Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Insights - The company experienced accelerated growth in Q2 2025, with revenue and net profit attributable to shareholders increasing by 12% and 24% year-on-year, respectively [1] - The high-end brand transformation is showing positive results, with a focus on brand building, product line expansion, and channel development [2] - The self-owned brand and CP business segments are stabilizing, with expectations for profitability in the upcoming periods [3] Financial Performance - In the first half of 2025, the company reported revenue of 2.5 billion yuan, a year-on-year increase of 9.02%, and a net profit of 123 million yuan, up 16.54% [1] - The gross margin for Q2 2025 was 65.27%, reflecting a year-on-year increase of 3.67 percentage points [1] - The forecast for net profit attributable to shareholders is projected to grow significantly from 260 million yuan in 2025 to 414 million yuan in 2027, representing year-on-year increases of 136%, 29%, and 23% respectively [3][8] Brand and Product Development - The company is enhancing its high-end brand matrix through collaborations with celebrities and high-fashion events, which are effectively reaching high-net-worth customers [2] - New product launches in the Chinese market have been successful, contributing to the overall brand product system [2] - The performance of star products has been strong, with significant sales in key categories [2] Market Position and Strategy - The company is focusing on high-end transformation, with a target to open 50 high-end stores with SPA services over the next three years [2] - The self-owned brand and CP business are expected to stabilize, with a focus on quality and resource allocation [3]

Group 1: Company Overview and Strategy - The company aims to build a "new high-end luxury beauty brand management group" through high-end and global strategies, focusing on brand globalization and optimizing business structure [2][3][8]. - In 2024, the company achieved a revenue of 4.237 billion CNY, with self-owned brands generating 1.651 billion CNY, maintaining a stable revenue share [3][8]. Group 2: Self-Owned Brands Performance - The self-owned brand segment achieved a revenue of 1.651 billion CNY, with a gross margin of 74.27% in 2024, indicating an improvement in product structure and profitability [3][9]. - The French luxury skincare brand EDB saw significant growth, with a focus on high-net-worth customers and successful marketing campaigns, leading to a strong brand presence [4][17]. - The brand PA, acquired in 2024, experienced over 300% growth, with expectations for continued expansion in both domestic and international markets [6][20]. Group 3: CP Brands Performance - The CP brand segment consists of five main categories, with a focus on quality and resource allocation, although the performance of the Kefu (formerly Johnson & Johnson) brand declined significantly [8][9]. - Other CP brands, such as ESI and Mistique, reported good growth, with ESI's GMV doubling year-on-year [8][9]. Group 4: Financial Performance - The company reported a net profit of 110 million CNY in 2024, a decrease of 62.63% year-on-year, attributed to increased market expenses and external economic pressures [9][12]. - The overall gross margin improved to 63.01%, up from 58.44% in 2023, driven by a higher proportion of high-margin products [9][12]. Group 5: Research and Development - The company applied for 28 patents and published 15 papers in 2024, emphasizing its commitment to R&D and innovation [10][11]. - R&D expenses accounted for 4.98% of self-owned brand revenue, aligning with international standards for leading beauty companies [9][11]. Group 6: Market Outlook and Challenges - The company anticipates a focus on high-end brands and a strategic reduction in lower-end brands to improve profitability [27][30]. - The external economic environment remains challenging, but the company is committed to maintaining a strong brand presence and sustainable growth [11][30].