up 3.67 percentage points year-on-year [2] - The net profit margin for the first half of 2025 was 4.93%, an increase of 0.32 percentage points year-on-year, while the net profit margin excluding non-recurring items was 4.82%, a decrease of 0.38 percentage points [2] Brand Development - The company is establishing a high-end brand matrix, with brands like Ifidan, PA, and RV contributing to long-term growth [3] - Ifidan is positioned as a French luxury skincare brand, enhancing market recognition through innovative product combinations and experiential retail [3] - RV's flagship product "One Night Rejuvenation Oil" continues to lead sales on platforms like Tmall, indicating strong brand presence [3] Investment Outlook - The company is projected to achieve net profits of 250 million, 340 million, and 430 million yuan for the years 2025 to 2027, with year-on-year growth rates of 129.6%, 32.7%, and 28.0% respectively [4] - Corresponding price-to-earnings ratios are expected to be 33X, 25X, and 20X for the same years [4]

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6][17]. Core Insights - The company reported a revenue of 2.5 billion yuan for H1 2025, representing a year-on-year increase of 9.02%, and a net profit attributable to shareholders of 123 million yuan, up 16.54% year-on-year [1]. - The gross margin improved significantly to 64.61% in H1 2025, an increase of 3.13 percentage points year-on-year, driven by an increase in the proportion of proprietary brands [2]. - The company is focusing on a dual business strategy of proprietary brands and CP brand operations, with proprietary brand revenue reaching 1.039 billion yuan in H1 2025, accounting for 41.55% of total revenue [3]. - The company is building a global high-end beauty group, enhancing its brand matrix and achieving significant sales growth through various marketing strategies [4]. Financial Performance Summary - For H1 2025, the company achieved a revenue of 2.5 billion yuan and a net profit of 123 million yuan, with a gross margin of 64.61% [1][2]. - The company expects revenues of 4.655 billion yuan, 4.968 billion yuan, and 5.290 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 250 million yuan, 320 million yuan, and 400 million yuan for the same years [4][11]. - The company’s financial ratios indicate a projected PE of 33x for 2025, decreasing to 21x by 2027 [4][11].

Investment Rating - The report maintains a "Buy" rating for Proya and a "Hold" rating for other companies in the beauty and personal care sector [5][9]. Core Insights - The beauty and personal care sector has shown mixed performance, with Proya launching new medical-grade collagen products and Lin Qingxuan preparing for an IPO in Hong Kong [2][20][23]. - The Tmall 618 pre-sale rankings for beauty products show Proya, Lancôme, and L'Oréal leading the market, indicating strong brand presence [20][21]. - The overall market performance for the week ending May 30, 2025, saw the retail sector increase by 0.69%, while the beauty care sector decreased by 0.72% [12][14]. Summary by Sections Market Performance - For the week of May 26 to May 30, 2025, the retail sector increased by 0.69%, social services by 0.18%, and beauty care decreased by 0.72%, ranking 12th, 14th, and 25th among 31 primary industries respectively [12][14]. - The professional chain, general retail, and professional services sectors saw the highest gains, with increases of 2.24%, 1.72%, and 0.92% respectively [14]. Key Industry Events and News - Proya launched a new medical-grade collagen patch, approved as a Class II medical device, aimed at treating superficial wounds and post-procedure care [23]. - Lin Qingxuan submitted its IPO application to the Hong Kong Stock Exchange, with significant sales figures for its signature camellia oil product [20]. - Tmall's 618 pre-sale rankings for beauty products remained stable, with Proya, Lancôme, and L'Oréal maintaining their top three positions [20][21]. Company Announcements - Proya's new medical product is priced at 198 yuan for a box of five patches, indicating a strategic move into the medical beauty segment [23]. - Ji Hong Technology announced its H-share listing, with a global offering of 67.91 million shares at a price of 7.68 HKD per share, aiming to raise approximately 420 million HKD [27].

Summary of Water Sheep Co. Conference Call Company Overview - **Company**: Water Sheep Co. (水羊股份) - **Core Brand**: Yi Fan (一帆单品) - **Industry**: Beauty and Personal Care Key Points Performance and Growth Expectations - Yi Fan single product did not meet expectations in 2024, but Q1 2025 shows recovery with expected growth of over 10% year-on-year, aiming for an annual growth rate exceeding 20% [2][5] - Profit margins are expected to improve year-on-year due to optimized marketing strategies, shifting from celebrity endorsements to other advertising methods [2][4] Product Diversification - The company is expanding its product categories, moving from reliance on CP series (60%-70% of sales) to include new categories like sunscreen and creams, which are performing well [2][6] - This diversification is seen as a way to mitigate risks and enhance overall profitability [2] Offline Channel Development - Water Sheep Co. is investing heavily in offline channels, which currently account for about 10% of sales, with plans for continued expansion [2][7] - New stores, such as the Zhang Yuan image store and locations in SKP and Wulin Yintai, have been profitable, with expectations for offline channel growth exceeding 20% for the year [2][7] Brand Strategy and Performance - The Yuni Fang brand experienced a decline in 2024 but is being repositioned for 2025, targeting lower-tier markets with promising early results indicating a significant reduction in losses, potentially achieving breakeven [2][8] - The PA brand has completed global ownership acquisition and is positioned in the light luxury segment, with good brand assets and potential for revenue growth in 2025 [2][9] - RV brand has already generated profits, and the company plans to refine its positioning and develop products suited for Chinese consumers [2][9] Agency Business Insights - The agency business generated approximately 2.6 billion yuan in revenue in 2024, impacted by the spin-off of Johnson & Johnson's health division, leading to a decline in related agency business [2][10] - Despite a decrease in agency revenue, the introduction of new brands has stabilized overall income, with a net profit margin of about 3% [2][10] Overall Financial Outlook - The company anticipates a significant rebound in profits for 2025, with expectations of reaching over 200 million yuan in profit, supported by the recovery of various brands [2][3][11] - Water Sheep Co. is currently valued relatively low in the beauty industry, presenting a high safety margin and potential for investors [2][14] Emerging Brands and Market Trends - The Misty Bright Drink brand has shown excellent sales performance on Douyin, with potential positive contributions to overall profits if sales continue to grow [2][13] - Smaller brands like VAA and HBS are also showing promising trends, contributing to the overall improvement in company performance as they mature [2][9] Conclusion Water Sheep Co. is strategically repositioning its brands and diversifying its product offerings while expanding its offline presence. The company is expected to recover from previous losses and achieve significant profit growth in 2025, making it an attractive investment opportunity in the beauty and personal care sector.