Group 1: Gold Market Analysis - Recent surge in gold prices, with London gold reaching nearly $3580 per ounce on September 3, 2025, after a four-month period of high volatility [12][10] - Under neutral assumptions, the gold price midpoint for the second half of the year is projected at $3627 per ounce, with an optimistic scenario suggesting a rise to $3816 per ounce [12][10] - Key drivers for the recent price increase include a shift in investment from long-term US and European bonds to gold due to concerns over debt risks, particularly in Europe [12][11] Group 2: International Beauty Market Trends - The global beauty market is expected to grow at a rate of 4.5% in 2024, down from 8% in 2023, with significant regional disparities [13][13] - The European market outperformed the global average with a 7.5% year-on-year growth, while the North Asia market saw a decline of 2% [13][13] - Major international beauty brands are adapting to the competitive landscape in China by embracing new online channels and local partnerships, leading to a slight recovery in market performance [13][13] Group 3: Fourth Paradigm Company Overview - The company is projected to achieve revenues of 68.52 billion, 88.19 billion, and 112.26 billion yuan from 2025 to 2027, with year-on-year growth rates of 30%, 29%, and 27% respectively [17][17] - The company is expected to turn a profit by 2025, with net profits forecasted at 0.55 billion, 2.83 billion, and 5.68 billion yuan for the same period [17][17] - The company's strategy focuses on standardization, which is anticipated to drive rapid industry expansion and maintain long-term competitiveness [14][14]

Investment Rating - The report maintains a "Buy" rating for the cosmetics and medical beauty sector, highlighting strong growth potential and investment opportunities in the industry [14][19]. Core Insights - The cosmetics and medical beauty sector has shown resilience, outperforming the market during the week of August 29 to September 5, 2025, with the Shenwan Beauty Care Index declining only 0.8% [3][4]. - The transition to autumn skincare marks the beginning of a consumption peak for the sector, with significant sales events such as the Autumn Beauty Consumption Festival and Double 11 approaching, creating new investment opportunities [9][10]. - Major companies in the sector are optimistic about their performance in the second half of 2025, as indicated by a recent conference involving over ten beauty care companies [9]. Summary by Sections Industry Performance - The Shenwan Cosmetics Index remained stable, outperforming the Shenwan A Index by 1.4 percentage points, while the Shenwan Personal Care Index fell by 1.8%, underperforming the Shenwan A Index by 0.3 percentage points [3][4]. Key Company Reviews - **Mao Geping (1318HK)**: Reported a revenue of 2.59 billion yuan for H1 2025, a year-on-year increase of 31%, with a net profit of 670 million yuan, up 36%. The color cosmetics segment saw a revenue of 1.42 billion yuan, while skincare generated 1.09 billion yuan, reflecting strong brand momentum [10][11]. - **Shangmei Co. (02145HK)**: Achieved a revenue of 4.108 billion yuan in H1 2025, a 17.3% increase, with a net profit of 556 million yuan, up 34.7%. The main brand, Han Shu, contributed significantly to growth, with a revenue of 3.344 billion yuan [16][17]. Investment Recommendations - Recommended companies include Shangmei Co., Porlaia, and Shanghai Jahwa, which have strong brand matrices and relatively low PE multiples. Other notable mentions are Marubi Biological and Mao Geping, which are positioned well to benefit from the rise of domestic beauty brands [10][19]. - The report suggests focusing on companies with strong R&D capabilities and product pipelines, particularly in the upstream medical beauty segment, with a recommendation for Aimeike [10][19]. Market Trends - The report notes a significant increase in online sales, with H1 2025 online revenue for Mao Geping reaching 1.297 billion yuan, a 39% year-on-year increase, marking a shift in consumer purchasing behavior towards online platforms [12][18]. - The overall cosmetics retail market showed a 4.5% growth in July 2025, indicating a robust recovery in consumer spending [23][26]. Strategic Developments - Porlaia's investment in Huazhi Xiao reflects a strategic move to enhance its multi-brand strategy and capitalize on the influence of Gen Z consumers [28]. - The report highlights the competitive landscape, noting that domestic brands are increasingly capturing market share, with a notable shift in consumer perception from "value for money" to "quality choice" [32].

Investment Rating - The report maintains an "Outperform" rating for Mao Geping Cosmetics, with a target price of HK$124.70, indicating a potential upside of 28.3% from the current price of HK$97.20 [2][8]. Core Insights - Mao Geping achieved a revenue of RMB 2.588 billion in 1H25, representing a year-on-year growth of 31.3%, with net profit attributable to the parent company reaching RMB 670 million, up 36.1% year-on-year [3][13]. - The company's gross margin for 1H25 was 84.2%, slightly down from the previous year, primarily due to costs associated with product upgrades and training services [3][14]. - Online sales surpassed offline sales for the first time, with online revenue growing by 39.0% year-on-year, while offline revenue increased by 26.6% [4][14]. - The company plans to expand its sales network by adding over 30 new offline stores annually and enhancing its online presence through effective marketing strategies [6][15]. Financial Performance - Revenue projections for 2025-2027 are estimated at RMB 5.155 billion, RMB 6.665 billion, and RMB 8.398 billion, with growth rates of 32.7%, 29.3%, and 26.0% respectively [8][18]. - Net profit forecasts for the same period are RMB 1.209 billion, RMB 1.505 billion, and RMB 1.859 billion, with growth rates of 37.3%, 24.6%, and 23.5% [8][18]. - The company’s diluted EPS is projected to increase from RMB 2.50 in 2025 to RMB 3.79 in 2027 [2][12]. Business Strategy - Mao Geping is focusing on enhancing its brand visibility through increased marketing and promotional expenditures, which rose by 24% year-on-year to RMB 540 million in 1H25 [3][14]. - The company is also testing new skincare product lines and plans to introduce high-priced skincare products targeting mature skin [4][15]. - The expansion strategy includes entering high-end markets in Asia-Pacific, the Middle East, and Europe, with plans to open a flagship store in Hong Kong and expand to Singapore and Japan [7][17]. Market Position - The company’s market capitalization is approximately HK$25.45 billion (US$3.26 billion), with a trading volume averaging US$37.53 million over the past three months [2][8]. - Mao Geping's stock has shown a relative underperformance compared to the MSCI China index, with a 12-month relative decline of 28.3% [2].

Summary of the Conference Call Records Company Overview - The company discussed is 毛戈平, a high-end beauty brand in China, known for its strong IP and Eastern aesthetic philosophy, which has established a significant position in consumers' minds [1][2]. Key Points and Arguments Market Positioning and Strategy - 毛戈平 has a differentiated product positioning and pricing strategy that allows it to occupy a place in the high-end market while attracting consumers from downgraded international brands, thus expanding its market coverage [1][2]. - The company started with offline counters and currently operates over 400 counters, enhancing user experience through a membership service system that increases customer loyalty [1][2]. Business Growth through Product Line Extension - The company is gradually expanding into skincare and fragrance categories, which supports its business growth and enhances annual sales per counter [1][3]. - The core product remains in the color cosmetics category, but the multi-category strategy is expected to improve customer loyalty and increase average transaction value [3][4]. Future Growth Potential - 毛戈平's future growth is considered highly certain, with plans for steady expansion, benefiting from the resurgence of national aesthetics and increased national confidence, leading to a growing market share in high-end cosmetics [5]. - The company plans to add over 20 counters in the first half of 2025, contributing to a projected annual growth rate of about 10% from new counter openings [5][6]. Revenue Growth Sources - The brand's growth is primarily driven by an increase in the number of counters, higher unit prices, and same-store sales growth, with expectations for double-digit growth in same-store sales [6][7]. - The company has successfully launched new products, such as lip and color products, and has maintained an advantage in the base makeup sector [7][8]. Product Development and Performance - In the skincare segment, 毛戈平 has introduced high-performing products like caviar masks and black creams, which accounted for over half of the skincare sales in the first half of the year [7][8]. - The company launched a new fragrance in May, achieving over 10 million yuan in sales within two months, aligning with its brand characteristics [8]. International Expansion Plans - 毛戈平 aims to become a truly international luxury beauty group, with plans to enter the Hong Kong Sephora system and open physical stores in Hong Kong [9][10]. - The company expects to maintain over 20% growth in offline sales and over 30% growth in online sales, leveraging its high conversion rates and customer repurchase rates [10]. Expected Compound Growth Rate - The company anticipates a compound annual growth rate of approximately 30% over the next few years, supported by its steady expansion strategy, new product launches, and enhanced channel development [11].

Core Viewpoint - The company has demonstrated strong and rapid growth in its performance, with significant increases in both revenue and net profit for the first half of 2025 compared to the previous year [1][4]. Financial Performance - The company achieved a revenue of 2.588 billion with a year-on-year growth of 31.3%, and a net profit of 670 million, reflecting a year-on-year increase of 36.1% [1]. - Adjusted net profit stood at 672 million, marking a year-on-year growth of 32.0%, with an adjusted net profit margin of 26.0%, up by 0.2 percentage points [1]. Product Category Performance - In the cosmetics segment, revenue reached 1.422 billion, growing by 31.1%, with luxury products like caviar cushion and soft-focus powder both exceeding 200 million in sales [1]. - The skincare segment generated 1.087 billion, up by 33.4%, with key products like caviar masks and black cream achieving sales of 600 million and 200 million respectively [1]. - The newly expanded fragrance category generated 110 million, while the makeup artistry training business saw revenue of 67 million, down by 5.9% due to a deliberate reduction in enrollment [1]. Channel Performance - Online channels generated 1.297 billion, reflecting a year-on-year increase of 39.0%, with direct online sales contributing 1.024 billion, also up by 39.0% [2]. - Offline channels achieved revenue of 1.224 billion, growing by 26.6%, with direct offline sales at 1.094 billion, up by 25.0% [2]. - The company operated 437 counters, adding 28 new ones, with comparable counter average revenue increasing to 2.9 million, a year-on-year growth of 21% [2]. - Member repurchase rates for online and offline channels improved to 24.1% and 30.3%, respectively, with increases of 2.6 percentage points and 1.6 percentage points [2]. Profitability - The company's gross margin and net margin for the first half of 2025 were 84.2% and 25.9%, respectively, with a decrease in gross margin by 0.7 percentage points and an increase in net margin by 0.9 percentage points [3]. - The gross margins for cosmetics and skincare were 82.7% and 87.5%, reflecting declines of 0.9 and 0.2 percentage points, respectively, primarily due to increased product costs and training expenses [3]. - Sales and marketing expense ratio, administrative expenses, and R&D expense ratio were 45.2%, 5.3%, and 0.6%, showing decreases of 2.3 percentage points, 1.5 percentage points, and 0.2 percentage points, respectively [3]. Investment Outlook - The company is expected to maintain strong mid-term performance, with rapid growth in both revenue and profit, supported by its strong brand and continuous product innovation [4]. - The company aims for synergistic development in cosmetics and skincare while expanding into the fragrance category [4]. - Online revenue has surpassed offline for the first time, indicating a shift in the sales strategy [4].

Core Viewpoint - The company reported strong performance in the first half of 2025, with significant revenue and profit growth, indicating a positive outlook for the business. Group 1: Overall Performance - In H1 2025, the company achieved revenue of 2.59 billion yuan, representing a year-on-year increase of 31% [1] - Net profit for H1 2025 reached 670 million yuan, up 36% year-on-year [1] - Gross margin stood at 84.2%, slightly down by 0.7 percentage points year-on-year, while net margin improved to 25.9%, up 0.9 percentage points [1] Group 2: Segment Performance - Makeup segment revenue in H1 2025 was 1.42 billion yuan, growing by 31.1% year-on-year, driven by strong sales of key products [2] - Skincare segment revenue reached 1.09 billion yuan, with a year-on-year increase of 33.4%, supported by high-performing products [2] - Fragrance segment generated revenue of 11.41 million yuan, showing strong performance from the "Wen Dao Dong Fang" series [2] - Makeup training revenue declined by 5.9% year-on-year to 67.31 million yuan [2] Group 3: Channel Performance - Offline revenue in H1 2025 was 1.224 billion yuan, up 26.6% year-on-year, with a total of 437 stores [3] - Online revenue reached 1.297 billion yuan, growing by 39% year-on-year, accounting for 51.4% of total revenue [3] - The company has 19 million members, a 53% increase year-on-year, with a repurchase rate of 26.8% [3] Group 4: Growth Drivers - The company is focusing on product innovation and international expansion, with new skincare and makeup lines launched in mid-2025 [3] - Plans for a research and development center in Hangzhou by the end of 2026 aim to support product diversification and market penetration [3] - The company is prioritizing entry into European and Asia-Pacific markets with localized teams and high-end channels [3] Group 5: Brand Positioning - The company is positioned as a leading domestic beauty brand, focusing on the mid-to-high-end makeup segment [4] - Strong brand premium and unique positioning in Oriental aesthetics contribute to long-term growth potential [4] - Profit forecasts for 2025-2027 are 1.184 billion, 1.542 billion, and 1.953 billion yuan, with corresponding PE ratios of 37, 29, and 23 [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][6][22] Core Insights - The company has shown strong performance in the high-end domestic beauty market, with significant revenue growth and brand momentum [6][10] - The company reported a revenue of 2.59 billion RMB in H1 2025, representing a year-on-year increase of 31%, and a net profit of 670 million RMB, up 36% year-on-year [6][10] - The gross margin for H1 2025 was 84.2%, with a net profit margin of 25.9%, indicating effective cost control [6][10] Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: 2,886 million RMB - 2024: 3,885 million RMB - 2025E: 5,173 million RMB - 2026E: 6,852 million RMB - 2027E: 8,533 million RMB - Year-on-year growth rates for revenue are projected at 58% for 2023, 35% for 2024, and gradually decreasing to 25% by 2027 [5][13] - Net profit forecasts are as follows: - 2023: 662 million RMB - 2024: 881 million RMB - 2025E: 1,184 million RMB - 2026E: 1,542 million RMB - 2027E: 1,953 million RMB - The projected PE ratios are 64.7 for 2023, decreasing to 22.5 by 2027 [5][13] Segment Performance - The company experienced double-digit growth in both color cosmetics and skincare, with significant contributions from new product launches [6] - In H1 2025, color cosmetics revenue reached 1.42 billion RMB (up 31.1% YoY), while skincare revenue was 1.09 billion RMB (up 33.4% YoY) [6] - The fragrance segment also showed promising growth, with revenue of 11.41 million RMB, while the makeup training segment saw a decline of 5.9% [6] Channel Performance - The company has effectively released its potential across all channels, with offline revenue of 1.22 billion RMB (up 26.6% YoY) and online revenue of 1.297 billion RMB (up 39% YoY) [6] - The number of members reached 19 million, with a repurchase rate of 26.8%, indicating strong customer loyalty [6] Research and Development - The company is focused on innovation and international expansion, with new product launches planned and a research center set to support growth [6] - The company aims to penetrate the European and Asia-Pacific markets with localized teams and high-end channels [6] Brand Positioning - The company is positioned as a leading domestic beauty brand, capitalizing on the high-end color cosmetics market with a strong emphasis on unique aesthetics and product innovation [6]

Group 1: Beauty Sector Insights - Mao Ge Ping's department store same-store sales growth exceeds 10% YoY, while shopping plaza stores show over 20% growth[2] - Average customer spending in department stores is around 600-900 yuan, higher than 300-600 yuan in shopping centers, reflecting different customer demographics[2] - Mao Ge Ping expects over 20% sales growth for the full year of 2025[2] Group 2: Skincare and Product Focus - Mao Ge Ping's product mix consists of approximately 50% makeup, 45% skincare, and 5% perfume, with a strong reliance on star products in skincare[3] - The skincare segment still heavily depends on caviar star products, which account for over half of skincare sales[3] Group 3: Jewelry Market Trends - From January to July 2025, sales of Chow Tai Fook, Chow Sang Sang, and Zhou Liu Fu declined by 10%-20% YoY, while CHJ Jewellery increased by 40% YoY[4] - CHJ Jewellery's growth is attributed to lower gold prices and fixed-price products that attract consumers[4] Group 4: Sports Apparel Performance - Adidas and Nike's average customer spending decreased to 800-1500 yuan, while Anta and Li Ning increased to 500-700 yuan[5] - Columbia's sales grew by 10-15% YoY, while The North Face and Jack Wolfskin saw declines of 5-10% YoY[5]

Core Viewpoint - The acquisition of the functional skincare brand Baizhicui by the makeup brand Judo's parent company, Juyi Group, marks its official entry into the skincare sector, reflecting a broader trend of multi-brand and cross-category development in the beauty industry [1][2]. Category Expansion: Skincare/Makeup/Medical Devices - Skincare brands are primarily venturing into makeup and fragrance, while makeup brands are increasingly extending their reach into skincare [3][4]. - The mainstream choice for skincare brands entering the makeup market is to launch base makeup products, followed by fragrances [5]. Skincare Brands Entering Makeup Market - Notable brands like Proya, Han Shu, and Baique Ling have launched cushion products, while others like Natural Hall and Oushiman have introduced foundation products [5][6]. Skincare Brands Focusing on Medical Devices - Skincare brands are showing a strong interest in the medical device category, primarily launching products featuring recombinant collagen [6][7]. Makeup Brands Entering Skincare Market - Makeup brands are primarily focusing on masks as their first choice for skincare products, followed by serums and creams [8][9]. - The low technical requirements and acceptance of masks make them an attractive entry point for makeup brands [10]. Product Pricing Strategies - Skincare brands typically price their makeup products below 200 yuan, with many under 100 yuan, while makeup brands entering skincare tend to target mid to high-end price ranges [13][14]. - Medical device products from skincare brands have a wider pricing range, with some products priced as high as 300 yuan [13]. Market Performance - Sales figures for newly launched products vary significantly, with some brands achieving over 10,000 units sold, while others struggle to reach even 100 [15][16]. - For instance, the luxury caviar mask from Mao Ge Ping has sold over 100,000 units, contributing significantly to the brand's revenue [17]. Challenges in Cross-Category Development - The drive for cross-category development is largely due to rising traffic and customer acquisition costs, as well as the saturation of single-category growth [18]. - Successful cross-category ventures depend on the ability to transfer existing consumer perceptions to new product categories [19].

Summary of the Beauty Industry Conference Call Industry Overview - The beauty industry experienced a total sales growth of 5.2% during the 618 shopping festival, with total sales reaching approximately 855.6 billion yuan, a 15.2% increase year-on-year. The event duration was extended to 36 days, leading to a slight decline in average daily sales compared to the previous year [2][14]. Key Brands and Performance - **Polaire**: Achieved significant sales on Tmall and Douyin, with a GMV of 4.5 billion yuan on Douyin in 2025, facing some growth pressure but maintaining positive growth on Tmall [11]. - **Mao Geping**: Experienced a remarkable growth rate of 55%-60% on Douyin, driven by key products like caviar masks and foundation. The skincare category on Tmall also saw a growth rate of about 60% [5]. - **Perfect Diary**: Notable growth on Douyin attributed to new products like the small gold needle series and creams, with a growth rate of approximately 40% on Tmall [6]. - **Han Shu**: Maintained its leading position on Douyin with a growth rate of about 20%. The brand reduced its live broadcast ratio to 15% but still achieved good growth, indicating effective product card and self-broadcasting strategies [7][8]. - **Wenona**: Achieved a GMV close to 200 million yuan on Douyin, with a year-on-year growth rate of 20% in 2025, reflecting effective management changes [9][10]. - **Caitang**: Experienced over 100% growth on Douyin and 40-50% growth on Tmall, showing significant improvement under new management [12]. - **Kefumei**: Achieved a GMV of 270 million yuan on Douyin during the festival, with a year-on-year growth of 20%. Despite a decline in daily sales due to public sentiment issues, the brand's product quality remained unaffected [13]. Market Dynamics - The beauty and skincare categories performed exceptionally well, with Tmall's top five brands being Polaire, Lancôme, L'Oréal, Estée Lauder, and Shiseido [3][4]. - The overall growth of the beauty industry met expectations, with Tmall and Douyin continuing to support beauty products [14]. - Brands like Shangmei and Ruoyuchen are highlighted as potential investment opportunities, with Ruoyuchen's flagship store achieving over 70 million yuan GMV on Douyin during the festival [14]. Investment Insights - The beauty industry is considered suitable for investment due to valuation adjustments, particularly for companies like Juzhi Biology and Runben, which are expected to see significant growth [14].