Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 109.78, based on a PE valuation of 30 times for 2025 [4]. Core Insights - The company is a leading player in China's beauty and personal care industry, with a multi-brand matrix covering skincare, baby care, and hair care segments. The main brand, Han Shu, has rapidly expanded its presence on platforms like Douyin, achieving significant revenue growth [2][3]. - The company is expected to achieve revenue of CNY 67.93 billion in 2024, representing a year-on-year growth of 62.1%, with a net profit of CNY 7.81 billion, up 69.4% [14]. - The growth strategy is supported by a strong brand operation methodology, focusing on market-driven brand positioning, precise consumer targeting, and innovative marketing strategies [3][39]. Summary by Relevant Sections Company Highlights - The company has a multi-brand strategy with a focus on online sales, achieving nearly 93% online sales in the first half of 2025. The main brand, Han Shu, is projected to generate revenue of CNY 55.91 billion in 2024, a growth of 80.90% year-on-year [2]. - New brands like Yi Ye are experiencing rapid growth, with projected annual growth rates of 498% for 2023/2024 and 146% for the first half of 2025 [2]. Investment Logic - The company is expected to see significant growth in its three main segments: skincare, baby care, and hair care. Han Shu is projected to exceed CNY 10 billion in revenue within three years, while Yi Ye is expected to maintain a compound annual growth rate of over 50% [3]. - The baby care brand Yi Ye is leveraging a unique "medical research co-creation" model, while the hair care segment is expected to produce major brands through clear positioning and effective marketing strategies [3]. Profit Forecast, Valuation, and Rating - The forecasted EPS for 2025, 2026, and 2027 is CNY 2.68, CNY 3.33, and CNY 4.09 respectively, with a projected valuation of 24 times for 2026. The strong growth potential of the multi-brand strategy supports the "Buy" rating [4]. - The company is expected to achieve a return on equity (ROE) of 41.92% in 2025, indicating strong profitability [8].

Core Insights - Shanghai Shangmei Cosmetics Co., Ltd. announced international superstar Jackson Wang as the global ambassador for its core brand, Han Shu, marking Wang's first endorsement of a domestic beauty brand [1] - Han Shu, founded in 2003, achieved a revenue of 5.591 billion yuan in 2024, representing a year-on-year growth of 80.9%, and maintained the top position in Douyin's beauty category with a GMV of 6.784 billion yuan [1] - The brand's success is attributed to its continuous investment in research, product development, and brand building, establishing a strong presence in various channels [1][2] Brand Development - Han Shu has developed a multi-category matrix including skincare, makeup, hair care, and personal care, with several products achieving top positions in their respective categories [2] - The flagship product, Han Shu Red Waist Set, has sold over 16.5 million sets across all channels, consistently ranking first in Douyin's skincare set category [2] - The brand's marketing strategy includes signing popular figures like Ding Yuxi, Tian Xuning, and Jackson Wang to connect deeply with younger consumers [2] Global Strategy - The appointment of Jackson Wang is a significant step in Shangmei's globalization strategy, which aims to enhance the brand's international presence and reach broader audiences [2][3] - The company is expanding its global footprint through various cooperation models in countries such as Russia, Vietnam, Mongolia, Malaysia, and Indonesia [3] - Shangmei aims for substantial growth, targeting revenues of 10 billion yuan and eventually 30 billion yuan, as it navigates the global beauty market [3]

Core Viewpoint - The announcement of international superstar Jackson Wang as the global ambassador for Han Shu signifies a transformative leap for the brand, marking a shift towards internationalization and a redefined brand image beyond traditional "national goods" labels [2][9][21]. Brand Transformation - Han Shu has evolved from a price-driven brand to one focused on scientific anti-aging, enhancing its product development and research capabilities [2][6]. - The collaboration with Jackson Wang represents a strategic upgrade in brand positioning, aiming to shed the image of being merely a "national alternative" and instead showcase a modern brand with technological and cultural depth [8][20]. Globalization Strategy - The partnership with an internationally influential figure like Jackson Wang allows Han Shu to expand its narrative and product experiences beyond China, aiming to establish itself as a representative of Chinese scientific beauty on the global stage [9][22]. - This move is part of Han Shu's ambition to become a "Chinese scientific beauty exporter," indicating a commitment to high-end transformation and international market penetration [9][21]. Market Performance - Han Shu has demonstrated strong market performance, maintaining a leading position on platforms like Douyin for 25 consecutive months and achieving significant sales milestones [10][16]. - The brand's user demographics show a concentration of over 74.95% in the 18-35 age range, indicating a strong appeal to the primary consumer base in the beauty market [10]. Research and Development - Han Shu has a robust foundation in research, having focused on peptide technology since 2003, and recently appointed a leading international expert to enhance its scientific capabilities [11][14]. - The introduction of the X Peptide series, featuring self-developed ingredients, exemplifies Han Shu's commitment to high-quality, effective skincare products that can compete with international brands [17][19]. Future Aspirations - The collaboration with Jackson Wang is seen as a strategic step towards achieving the brand's vision of becoming a billion-dollar entity, focusing on expanding its market presence and enhancing its product offerings [21][22]. - Han Shu aims to leverage its existing market dominance to build a sustainable growth trajectory that emphasizes premium positioning and international competitiveness [21].

Core Viewpoint - The Chinese beauty brand Han Shu, under the parent company Shangmei Co., is accelerating its global expansion strategy, highlighted by the appointment of international star Jackson Wang as its global ambassador, marking a significant step in its internationalization efforts [1][2]. Group 1: Company Performance - Han Shu achieved a revenue of 55.91 billion yuan in 2024, representing a substantial year-on-year growth of 80.9%, and maintained its position as the top beauty brand on Douyin with a GMV of 67.84 billion yuan [1]. - In the first half of 2025, Shangmei Co. reported a revenue of 41.08 billion yuan, a year-on-year increase of 17.3%, with a profit of 5.56 billion yuan, up approximately 35% [1]. - For the first half of 2023, Han Shu generated 33.44 billion yuan in revenue, reflecting a growth of 14.3%, accounting for 81.4% of Shangmei Co.'s total revenue during that period [2]. Group 2: Globalization Strategy - The CEO of Shangmei Co., Lv Yixiong, emphasized that the Chinese beauty industry is entering a golden period for domestic brands, establishing a new strategy focused on "single focus, multiple brands, and globalization" [2]. - The appointment of Jackson Wang as a global ambassador is seen as a crucial move in Han Shu's globalization strategy, leveraging his influence across Southeast Asia, Europe, America, Japan, and South Korea to enhance brand visibility [2]. - Shangmei Co. is actively pursuing its global strategy through various collaboration models, expanding its reach to countries such as Russia, Vietnam, Mongolia, Malaysia, and Indonesia [2]. Group 3: Research and Development - Han Shu has invested in peptide research for 22 years, establishing a strong technological foundation for international competition [3]. - In 2024, Han Shu's self-developed "Cyclohexapeptide-9" ingredient successfully passed registration, breaking the technological monopoly of international brands in the anti-aging raw materials sector [3]. Group 4: Stock Performance - Shangmei Co.'s stock price has significantly increased this year, with a cumulative rise of 180% as of October 13, and a peak increase of nearly 200% during the same period [3]. - As of October 13, Shangmei Co. has a market capitalization of 38.2 billion Hong Kong dollars [3].

Core Insights - The beauty industry is witnessing a shift towards domestic brands, with significant growth in local products and a decline in international brand performance [3][5]. Industry Environment - The rise of Birkenstock shoes highlights a trend towards comfort and versatility, appealing to the middle class and gaining popularity on social media. The brand's market value exceeds 100 billion, with plans to launch foot care products in 2024 [2]. - Douyin's April beauty data shows a key trend where a domestic brand achieved over 100 million in GMV from two live streams, while international brands fell off the list. Domestic brands like Han Shu and Proya performed well, with Proya's sales increasing by 63.46% [3]. Head Brand Dynamics - Highzi's participation in CBE emphasizes a long-term strategy focused on product development and consumer needs. The brand aims to enhance its core categories like sun protection and whitening, advocating for a "long-termism" approach in the beauty industry [5]. - Thai high-end fragrance brand HARNN entered the Chinese market last year, targeting a body care market projected to reach 16.7 billion by 2026. The brand plans to open 2,000 sales points and 50 counters in three years [6]. - Newpage, a baby skincare brand, upgraded its strategy to cover all age groups, launching a product matrix for ages 0-18, addressing market gaps and promoting scientific parenting solutions [7]. - Pizhuan cosmetics is focusing on quality improvement, launching new products at CBE and emphasizing cultural and technological aspects to penetrate niche markets [8][9]. - Aiyuan Group is leading the Chinese cosmetics industry through technological innovation, showcasing significant advancements in skincare solutions and accumulating 216 patents [10]. Product Highlights - The domestic makeup brand RedChamber's multi-use cream gained popularity due to its affordability and multifunctionality, although it faces criticism regarding its effectiveness and practicality [11]. - The emerging beauty brand Tongpin, co-created with Jinbo Biotechnology, performed well during the 618 shopping festival, leveraging unique patented ingredients and targeted marketing strategies [12].