Core Viewpoint - The company is experiencing short-term revenue pressure but demonstrates resilience in gross margin, with strategic adjustments in response to industry competition and consumer fatigue [1][2]. Financial Performance - Total revenue for H1 2025 is 2.372 billion (down 15.4% YoY), with net profit attributable to shareholders at 247 million (down 49.0% YoY) and net profit excluding non-recurring items at 183 million (down 56.5% YoY) [1]. - Gross margin and net profit margin stand at 76.0% and 10.5% respectively (up 3.4 percentage points and down 6.5 percentage points YoY) [1]. - Expense ratios for sales, management, and R&D are 54.2%, 8.1%, and 4.9% respectively (increased by 8.6, 1.9, and 0.8 percentage points YoY) [1]. Revenue Breakdown - Online channel revenue is 1.743 billion (down 6% YoY), with emerging content e-commerce platforms like Douyin showing growth; self-operated channels enhance repurchase rates through tiered membership operations, adding 430,000 new registered users [1]. - OMO channel revenue is 191 million (down 10% YoY) [1]. - Offline channel revenue is 424 million (down 42% YoY) [1]. Strategic Initiatives - The company is optimizing product structure and enhancing membership operations to improve gross margin, focusing on core products and reducing ineffective promotions [2]. - A multi-brand strategy is being deepened, with new growth avenues opened through the expansion of product lines and the acquisition of brands to cover various market segments [2]. - R&D efforts are concentrated on collaborative medical research and clinical efficacy validation, while channel strategies are shifting towards user operation and brand experience centers [2]. Investment Outlook - The company is positioned as a leader in effective skincare, with expected gradual recovery in performance driven by brand matrix, R&D barriers, and channel development [3]. - Projected net profits for 2025-2027 are 547 million, 642 million, and 777 million respectively, with a target valuation of 20.23 billion and a target price of 47.75 [3].

Investment Rating - The report maintains a "Neutral" rating for the company with a target price of 47.75 yuan [2][8]. Core Views - The company is positioned for long-term recovery through its brand matrix and R&D innovations, despite facing short-term performance pressures due to market conditions and strategic adjustments [8]. - The company is expected to gradually recover its performance as it enhances its brand matrix, R&D barriers, and channel development, particularly with the growth of its new brands and improved online member repurchase rates [8]. Financial Summary - Total revenue projections for 2024A, 2025E, 2026E, and 2027E are 5,736 million, 5,406 million, 5,952 million, and 6,655 million respectively, with growth rates of 3.9%, -5.8%, 10.1%, and 11.8% [4]. - Net profit attributable to the parent company is forecasted to be 503 million, 547 million, 642 million, and 777 million for the same years, with growth rates of -33.5%, 8.7%, 17.4%, and 21.1% [4]. - Earnings per share (EPS) are projected at 1.19, 1.29, 1.51, and 1.83 yuan for 2024A, 2025E, 2026E, and 2027E respectively [4]. Revenue Breakdown - Online channel revenue is expected to show resilience, with a projected income of 17.43 billion, despite a year-on-year decline of 6%. The company has seen growth in emerging content e-commerce platforms [8]. - Offline channel revenue is projected to decline significantly, with an expected income of 4.24 billion, reflecting a year-on-year decrease of 42% [8]. Strategic Initiatives - The company is focusing on optimizing its product structure and enhancing member operations to improve profitability. Key strategies include streamlining SKUs, focusing on core products, and implementing differentiated member tier operations [8]. - The company is expanding its multi-brand matrix and entering new market segments, such as high-end anti-aging and infant care, to create additional growth avenues [8].