Investment Rating - The report maintains a "Positive" investment rating for the cosmetics industry [3] Core Insights - The cosmetics industry is experiencing stable growth with a slight improvement in growth rates, while profitability continues to show differentiation among companies [11][16] - The average revenue growth rate for the cosmetics industry in Q1 and Q2 of 2025 was -8.4% and -2.1%, respectively, indicating a slight improvement in the second quarter [16] - Online sales channels, particularly Tmall and Douyin, have shown a year-on-year growth of 13.1% in the first half of 2025, reflecting a recovery in consumer demand [11] Summary by Sections Cosmetics: Stable Growth and Business Adjustments - The cosmetics industry showed a year-on-year growth of 3.1% and 2.6% in Q1 and Q2 of 2025, respectively, with a significant improvement compared to the -1.1% growth in 2024 [11] - The industry is characterized by a slight improvement in growth rates, with the overall growth falling into a stable range [11] Revenue: Differentiation Among Brands - The average revenue growth for the brand segment was 0.4% and 6.5% in Q1 and Q2 of 2025, respectively, indicating stronger resilience compared to upstream and downstream segments [16] - Mid-sized brands like Maogeping and Shangmei have achieved good growth amidst a stable industry backdrop, while leading companies like Proya continue to grow steadily [16] Gross Margin Trends - The average gross margin for the brand segment increased by 1.6 percentage points in the first half of 2025, driven by improved business structures and effective price control by certain brands [21] - Specific brands like Water Sheep and Beitaini have seen significant improvements in gross margins due to product upgrades and price management strategies [21] Product Innovation: Focus on Core Series and Efficacy Expansion - Brands are focusing on upgrading core product lines and expanding efficacy categories, particularly in sunscreen and whitening, with increased competition expected [25] - New product launches include Proya's whitening series and Beitaini's anti-aging products, indicating a trend towards enhancing product offerings [25] Sales Expenses: Rising Industry Rates - The average sales expense ratio for brands in the first half of 2025 was 44.7%, reflecting a year-on-year increase of 1.7 percentage points, influenced by rising competition and platform costs [31] - The narrowing of gross sales margins indicates ongoing pressure on profitability across the industry [31]

Core Viewpoint - The company reported strong revenue and profit growth in the first half of 2025, indicating robust performance across various product lines and channels [1][2]. Revenue Performance - In H1 2025, the company achieved revenue of 3.113 billion yuan, representing a year-on-year increase of 22.52% [1]. - Revenue breakdown by product category: - Efficacy skincare products: 2.410 billion yuan, accounting for 77.4%, with a growth of 24.2% - Medical dressings: 693 million yuan, accounting for 22.3%, with a growth of 17.1% - Health food and others: 10 million yuan, accounting for 0.3%, with a growth of 16.3% [1]. - Revenue breakdown by sales channel: - Direct sales: 2.325 billion yuan, accounting for 74.7%, with a growth of 26.5% - Distribution: 787 million yuan, accounting for 25.3%, with a growth of 12.1% [1]. Profitability Metrics - The company reported a gross margin of 81.68%, down by 0.72 percentage points, and a net profit margin of 37.98%, also down by 0.72 percentage points [2]. - The decline in gross margin was attributed to product category expansion, while supply chain cost optimization mitigated some of the downward trend [2]. Cost Management - The company's expense ratio decreased to 37.99%, down by 1.63 percentage points, with a sales expense ratio of 34.01%, down by 1.10 percentage points [2]. - R&D expense ratio decreased to 1.32%, down by 0.59 percentage points, due to the transition of some R&D projects to commercialization and reduced share-based compensation [2]. R&D and Product Development - The company is enhancing its R&D capabilities and expanding its product matrix, which is expected to support long-term growth [2]. - New product launches, such as the collagen stick 2.0 and collagen mask 3.0, have received positive consumer feedback, indicating strong product vitality [2]. Future Outlook - The company is expected to achieve revenues of 7.056 billion yuan, 8.790 billion yuan, and 10.568 billion yuan from 2025 to 2027, with net profits of 2.538 billion yuan, 3.189 billion yuan, and 3.867 billion yuan respectively [3]. - The company maintains a strong position in the collagen protein sector, with anticipated improvements in industry standing and penetration rates [3].

Core Viewpoint - The company's 1H25 performance met expectations, with revenue of 3.11 billion yuan, a year-on-year increase of 22.5%, and a net profit attributable to shareholders of 1.18 billion yuan, up 20.2% year-on-year [1][2] Financial Performance - Revenue for 1H25 reached 3.11 billion yuan, reflecting a 22.5% year-on-year growth - Net profit attributable to shareholders was 1.18 billion yuan, representing a 20.2% increase year-on-year - Adjusted net profit stood at 1.21 billion yuan, with a year-on-year growth of 17.4% [1] Product Development and Market Trends - The product matrix continues to expand, driving rapid revenue growth for key brands: - Revenue for Kefu Mei was 2.54 billion yuan, up 22.7% year-on-year - Keli Jin generated 500 million yuan, with a year-on-year increase of 26.9% - Performance of key products includes: - Kefu Mei's collagen stick ranked first in Tmall's liquid essence sales during the 618 shopping festival - Keli Jin's upgraded collagen mask performed well [1][2] Profitability and Cost Management - Gross margin slightly declined by 0.7 percentage points to 81.7% due to changes in product mix - Sales expense ratio decreased by 1.1 percentage points to 35.1%, attributed to improved operational efficiency across online platforms - Net profit margin decreased by 0.7 percentage points to 38.0%, maintaining industry-leading profitability [2] Future Outlook - Short-term impacts from previous events are gradually dissipating, with clear marketing and promotional plans for the second half of the year - The company is expected to see further operational improvements in its cosmetics business and steady progress in its medical aesthetics pipeline [2] Earnings Forecast and Valuation - The profit forecast for 2025-2026 is maintained at 2.5 billion and 3.2 billion yuan respectively - Current stock price corresponds to a 20x and 16x P/E for 2025 and 2026, with a target price of 82 HKD, indicating a 57% upside potential [3]

Investment Rating - The investment rating for the company is "Buy" [6][18] Core Insights - The company reported a steady growth in revenue and net profit for the first half of 2025, with year-on-year increases of 23% and 20% respectively, indicating strong performance and effective cost control [2][10] - The sales expense ratio has decreased year-on-year, highlighting improved operational efficiency [10] - The company is focusing on the performance of key products and new launches, which are expected to drive future growth [10] Financial Summary - Total revenue for 2023 is projected at 3,524 million RMB, with a growth forecast to 5,539 million RMB in 2024, and reaching 10,402 million RMB by 2027, reflecting a compound annual growth rate (CAGR) of 22.4% [4][12] - Net profit is expected to grow from 1,452 million RMB in 2023 to 3,795 million RMB by 2027, with a CAGR of 23.4% [4][12] - The company maintains a high gross profit margin, projected at 81.7% for the first half of 2025, despite a slight year-on-year decrease [10] Revenue Breakdown - For the first half of 2025, revenue from various channels showed significant growth: DTC online direct sales increased by 13%, e-commerce platform direct sales surged by 134%, and offline direct sales rose by 12% [10] - The main brand, "可复美," launched upgraded products that performed well in the market, indicating strong brand momentum [10] Product Development - The company continues to innovate with new product launches, including an upgraded collagen stick and a new skincare series, which are expected to enhance market presence and meet consumer demands [10]

Investment Rating - The investment rating for the company is "Buy" (maintained) [3][18] Core Views - The company's performance in H1 2025 met market expectations, with revenue of 3.113 billion RMB, a year-on-year increase of 22.5%, and a net profit attributable to shareholders of 1.18 billion RMB, up 20.2% [8] - The company is expected to accelerate growth in H2 2025, with a focus on new product launches and expanding direct sales channels [2][8] Financial Summary - Revenue projections for the company are as follows: - 2023: 3,524 million RMB - 2024: 5,539 million RMB - 2025E: 7,066 million RMB - 2026E: 8,842 million RMB - 2027E: 10,691 million RMB - Year-on-year growth rates for revenue are projected at 49% for 2023, 57% for 2024, and gradually decreasing to 21% by 2027 [4][9] - Net profit attributable to shareholders is projected to grow from 1,452 million RMB in 2023 to 3,726 million RMB in 2027, with year-on-year growth rates of 45% in 2023 and 19% in 2027 [4][9] - The company's gross margin is expected to remain high, around 82-84% over the forecast period [4] Product and Market Insights - The company's flagship product, 可复美, generated revenue of 2.54 billion RMB in H1 2025, representing a year-on-year increase of 22.7% and accounting for 81.7% of total revenue [8] - New product launches, including the upgraded 胶原棒 2.0 and the 焦点面霜, have been well received in the market, contributing to revenue growth [8] - Direct sales revenue reached 2.33 billion RMB in H1 2025, up 26.5%, with significant growth in both online and offline channels [8] Future Outlook - The company is expected to achieve net profits of 2.54 billion RMB, 3.12 billion RMB, and 3.73 billion RMB for the years 2025, 2026, and 2027 respectively, with corresponding price-to-earnings ratios of 20, 16, and 14 [8][9] - The company is well-positioned in the collagen protein market, with ongoing expansion into medical aesthetics and B2B segments anticipated to drive future growth [8]

Core Viewpoint - The controversy surrounding the product testing methods and results of Juzhibio has raised significant consumer trust issues, particularly affecting its KefuMei brand ahead of the critical 618 shopping festival [2][3] Group 1: Allegations and Responses - Beauty influencer "Big Mouth Doctor" has publicly questioned the testing methods used by Juzhibio, specifically the "biuret method," claiming it could lead to inflated results due to the presence of sodium polyglutamate in the products [2] - Juzhibio has denied the allegations and stated that they have commissioned a third-party organization for further testing [2] - The influencer has raised three key scientific questions regarding the presence of recombinant collagen in the products and the absence of glycine, a critical component [2] Group 2: Consumer Impact - The negative publicity has led to a noticeable decline in consumer trust towards KefuMei products, with many consumers expressing doubts in the comments section of major e-commerce platforms [2] - As the 618 shopping festival approaches, the potential impact on KefuMei's sales performance is significant, with concerns that consumer hesitation may persist until third-party test results are released [2][3] Group 3: Urgency for Resolution - The internal testing by Juzhibio was completed on May 24, but the results from the third-party testing have not yet been disclosed, leading to increased public scrutiny [3] - The need for authoritative testing results and clear explanations is critical for restoring consumer confidence and resolving the ongoing controversy [3]

Investment Rating - The report maintains a "Positive" investment rating for the beauty industry [3] Core Insights - The beauty industry is experiencing stable growth, with a notable performance in the collagen restructuring segment [1][5] - The overall revenue growth for the cosmetics sector has shown slight improvement, with a year-on-year increase of 3.1% in Q1 2025, recovering from previous negative growth [12][19] - The average revenue growth for the cosmetics industry is projected to be 8% in 2024, followed by a decline to -5% in Q1 2025, indicating a trend of increasing differentiation among brands [19] Summary by Sections Cosmetics - The cosmetics industry has shown a steady growth rate, with Q1 2025 marking a recovery from three consecutive quarters of negative growth [12] - Online sales channels, particularly Tmall and Douyin, have seen significant growth, with a combined increase of 17% in Q1 2025 [12] - The average revenue growth for brands has been more resilient compared to upstream and downstream segments, with mid-sized brands like Marubi and Runben achieving good growth despite a generally weak market [19] Medical Beauty - The medical beauty sector has seen a convergence in revenue, while the collagen restructuring segment continues to maintain high growth rates [1][5] Revenue and Profitability - The average revenue growth for the cosmetics industry has been declining, with a notable differentiation in performance among brands [19] - The average gross margin for the brand segment has slightly increased, attributed to improved business structure and price control measures [20] Product Innovation - Brands are focusing on upgrading main product lines and expanding functional categories, particularly in sun protection and whitening, with increased competition expected [25] - New product launches include significant upgrades in major brands like Proya and Bethany, focusing on whitening and sun protection [24][25] Expenses and Profit Margins - The average sales expense ratio for brands has increased, reflecting heightened competition and rising platform costs [26] - The gross profit margin has generally decreased across the industry, although leading brands like Proya have managed to improve their margins through effective cost management [26][35] R&D and Management Expenses - There is a trend of increasing R&D investment among leading brands, with a shift towards foundational research [45] - Management expense ratios have shown a divergence, with leading companies optimizing their expenses while others have seen increases due to business adjustments [45]

Investment Rating - The report maintains a "Recommended" investment rating for the industry [5] Core Insights - The social retail sales total for March 2025 reached 4.09 trillion yuan, showing a year-on-year growth of 5.9%, exceeding the consensus forecast of 4.36% [2][19] - The total retail sales for the first quarter of 2025 amounted to 12.47 trillion yuan, with a year-on-year increase of 4.6%, accelerating by 1.1 percentage points compared to the previous year [2][19] - The report highlights the ongoing implementation of policies aimed at boosting domestic demand, including initiatives to integrate domestic and foreign trade [2][28] Market Performance - During the week of April 14-18, 2025, the Shenyin Wanguo indices for retail, social services, and beauty care sectors increased by 0.24%, 0.14%, and 0.43% respectively, ranking 18th, 21st, and 14th among 31 primary industries [11][12] - The internet e-commerce sector saw a notable increase of 5.69%, benefiting from policies promoting the integration of domestic and foreign trade [12][19] Key Industry Data and News - The report indicates that the retail sales of essential goods and some upgraded products showed strong growth, with food and daily necessities increasing by 12.2% and 6.8% respectively [19][26] - The beauty care sector is witnessing innovation, with companies like Proya launching new products and establishing global brand ambassadors [31][32] - The collectible card game company, Card Game, is set to surpass 10 billion yuan in revenue for 2024, reflecting significant growth in the entertainment sector [34] Company Announcements - Xiangyuan Cultural Tourism reported a revenue of 864.12 million yuan for 2024, marking a year-on-year increase of 19.64% [41] - Tongcheng Travel announced the acquisition of 100% of Wanda Hotel Management for approximately 2.49 billion yuan [42] - Upme Cosmetics plans to establish a joint venture to create a new cosmetics brand [43]