Key investment recommendation logic: Since 2012, the cosmetics industry's compound annual growth rate has reached 13%, far exceeding the global cosmetics market. 2) The development of endogenous epitaxial two-wheel drive companies. Since 2015, the company has vigorously expanded high-end products. In the first half of this year, the revenue of the high-end brand Midos increased by 32.5% year on year. At the same time, the company successively acquired Suqian Baibao, invested in beauty industry funds, and invested in beauty information to enter the media and beauty sector; 3) In the first half of 2018, the company achieved operating income of 400 million yuan, +2.8% year on year, and net profit to mother of 80 million yuan, +57.8%. According to our forecast data, the 2018 valuation was only 17 times. Vigorously expand high-end products, and the brand matrix continues to be rich: 1) Vigorously expand high-end products: Currently, the growth of popular toiletries is slowing down, but high-end toiletries are relatively scarce. In order to meet the upgrading of consumer demand, the company has vigorously expanded high-end products since 2015, and the share of the high-end brand Medos in the company's revenue increased from 5.8% in 2014 to 21.8%. 2) The brand matrix continues to be rich: The company has launched new care brands such as “Yimei”, “Jiaocaotang”, and “Mansina” with green and health themes, and continues to penetrate the daily chemical market in multiple dimensions and depth through agents for imported brands “Reboxi” and “Delper”. In the first half of this year, sales of “agent products” and “Mansna” increased by 502.2% and 18.4%, respectively. Deeply adjust sales channels and increase the marketing layout of emerging channels: 1) Deeply adjust sales channels: On the basis of strengthening existing superior channels, the company's KA channel sales, represented by “Da Runfa” and “Wumei,” increased 10.3% year-on-year in the first half of this year, accounting for 30.4% of revenue; at the same time, the focus was on expanding emerging channels such as cosmetics franchises and e-commerce. 2) Increase the marketing layout of emerging channels: Increase the channel promotion of KOL, WeChat applets and mainstream e-commerce platforms on platforms such as WeChat's leading online accounts, Weibo, etc., and replace “traditional channels” in an orderly manner with “promotion channels such as social platforms and public communication”. Active foreign investment and industrial chain layout: The company adheres to the strategy of endogenous and epitaxial two-wheel drive. Currently, the company has successively participated in Suqian Baibao and Honey Makeup Information, entered the fields of content e-commerce, beauty, etc., set up industrial funds to position the beauty industry, and improve the layout of the beauty industry through complementary advantages. Profit forecasting and investment advice. Net profit growth rates for 2018-2020 are expected to be 47.6%, 22.05%, and 15.8%, respectively, and EPS will be 0.79 yuan, 0.90 yuan, and 1.04 yuan respectively, giving the company 30 times PE in 2018, corresponding to a 6-month target price of 23.7 yuan, maintaining a “buy” rating. Risk warning: Industry competition intensifies or falls short of expectations; sales of new products fall short of expectations; completion and progress of investment projects fall short of expectations.