A research report indicates that MAO GEPING (01318) is expected to achieve net profits attributable to shareholders of RMB 1.19 billion, 1.53 billion, and 1.94 billion for 2025-2027 respectively, representing a 3-year compound growth rate of 27.5%. At current share prices, these correspond to P/E ratios of 38.2x, 29.8x, and 23.5x respectively. Considering comparable companies and the company's position as a scarce high-end domestic beauty brand, with premiums for newly listed stocks and scarcity, analysts assigned a 1.7x PEG multiple, corresponding to 46.7x P/E, with a target price of HK$124.4, maintaining a "Strong Buy" rating.

Key observations are as follows:

**Performance Overview** H1 2025 revenue increased 31.3% year-over-year, with net profit up 36.1%, delivering impressive performance. MAO GEPING achieved H1 2025 revenue of RMB 2.59 billion (+31.3%) and net profit attributable to shareholders of RMB 670 million (+36.1%), with adjusted net profit of RMB 670 million, meeting market expectations.

**Profitability: Optimized Sales Expense Ratio, Robust Profitability** H1 2025 gross margin was 84.2% (-0.7pp), net margin 25.9% (+0.9pp), remaining relatively stable. Sales/administrative expense ratios were 45.2%/5.3% (-2.4pp/-1.5pp) respectively. Despite increased sales and distribution expenses to RMB 1.17 billion to enhance brand exposure, including marketing and promotional expenses rising to RMB 540 million, the sales expense ratio was effectively controlled due to scale effects and improved operational efficiency, driving year-over-year net margin improvement.

**Business Breakdown by Brand: Revenue = 55% Color Cosmetics + 42% Skincare + 3% Makeup Art Training + 0.4% Fragrance** 1) Color Cosmetics: Revenue RMB 1.42 billion (+31%), gross margin 82.7% 2) Skincare: Revenue RMB 1.09 billion (+33%), gross margin 87.5% 3) Makeup Art Training: Revenue RMB 70 million, gross margin 62.9% 4) Fragrance: Revenue RMB 11 million, gross margin 77.6%

**Business Breakdown by Channel: Revenue = 47% Offline + 50% Online** 1) Offline: Revenue RMB 1.22 billion (+27%), gross margin 85.7%: Including department store direct sales revenue RMB 1.09 billion (+25%), gross margin 87.3%; offline distributor revenue RMB 50 million (+28%), gross margin 76.8% (+2pp); high-end international beauty retailer revenue RMB 80 million (+54%), gross margin 68.2% (+1pp) 2) Online: Revenue RMB 1.297 billion (+39%), gross margin 83.9%. Including online direct sales revenue RMB 1.02 billion (+39%), gross margin 84.1%; online distributor revenue RMB 270 million (+39%), gross margin 83.1%

**Category Expansion into Fragrance Sector, Continued High-End Brand Building** During the reporting period, the company launched two premium fragrance series, "Guoyun Ningxiang" and "Wendao Dongfang," successfully expanding its product portfolio into the fragrance market. Simultaneously, the company continued advancing brand image upgrades, opening its first brand flagship store in Hangzhou's core commercial district and entering high-end department stores such as Beijing SKP, further consolidating and strengthening the brand's premium positioning.

The company still has significant room for growth in SKU expansion and store efficiency improvement, expected to continue releasing growth momentum. Compared to international leading color cosmetics brands, the company currently has approximately 400 SKUs, with substantial expansion potential in lip cosmetics, eyeshadow, foundation shades, and other categories. Additionally, the company's offline store productivity still has room for improvement compared to international first-tier brands. With continued brand momentum release and operational efficiency optimization, growth drivers remain abundant.

**Investment Recommendation** As a benchmark for high-end domestic beauty brands, MAO GEPING possesses deep brand moats with steady growth driven by both color cosmetics and skincare segments. The company has successfully expanded into fragrance categories, demonstrating potential for diversified matrix development. Online channels maintain high-speed growth while offline channels consolidate advantages through experiential services, with healthy synergistic development across dual channels. The company still has significant room for SKU expansion and store efficiency improvement, expected to continue releasing growth momentum.