According to the latest report from Guoyuan International, based on Qingyan Intelligence, as of November 10th, major e-commerce platforms achieved double-digit GMV growth in the beauty sector during the November 11 shopping festival, with Taotian/JD.com/Douyin growing by 25.8%/10.5%/21.8% respectively. With the overall recovery of e-commerce sales, the beauty sector showed good performance in this year's November 11 shopping festival. The growth rate of major Chinese cosmetic brands slowed down slightly due to the impact of a high base number, but with the increase in international brand investment driving brand growth, top domestic brands are believed to have strong competitiveness in the mass skincare market. It is recommended to pay attention to Jingzi Biology (02367) and Proya Cosmetics (603605.SH).

The major points of Pu Yin International are as follows:

The longest November 11 shopping festival in history concludes with a pleasing growth in personal care and beauty sales.

According to Xingtu data, during the November 11 promotion period (October 14th to November 11th, 2024 vs October 24th to November 11th, 2023), the sales of personal care and beauty products on comprehensive e-commerce platforms (including Diantao) increased by 22.5% year-on-year. As of November 10th, major e-commerce platforms achieved double-digit GMV growth in the beauty sector during the November 11 shopping festival, with Taotian/JD.com/Douyin growing by 25.8%/10.5%/21.8% respectively. Although the year-on-year growth includes scale growth due to a certain extension of the promotion period, it is still believed that online beauty sales during this year's November 11 shopping festival are returning to a faster growth trajectory.

The extended promotion period once again lowers the intensity of price wars.

As predicted, this year's November 11 promotion period has been extended. Taking Tmall and Douyin as examples, this year's November 11 started on October 14th and October 8th respectively, extending by 1 week and 12 days compared to last year. The extension of the promotion period provides consumers with more time for comparison and consideration, in order to adapt to the relatively weak consumer environment. Observing this year's November 11 period, although low stock prices are still a focus of competition for businesses, the competitive environment has returned to rationality. Some brands have stepped out of the price war vortex by adjusting gift combinations or increasing prices (compared to past promotional prices). This is mainly because cosmetic brands have already lowered prices with regular sales, leaving little room to further reduce prices during promotions. Stepping out of the price war also allows brands to reshape their brand image and have greater profit margins.

International big brands are fighting back, but the trend of domestic brands replacing them is still dominant.

Compared to previous years, the strong performance of domestic brands during the november 11 shopping festival-related period, this year the popularity of international brands has significantly rebounded. In the Top 20 brands by transaction volume during the Tmall beauty november 11 shopping festival-related, international brands hold 16 seats, similar to last year's november 11 shopping festival, but the ranking of domestic brands has dropped significantly - except for Proya Cosmetics ranking first in the top ten list, Winona's ranking has dropped from fifth to ninth. Guotai Junan International believes that the good performance of international brands in this promotion is due to: (1) increased investment in reaching younger consumers: the ranking of international big brands on Douyin has shifted compared to last year; (2) Japanese brands have warmed up after the nuclear sewage discharge incident, with SK-II and Cosmax brand rankings increasing compared to last year. The overall trend of domestic substitution continues. In the same list, domestic brand Proya Cosmetics also ranked first in last year's november 11 shopping festival, maintaining its position.

Major domestic beauty companies have shown stable performance.

Proya Cosmetics: The company announced that during the 2024 november 11 shopping festival-related, the company's main brand Proya Cosmetics ranked first in the beauty category on platforms such as Tmall, Douyin, and jd.com (by GMV). Among them, the main brand Proya Cosmetics showed a year-on-year growth of 10%+/60%+/30%+ on Tmall, Douyin, and jd.com platforms respectively (data statistics from October 8 to November 11 of 2023 and 2024). According to Guotai Junan International's estimate, the GMV of the main brand during the november 11 shopping festival-related is expected to increase by around 20% year-on-year.

Giant Bio: According to the company's announcement, during the 2024 november 11 shopping festival-related, Canlifuhai restructured collagen dressing, collagen bars, Focus cream, and other products ranked top in various segmented lists, with a total brand exposure of 1.38 billion times. During the november 11 shopping festival-related, Canlifuhai's GMV on Tmall, Douyin, and jd.com channels increased by 50%+/100%+/200%+, with an overall channel growth of 80+%; Collier King's GMV on Tmall, Douyin, and jd.com channels increased by 100%+/500%+/200%+, with an overall channel growth of 150%+. Overall, brands under Giant Bio performed as expected during the november 11 shopping festival-related.

Investment risks: Slower industry demand; intensified competition in the online cosmetic market.