Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [1]. Core Viewpoints - The company is positioned as a high-end beauty brand in China, leveraging its founder's expertise in Eastern aesthetics and professional quality to create a competitive edge in the cosmetics market [5][6]. - The company has shown significant revenue growth, with projected revenues reaching 3.885 billion yuan in 2024, up 34.6% year-on-year, and net profits expected to hit 881 million yuan, reflecting an 88% increase [4][6]. - The brand's strong market presence is supported by a family-run business model, extensive experience in the beauty industry, and effective marketing strategies that resonate with younger consumers [5][6][25]. Summary by Sections 1. Market Overview - The Chinese cosmetics market is projected to grow at a compound annual growth rate (CAGR) of approximately 8.4% from 2023 to 2028, reaching 175.2 billion yuan by 2028 [10]. 2. Company Profile - Founded in 2000, the company has established itself as a leader in high-end domestic cosmetics, with a focus on integrating art and product development [5][14]. - The company operates under a family business model, with significant ownership held by the founder and family members, ensuring a cohesive strategic direction [22][24]. 3. Financial Performance - The company reported revenues of 2.886 billion yuan in 2023, with a projected increase to 3.885 billion yuan in 2024, and net profits expected to rise from 662 million yuan to 881 million yuan in the same period [4][6][26]. - The gross margin remains high, with cosmetic products achieving over 80% gross margin, indicating strong profitability compared to peers [29][30]. 4. Brand Development and Marketing - The brand has successfully built a strong identity through collaborations with cultural institutions and participation in major events, enhancing its market positioning [36][37]. - The company has expanded its online presence significantly, with online sales accounting for 47.8% of total revenue in 2024, reflecting a strategic shift towards digital marketing [5][6][9]. 5. Product and Channel Expansion - The company has diversified its product offerings, with color cosmetics generating 2.304 billion yuan in sales in 2024, and skincare products contributing 1.429 billion yuan [5][6]. - The company continues to explore new product categories, including the introduction of a fragrance line in 2025, which is expected to drive future growth [5][6].

Core Insights - The company, founded by renowned makeup artist Mao Geping in 2000, has established significant brand influence in the Chinese beauty industry, with two main brands: MAOGEPING and Zhi Ai Zhong Sheng, covering makeup, skincare, and makeup training [1][2] - The brand is experiencing accelerated growth and has substantial future potential, with a rich product line and high repurchase rates, although there remains a considerable gap compared to international brands [1][2] Product and Channel Strategy - On the product side, the company has historically focused on base makeup and skincare products, but is now expanding its makeup categories and innovating within base makeup to create a comprehensive beauty group [1] - The company plans to maintain a dual-channel development strategy, leveraging both online and offline sales channels for future growth [1][2] Brand Resource Advantages - The company benefits from a well-known professional makeup artist IP, providing a natural marketing advantage reflected in higher net profit margins compared to industry averages [2] - Unique access to high-end department store resources allows the company to better understand consumer insights and maintain high ARPU consumer relationships, with brand strength continuously improving [2] - The management team has extensive experience in the makeup industry, valuing the brand's worth [2] Financial Projections - Revenue is projected to reach RMB 5.368 billion, 6.976 billion, and 8.785 billion for 2025-2027, with year-on-year growth rates of +38%, +30%, and +26% respectively [2] - Net profit attributable to the parent company is expected to be RMB 1.2 billion, 1.58 billion, and 1.97 billion for the same period, with growth rates of +36.7%, +30.9%, and +24.9% respectively [2] - The company maintains a "buy" rating, anticipating strong development in both makeup and skincare product lines, as well as growth in online and offline channels [2]