Core Viewpoint - Shanghai Jahwa reported a significant improvement in financial performance for the first three quarters of 2025, with total revenue reaching 4.961 billion yuan, a year-on-year increase of 11%, and a net profit of 405 million yuan, up 149% compared to the previous year [1] Financial Performance - The company's gross margin increased by 7 percentage points to 61.48%, attributed to product structure optimization and changes in raw material procurement prices [2] - The net profit margin rose by 16 percentage points to 9.41%, driven by improved gross margins and increased income from investment funds and joint ventures [2] - The company implemented strategic adjustments in 2024 due to industry downturns, which have led to a steady recovery in overall performance in 2025 [2] Business Segments - Revenue from personal care, beauty, innovation, and overseas businesses in Q3 2025 grew by 14%, 272%, 5%, and decreased by 3% respectively, totaling 606 million, 354 million, 158 million, and 365 million yuan [3] - Online sales in domestic markets increased by 173%, benefiting from a low revenue base from the previous year due to strategic adjustments [3] - The company experienced volume and price increases in personal care and beauty segments, with sales volume up by 9% and 101%, and average prices up by 5% and 85% respectively [3] Brand Strategy - The company focused on developing major products and enhancing brand building, with successful new product launches and marketing efforts [4] - Key products include the second-generation mosquito repellent from Six God, which contributed to customer growth, and the launch of a new fragrance shower gel [4] - The brand "Bai Cao Ji" achieved significant market presence with its new herbal skincare product, while "Yu Ze" and "Gao Fu" targeted specific demographics with strategic endorsements [4] Profit Forecast - The company is expected to continue its strategic adjustments, with projected EPS for 2025-2027 at 0.62, 0.76, and 0.91 yuan, corresponding to PE ratios of 41, 33, and 28 times at the current stock price [5]

Investment Rating - The report upgrades the investment rating to "Buy" based on the company's strong performance and growth potential [2]. Core Insights - The company reported Q3 2025 revenue of 1.483 billion yuan, a year-on-year increase of 28%, and a net profit attributable to shareholders of 140 million yuan, marking a return to profitability [9]. - The company has shown significant improvement in gross margin, reaching 61.5% in Q3 2025, up 7 percentage points year-on-year, attributed to product mix optimization and lower raw material costs [9]. - The report highlights the successful launch of new products and the revitalization of mature brands, contributing to a robust growth matrix [9]. - The company is focusing on online marketing strategies to enhance brand visibility and sales conversion, leveraging platforms like Douyin and Tmall [9]. - The financial forecast has been revised upwards, with expected net profits of 377 million yuan, 505 million yuan, and 606 million yuan for 2025, 2026, and 2027 respectively [9]. Financial Data and Profit Forecast - Total revenue for 2025 is projected at 6.531 billion yuan, with a year-on-year growth rate of 15% [8]. - The net profit attributable to shareholders is expected to be 377 million yuan in 2025, with a significant increase of 149% compared to the previous year [8]. - The report anticipates a gross margin of 59.2% for 2025, with a gradual increase in subsequent years [8]. - The price-to-earnings ratio (PE) for 2025 is estimated at 44 times, with a potential upside of 46% based on current market valuation [9].

Core Viewpoint - The stock of Shangmei Co., Ltd. (02145) has increased by over 3%, currently trading at 96.4 HKD with a transaction volume of 49.12 million HKD, driven by positive market developments and strong performance indicators in the beauty sector [1] Group 1: Company Performance - According to Qingyan Intelligence, the total GMV of the top 20 beauty brands on Douyin is expected to exceed 3 billion CNY by September 2025, capturing a market share of 17.6%, which represents a year-on-year growth of 38.59% [1] - Han Shu, a leading brand under Shangmei, continues to lead with a GMV exceeding 500 million CNY [1] - Huatai Securities reports that Shangmei's revenue and profit growth in the first half of the year have been impressive, with strong growth momentum observed in August as the main brand Han Shu expands into multiple product categories [1] Group 2: Market Expansion - The company has successfully launched multiple brands, including Guoguang White, Bread Superhero, and NAN Beauty, since the beginning of the second half of the year, indicating effective brand expansion [1] - The ability to incubate and operate multiple brands and product categories has been initially validated, suggesting potential for further growth if this capability continues to be replicated [1] - The internal organizational structure is characterized by high efficiency and strong execution capabilities, laying a solid foundation for future growth [1]

Core Viewpoint - The stock of Shumei Co., Ltd. (02145) has increased by over 3%, currently trading at 96.4 HKD with a transaction volume of 49.12 million HKD, indicating positive market sentiment towards the company [1] Group 1: Company Performance - According to Qianyan Intelligence, the total GMV of the top 20 beauty brands on Douyin is expected to exceed 3 billion CNY by September 2025, capturing a market share of 17.6%, which represents a year-on-year growth of 38.59% [1] - Han Shu, a leading brand under Shumei, has achieved over 500 million CNY in GMV, maintaining its position at the forefront of the market [1] - Huatai Securities reports that Shumei's revenue and profit growth in the first half of the year have been impressive, with strong growth momentum observed in August as the company continues to expand its product lines, including next-generation essence and fragrance body wash [1] Group 2: Market Expansion and Strategy - The company has successfully launched multiple brands, including Guangguang White, Bread Superhero, and NAN Beauty, since the second half of the year, indicating effective brand expansion strategies [1] - The ongoing multi-brand and multi-category incubation and operational capabilities of the company have been preliminarily validated, suggesting potential for further growth if these capabilities can be replicated [1] - The internal organizational structure of the company is characterized by high efficiency and strong execution, providing a solid foundation for future growth [1]

Macro Overview - The Federal Reserve lowered interest rates by 25 basis points, bringing the target range for the federal funds rate to 4.0-4.25% and indicated an additional 50 basis points of cuts may occur within the year [2][3] - The employment market is showing signs of slowing down, with a slight increase in the unemployment rate, leading to a more dovish stance from the Fed [2][3] Precious Metals Industry - Following the Fed's rate cut, gold prices may face short-term pressure due to profit-taking, although the long-term investment value remains intact [3] - The Fed's continued path of rate cuts amidst economic adjustments and persistent inflation concerns supports the long-term appeal of gold as a hedge against economic stagnation [3] ESG Investment Insights - ESG factors are increasingly influencing asset pricing, with improved disclosure rules in the A-share market leading to a rise in ESG report quality [4] - Empirical analysis shows that ESG factors have positive stock selection capabilities and are less correlated with traditional price-volume factors, indicating a growing pricing power for ESG in the A-share market [4] Japanese Gaming Industry - Japan's gaming industry, a pioneer with over 40 years of history, remains the third-largest market globally, with leading companies leveraging classic IPs to create resilient business models [5] - The success of Japanese gaming firms is attributed to their ability to diversify game distribution and localize operations, providing valuable lessons for Chinese companies looking to expand internationally [5] Company Spotlight: Shangmei Co., Ltd. - Shangmei Co., Ltd. reported strong revenue and profit growth in the first half of 2025, with continued expansion in product categories and brands expected to drive growth in the second half [7] - The company's operational capabilities in multi-brand and multi-category strategies have been validated, suggesting potential for further growth if these capabilities are replicated effectively [7]

Core Insights - The men's grooming market in China is experiencing unprecedented growth opportunities due to the trend of refinement and quality transformation [1] - The brand Zhiyue focuses on modern men aged 25 to 50, emphasizing personal attitude and taste through fragrance as a core element [2] - Zhiyue has established a complete product line that meets various grooming needs, including shower gel, shampoo, and fragrance [4] Brand Essence - Zhiyue positions itself as a brand that embodies the modern male spirit, using fragrance as a means to express individuality and confidence [2] - The collaboration with Swiss Firmenich introduces "Gentlemen Aroma Tech," resulting in a product line with a 72-hour lasting fragrance [2] Technological Innovation - Zhiyue integrates advanced technologies such as the "72-hour skin fragrance locking system," enhancing the fusion of fragrance and skin care [3] - The brand's acne treatment technology shows a 93.33% reduction in acne frequency and a 96.67% improvement in acne marks [3] Product Range - The brand offers a comprehensive product matrix that caters to various scenarios, from daily cleansing to social image management [4] - All products utilize natural plant extracts, ensuring they are gentle and safe for users, including pregnant women and infants [4] Brand Philosophy - Zhiyue represents a shift in domestic brands from mere functional satisfaction to emotional recognition, promoting a lifestyle that balances urban life with self-care [5] - The brand aims to redefine men's grooming standards while paving the way for high-end and global Chinese brands [5]

Core Insights - The overall performance of the consumer sector is under pressure, with major beauty brands facing growth challenges, while Shanghai Jahwa has reported its most encouraging financial results in recent years [1] - In the first half of the year, Shanghai Jahwa achieved revenue of 3.48 billion yuan, a year-on-year increase of 4.8%, and a net profit of 270 million yuan, up 11.7%, marking the first dual growth in these metrics since Q2 2022 [1] - The second quarter showed even more impressive results, with revenue growth of 25.4%, domestic online channel growth of 34.6%, and beauty product revenue growth of 55.7% [1] Group 1: Strategic Shifts - The company has shifted its core growth engine from channels to brand value, implementing four key focus measures: focusing on core brands, brand building, online channels, and efficiency [2] - This strategic adjustment reflects a response to the fragmented nature of the current market, where brand value and emotional connection have become more significant than channel convenience [3] - The brand-driven approach aims to capture consumer mindshare, facilitating cross-channel growth and enhancing profitability [3] Group 2: Brand Strategy and Innovation - Shanghai Jahwa is deepening its brand strategy by identifying differentiated value across its brands, employing a combination of niche category breakthroughs, strategic flagship products, and marketing innovation [4] - Key brands like Liushen and Yuze are focusing on specific market segments, with Liushen launching an upgraded portable mosquito repellent product that quickly became a top seller on Tmall, indicating its potential as a billion-level flagship product [4] - Yuze is concentrating on skin barrier repair, launching a second-generation cream that utilizes artemisia extract, achieving double-digit growth that outpaces the brand's overall performance [4] Group 3: Marketing and Brand Development - Other brands within Shanghai Jahwa are also clarifying their category strategies, such as Baihua Ji returning to its roots with a focus on traditional Chinese beauty products [5] - The company is enhancing its marketing innovation to appeal to younger consumers, exemplified by Liushen's creation of a brand-specific festival to strengthen consumer connection [6] - This comprehensive approach aims to establish a sustainable growth path by anchoring consumer perception, building barriers, and driving sales across the product matrix [6]

Investment Rating - The report provides a positive investment rating for the beauty and personal care industry, highlighting significant growth potential in various segments [1]. Core Insights - The beauty and personal care industry is experiencing a surge in user engagement, particularly in makeup and fragrance categories, driven by trends such as emotional healing and cultural collaborations [3][8]. - The report emphasizes the importance of understanding consumer trends, such as the rise of mini makeup products and the integration of fragrance into personal care routines, which are reshaping market dynamics [10][90]. User Trends - Trend 01: The rise of "mini makeup" products, with searches for mini makeup increasing by 145% year-on-year, indicating a shift towards portable beauty solutions [15][17]. - Trend 02: The "island makeup" trend reflects a desire for quick, effective beauty solutions that cater to the vacation mindset, with related searches up by 350% [38][44]. - Trend 03: The "no foundation makeup" trend is gaining traction, with a 262% increase in searches, as consumers seek lightweight, breathable products for warmer months [76][78]. Fragrance Trends - Trend 01: The focus on "energy fragrances" is growing, with a 165% increase in related searches, as consumers seek scents that resonate with their emotional states [92][94]. - Trend 02: The "memory fragrance" trend utilizes scents to evoke memories, with significant engagement on platforms like Xiaohongshu, indicating a strong consumer interest in personalized fragrance experiences [100][102]. - Trend 03: The trend of "DIY fragrances" is emerging, with a 52% increase in searches for DIY scent combinations, reflecting a growing consumer interest in personalized fragrance solutions [180][182]. Category Trends - The report identifies a significant expansion in the women's hygiene products sector, with trends such as "therapeutic sleepwear" and "private care" gaining traction due to increased consumer awareness and demand [188][194]. - The "absorbent pads" trend highlights a growing need for incontinence products, with a staggering 813% increase in related searches, indicating a previously underserved market [217][223]. - The "facial cleansing wipes" trend is also on the rise, with a focus on convenience and user experience, particularly for travel and outdoor activities, as evidenced by a 134% increase in related discussions [238][250].