Han Shu's growth momentum is strong, and the mass skincare market is expected to unleash its potential. 24H1 can be expected to achieve revenue of 3.502 billion/yoy 120.7%, net profit of 0.412 billion yuan/yoy 308.7%, and strong performance growth. The main brand Han Shu continues to maintain its leading position in the Douyin channel, and channels such as Tmall and Jingdong are also developing rapidly; the star product Hongmanwaist series has been upgraded to 2.0, and the Bai Man Waist series has also begun to be launched. It is expected that individual SKUs such as toner will continue to improve. The brand is expected to continue to lead the way in the mass skincare market, and its potential can still be expected. Newpage has maintained a rapid development trend. Red Elephant's transformation is beginning to bear fruit. One leaf is still undergoing an adjustment period, and many brands such as An Min Premium cover differentiated market segments. The company continues to deeply cultivate skincare/maternal and child care/care categories in the mass market, and the 66 Strategy is expected to support long-term sustainable development. The board of directors has decided to pay an interim dividend of $0.75 per share. It is estimated that EPS2.27/2.99/3.54 yuan (maintenance) in 24-26 years is comparable to the company Wind's consistent profit forecast of 22 times the average PE. Considering the strong growth of the main brand Han Shu, the company was given 23 times PE in 24 years, and the target price was HKD57.03 yuan (RMB 1.0923 to Hong Kong dollar exchange rate), maintaining the “buy” rating.

Han Shu continued to maintain strong performance. Red Man Waist upgraded, and Bai Man Waist began to increase 24H1. Han Shu's revenue was 2.927 billion yuan/yoy 185%. Douyin GMV ranked first in the beauty sector, with a GMV of 3.444 billion, more than last year; the GMV growth rate of the Tmall flagship store/Jingdong self-operated store was nearly 200%/over 400%, respectively. Han Shu set up a pickup point at Hongqiao Station in Shanghai to solve consumers' travel/travel/gift cosmetics needs in one stop, and continue to explore new ways to play. The 24H1 star product, the Red Man Waist series was upgraded to version 2.0, and the omni-channel sales of Red Man Waist Gift Box exceeded 10 million sets/White Man Waist Gift Box exceeded 1.5 million sets. A new product, Toner, was unveiled, and more products can be expected in the future, which is expected to contribute new growth points beyond skincare gift boxes.

Newpage has maintained a rapid development trend, and the transformation of Red Elephant is beginning to bear fruit. Ichiyo is still in the adjustment period. Newpage focuses on effective skincare brands for infants and children. 24H1 revenue is 0.161 billion yuan/yoy 173%, and Douyin/Tmall/Jingdong are all growing rapidly. 24H1 Ichiyo's revenue is 0.125 billion/yoy -38.6%. It is still in the adjustment period. H1 is starting a brand renewal and is looking forward to future development. 24H1 Red Elephant's revenue was 0.174 billion yuan/yoy -7.9%. The brand continued to advance transformation and saw initial results, focusing on the CUHK school-age market and launching more children's makeup products. The company also lays out categories such as sensitive skin, mid-range and high-end maternal and child care, and launched various brands such as Anminyu, Amir, Extreme, and 2032, covering different market segments. 24H1's other brands earned 0.116 billion/yoy 8%.

Increased share of DCT channels led to a significant increase in gross margin

24H1 gross profit margin was 76.5% /yoy7.5pct, mainly due to a further increase in DTC's share. 24H1 sales expense ratio is 57.6% /yoy4pct, mainly due to the increase in marketing and promotion expenses to 1.7 billion yuan/yoy 169.2%; administrative expenses ratio 3.2% /yoy-3.8pct; R&D expenses ratio 2.2% /yoy-1.2pct.

24H1's net operating cash flow was 0.217 billion yuan/yoy 26.7%.

Risk warning: Market competition intensifies; new product performance falls short of expectations; sales expenses increase.