Core Viewpoint - The report from CICC maintains the profit forecast for Maogeping (01318) for 2025-2026, with the current stock price corresponding to a P/E of 41/31x for those years, and a target price of HKD 127, indicating a potential upside of 22.5% [1] Group 1: Product Development - The skincare product matrix continues to expand, with positive market feedback on new perfume products [2] - In skincare, the company is launching a series of products targeting anti-aging issues, including the "Fire Source" series and the black gold series [2] - In color cosmetics, new products such as the "Starry Sky" eyeshadow and earth-tone eyeshadows have been introduced [2] - The perfume segment saw the launch of 13 new products in May, which remain in high demand [2] Group 2: Channel Expansion - The company is strengthening its brand presence by entering high-end retail locations, with significant same-store growth outperforming the market [3] - Offline, the company has opened new counters in prestigious locations, with a same-store growth of approximately 18% in the first half of 2025 [3] - Online, the company has successfully engaged younger demographics, with a combined GMV growth of 47% on Tmall and Douyin from July to August [3] Group 3: International Expansion - The company is expanding its brand internationally, having entered Sephora in Hong Kong and planning to open its first counter in Harbour City, Hong Kong in October [4] - The company aims to expand into Southeast Asia, Japan, and Europe starting in 2026, indicating strong growth potential as a rare high-end domestic beauty brand [4]

Core Viewpoint - The company reported strong performance in 1H25, with revenue and net profit growth aligning with previous forecasts and expectations [1][2]. Financial Performance - Revenue for 1H25 reached 2.59 billion yuan, a year-on-year increase of 31.3% - Net profit attributable to shareholders was 670 million yuan, up 36.1% year-on-year - Adjusted net profit stood at 672 million yuan, reflecting a 32.0% increase year-on-year - The performance was consistent with prior forecasts, which anticipated revenue growth of 30.4%-31.9% and net profit growth of 35.0%-37.0% [1]. Growth Trends - All-channel revenue showed rapid growth, with classic products performing well and strong same-store sales growth - By category, cosmetic revenue was 1.42 billion yuan, up 31% year-on-year, with key products like caviar cushion and gold fan powder exceeding 200 million yuan in retail sales - Skincare revenue reached 1.09 billion yuan, a 33% increase year-on-year, with significant sales from caviar masks and black cream - Offline revenue was 1.22 billion yuan, up 27% year-on-year, with same-store revenue growth of approximately 18% - Online revenue was 1.30 billion yuan, a 39% increase year-on-year, accounting for 50% of total revenue [1][2]. Operational Efficiency - Gross margin for 1H25 was 84.2%, a decrease of 0.7 percentage points year-on-year, primarily due to the increased share of online direct sales - Sales expense ratio decreased by 2.4 percentage points to 45.2%, attributed to effective online cost control and optimization of offline store locations - Management expense ratio fell by 1.5 percentage points to 5.3%, influenced by a high base from the previous year and scale effects - Net profit margin attributable to shareholders increased by 0.9 percentage points to 25.9% [2]. Future Outlook - The company plans to develop professional makeup products for different skin types and colors, expand skincare offerings, and enhance fragrance products based on Eastern culture and aesthetics - There is a focus on increasing coverage in high-end department stores in major cities and expanding online consumer reach - Long-term plans include entering overseas markets and strategically expanding a new high-end brand matrix [2]. Profit Forecast and Valuation - The profit forecast for 2025-2026 is set at 1.15 billion yuan and 1.46 billion yuan, respectively - The current stock price corresponds to a P/E ratio of 38x for 2025 and 29x for 2026 - The company maintains an outperform rating and a target price of 127 HKD, indicating a potential upside of 32% [3].