Summary of the Conference Call Transcript Company Overview - Company: Shangmei Co., Ltd. (上美股份) - Industry: Cosmetics and Personal Care - Date of Report: September 2, 2025 Key Points and Arguments 1. Performance Outlook: The company maintains a positive outlook for the second half of the year, with strong first-half results showing revenue and profit growth of 17% and 31% year-over-year, respectively, aligning with positive earnings forecasts [1][9][18]. 2. Business Strategy: The strategic shift towards self-broadcasting on Douyin has proven effective, with the "Han Shu" brand leading the beauty category on the platform, achieving a GMV ranking that is over twice that of the second place [1][4]. 3. Sales Growth: Year-to-date sales have increased by over 25%, with a target of exceeding 40% GMV growth for the year [1][4]. 4. Future Goals: The company aims for a 25% growth in both revenue and profit by 2026, with a mid-term goal of reaching 30 billion yuan in revenue by 2030 [1][4][18]. 5. New Product Lines: The second growth curve, represented by the "Yi Ye" brand, has seen a sales increase of 147% to 397 million yuan in the first half of 2025, surpassing 2024 levels [1][4]. 6. International Expansion: Plans for overseas expansion are set to begin in 2026, targeting Southeast Asia, including Indonesia [1][4]. 7. Dividend Policy: The interim dividend is set at 0.5 yuan per share, with a payout ratio of 38%, down from 76% in 2024 due to capital expenditures for new capacity and overseas investments, while maintaining a long-term payout ratio of 30-50% [1][4]. 8. Market Position: As of 2024, Shangmei is among the top ten domestic beauty brands in China, with a market share of 1.4% and retail sales of 7.7 billion yuan [9][18]. 9. Financial Projections: Revenue and profit are expected to grow at a compound annual growth rate (CAGR) of 22% and 30%, respectively, from 2025 to 2027, with operating profit margins projected to rise from 10.9% in 2024 to 14.0% in 2027 [9][18]. 10. Valuation: The target price is set at 109 HKD, corresponding to a 24x 12-month forward P/E ratio, based on a discounted cash flow analysis [1][9][19]. Additional Important Information - Sales Efficiency: The shift to self-broadcasting has led to improved advertising efficiency, with a decrease in sales expense ratio by 0.7 percentage points in the first half of 2025 [4]. - Brand Performance: The "Han Shu" brand accounted for 81.4% of total revenue in the first half of 2025, with significant contributions from online sales channels [16]. - Financial Metrics: The company reported a net profit of 556 million yuan in the first half of 2025, a 35% increase year-over-year [14]. - Risks and Catalysts: Key risks include product quality issues and inflation, while potential upside catalysts involve successful new brand launches and better-than-expected growth from the main brand [21][22]. This summary encapsulates the essential insights from the conference call, highlighting the company's strategic direction, financial performance, and market positioning within the cosmetics industry.
上美股份-下半年将提速；维持“增持”评级