Summary of Mao Geping Cosmetics Co. (1318.HK) Conference Call Company Overview - Company: Mao Geping Cosmetics Co. (1318.HK) - Period: 1H25 (First Half of 2025) Key Financial Metrics - Sales: RMB 2,588 million, up 31% year-over-year (yoy) [1][3] - Net Income (NI): RMB 670 million, up 36% yoy [1][3] - Operating Profit (OP): RMB 873 million, up 45% yoy [1][3] - Gross Margin: 84.2%, down 0.7 percentage points (ppt) yoy [10][12] - Net Margin: 25.9%, up 0.9 ppt yoy [13] Sales Performance By Channel - Online Sales: RMB 1,297 million, up 39% yoy, but 6% below Goldman Sachs estimates (GSe) [9][4] - Offline Sales: RMB 1,224 million, up 27% yoy, exceeding GSe by 3% [7][4] By Category - Color Cosmetics: RMB 1,422 million, up 31% yoy, contributing 55% of total sales [4][1] - Skincare: RMB 1,087 million, up 33% yoy, contributing 42% of total sales [4][1] - Fragrance: RMB 11 million in sales [4][1] Operating Efficiency - Selling and Distribution Expenses: Increased by 24.8% yoy to RMB 1,169 million, but 9% lower than GSe [11][12] - Selling Expenses Ratio: Declined by 2.4 ppt yoy to 45.2%, significantly below GSe of 48.8% [11][12] Future Outlook and Strategies - Discussion Points for Upcoming Briefing: 1. Sustainability of 1H margin and details behind selling expenses ratio decline [2] 2. Full year 2025 outlook [2] 3. Strategies for Double 11 sales event [2] 4. Skincare category strategy and online channel expansion [2] 5. Updates on fragrance line performance and new product pipelines [2] Risks and Considerations - Key Risks: 1. Variability in beauty consumption penetration in China [18] 2. Online penetration rates [18] 3. Development of new star SKUs, especially in skincare [18] 4. ROI on expanding consumer base [18] 5. Key person risk [18] Valuation and Price Target - 12-Month Price Target: HK$ 86, based on a 25x 2027E P/E [17] - Current Price: HK$ 96.45, indicating a downside potential of 10.8% [20] Conclusion Mao Geping Cosmetics Co. has shown strong growth in sales and net income for 1H25, driven by both online and offline channels. The company is focusing on operational efficiency and has plans for future growth, particularly in the skincare category and online expansion. However, it faces risks related to market penetration and product development. The current valuation suggests a potential downside, warranting careful consideration for investors.
毛戈平：初步看法，H25 销售、净利润（NI）处于利润指引中点，自营运利润（OP）因销售费用率低于预期超预期