Giant Biotech announced the “618” battle report. During the “618” period in 2024 (May 15 to June 20), the GMV of Kefu Mei online increased by more than 60% year over year, and the GMV of Klein Online increased by more than 100% year over year. According to the brand transaction rankings published by “World Online Merchants” and Tmall (May 20 to June 20), Kefumei ranked 13th and 11th respectively in the Tmall FMCG brand sales list and skincare brand sales list, and third among domestic brands; according to Douyin's official e-commerce list, Kefumei ranked 9th in the Douyin 618 Good Things Festival beauty list.

The 618 promotion kicked off in May, and growth on the Kofu Mei and Colijin online skyrocketed. In 2024, major e-commerce platforms cancelled pre-sales, and Tmall and Douyin's 618 promotions were brought forward to May to directly launch spot sales. Combined with the opening of the 618 promotion and the impact of the wrong schedule, the online GMV of Ke Mei and Colijin grew strongly in January-May. According to Magic Mirror data, in the beauty and skincare category on Tmall Taobao, Kefumi ranked 16th in terms of cumulative GMV from January to May, and the cumulative GMV growth rate ranked first among the TOP30 brands. According to Magic Mirror statistics, the total GMV for Tmall Taobao, JD, and Douyin reached 1.58 billion yuan in January-May, an increase of 123% over the previous year. Thanks to the volume of the core product collagen bars and new focus creams, the GMV of Kefumi's facial essence and lotion/cream categories increased by 289% and 385% year-on-year respectively on the Tmall Taobao platform, leading the overall growth of the Kefumei brand. The Klein brand is strong: According to Magic Mirror data, the total GMV of Tmall Taobao, JD, and Douyin reached 210 million yuan in January-May, an increase of 132% over the previous year.

The 618 promotion continues its high growth, and the potential for new products is beginning to show. 1) Kefu Mei: According to the official war report, in '24, “618” Kefu Mei's GMV on the Tmall, JD, and Douyin platforms increased by more than 50%/100%/65% year over year, respectively, and online channels all achieved high growth. The core products, recombinant collagen dressings and collagen sticks, are in a stable position, ranking TOP1 in the Tmall wound dressing category and Tmall facial essence category respectively. Kefumei's new products performed brilliantly. The focus cream launched in '24 was ranked in the TOP1 list of new Tmall face cream products and TOP1 on the Douyin brand collagen cream popularity list. According to the Tmall list, as of 14:00 on June 19, Focus Cream ranked 7th in the 618 repair cream best-selling list. In addition, the Kefumei Order Acne Stick, launched in '24, ranked in the TOP1 of the Tmall Repair Essence New Product List, and the Kefumei Collagen Milk launched in '23 ranked in the TOP3 list of Tmall's lotion bestsellers. The growth potential of various new products is beginning to be shown, which is expected to drive the brand to achieve long-term growth. 2) Clarion: According to the official war report, the GMV of “618” Klein on the Tmall, JD, and Douyin platforms increased by more than 70%/200%/300% year-on-year respectively in '24, and growth accelerated markedly. The core product, Cleijin Collagen, performed brilliantly. GMV increased by more than 100% year-on-year, and ranked in the top 4 best-selling mask on Tmall.

Maintaining the “Buy” rating, the target price is HK$60.83. We continue to be optimistic about the continued growth of online sales in the Juzi Bio skincare category, and expect injectable collagen products to be approved within the year. Based on the DCF model, the target price is maintained at HK$60.83 (WACC: 10.6%, sustainable growth rate: 3.0%). The target price corresponds to 23.2x FY24 adjusted price-earnings ratio and 18.8x FY25 adjusted price-earnings ratio.