Shenwan Hongyuan Group Co., Ltd. has released a research report stating that, according to the National Bureau of Statistics, China's cosmetics retail sales grew by 8.3% year-on-year in March, with a cumulative growth rate of 5.9% for the first quarter. This performance significantly outpaced the overall retail sales growth, demonstrating the resilience of cosmetic demand and indicating a trend of monthly recovery in demand since 2026. Driven by this positive trend, it is anticipated that the second quarter of 2026, particularly during the 618 shopping festival, will achieve new record-high growth rates, partly due to a relatively low base from the same period in 2025. The main views of Shenwan Hongyuan are as follows:
Brands show steady growth, while the manufacturing end exhibits marginal improvement in the cosmetics and medical aesthetics industry's Q1 2026 performance outlook. For cosmetics, brand-side revenue and profits are growing steadily, with manufacturing showing signs of improvement. 1) RYCE: The acquisition of the international high-end brand Erno Laszlo has enhanced its brand portfolio. The performance of its health beauty brand FILLMED continues to exceed expectations, contributing to high revenue growth in Q1. FILLMED's GMV on Douyin grew by triple digits in Q1, showing strong upward momentum and category expansion. 2) Shanghai Jahwa: The combined GMV of its three major brands on Taobao and Douyin saw high growth in Q1. Products such as Liushen's mosquito repellent eggs, Herborist's new herbal oil, and Dr.Yu's creams for dry and oily sensitive skin contributed significantly to revenue growth.
The e-commerce agency operation sector is attracting high attention, with companies like One Net One Creation and Aokumu Technology expected to report strong profit growth. However, due to plateauing e-commerce traffic and brands increasing their own operations, the agency sector has experienced a performance downturn since 2020. In the medical aesthetics sector, influenced by macroeconomic factors, both upstream and downstream performance is expected to be slightly soft. An increase in supply of pharmaceutical devices is anticipated, with more new products expected later in 2026 to stimulate consumer interest.
Regarding stock picks in cosmetics: Core recommendations include: 1) Companies with well-developed channels/brand matrices and high GMV growth, such as MAO GEPING, CHICMAX, and Shanghai Jahwa. 2) Companies where marginal improvements in earnings growth are anticipated, such as Proya, Marubi, Runben, Giant Biogene, Betaine, and Bloomage BioTechnology. 3) In the maternal and child sector: Sheng Bella and Kidswant.
For medical aesthetics: Focus on upstream companies with high R&D and certification barriers and strong profitability. Key targets are those driven by major products and with extensive product pipelines. Recommendations include Imeik Technology and Langzi Holding.
For e-commerce agency operations and self-owned personal care brands: Recommendations include RYCE, One Net One Creation, Yyang Group, and Aokumu Technology.
Risk warnings include heightened macroeconomic uncertainty, changes in market demand, intensified industry competition, and stricter regulations in the medical aesthetics sector.
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