DFZQ has released a research report reiterating its positive stance on MAO GEPING (01318). The report indicates that, considering the company's future development plans and based on its reported 2025 performance, the firm has adjusted its profit forecasts and introduced projections for 2028. It now anticipates earnings per share for 2026-2028 to be 3.24, 4.06, and 5.02 yuan, respectively. Using a discounted cash flow valuation model, this translates to a target price of approximately HK$98.64, maintaining an "Add" rating.

Key Report Highlights

Sustained High Revenue and Profit Growth, Driven by Dual Core Categories

In 2025, the company achieved revenue of 5.05 billion yuan, a year-on-year increase of 30.0%, and a net profit of 1.205 billion yuan, up 36.8% year-on-year. The profit growth outpaced revenue growth, primarily driven by increased product sales and optimized expense ratios. By product category, revenue from color cosmetics, skincare, and fragrances reached 2.996 billion, 1.873 billion, and 34 million yuan, respectively. Color cosmetics grew by 30.0% year-on-year, while skincare increased by 31.1%. Within color cosmetics, base makeup products performed strongly, with several key items generating retail sales exceeding 300 million yuan each. In skincare, flagship products such as the Caviar Mask, Black Cream, and Caviar Eye Mask achieved retail sales surpassing 1 billion, 300 million, and 100 million yuan, respectively. By sales channel, offline and online product sales revenue was 2.426 billion yuan and 2.477 billion yuan, representing year-on-year growth of 24.5% and 38.8%. Offline direct sales grew 24.2%, while online direct sales surged 36.1%, indicating faster growth in online channels, even as the offline high-end department store counter network continued its steady expansion.

High Gross Margin Sustained, Profitability Shows Steady Improvement

The company's gross profit margin for 2025 was 84.22%, remaining stable year-on-year, supported by its premium pricing and product mix. The sales expense ratio was 48.28%, and the administrative expense ratio was 5.33%. The net profit margin reached 23.87%, an increase of 1.18 percentage points year-on-year. This improvement reflects enhanced operational efficiency driven by economies of scale and more refined management of online marketing investments, contributing to continued profitability gains.

Future Growth Strategy and Outlook

Looking ahead, the company will continue to reinforce its positioning as a premium beauty brand by focusing on "Oriental Aesthetics, High-End Channels, and Category Expansion." On the product front, it aims to deepen its association with "Oriental Light and Shadow Aesthetics." While solidifying its core color cosmetics business, particularly base makeup, it will aggressively develop high-ASP premium skincare lines to enhance gross margin and leverage lifestyle categories like fragrances to establish a third growth pillar, thereby enriching its premium brand portfolio. Regarding channels, the company adheres to a dual-drive strategy emphasizing "high-end offline experiences and expanding online reach for incremental growth" to achieve efficient cross-segment conversion. Furthermore, the company plans to increase investment in research & development and supply chain infrastructure to build underlying technological barriers. It will also proactively explore overseas market opportunities, steadily advance brand internationalization, and strive to fully unlock the company's long-term growth potential and profitability ceiling.

Potential Risks to Consider

Key risks include intensifying industry competition, persistently weak consumer demand, and potential underperformance of new product sales.