Haitong International has released a research report maintaining an "Outperform" rating on MAO GEPING (01318). The report assigns MAO GEPING a 2026 price-to-earnings (PE) ratio of 32 times, corresponding to a target price of HK$108.2, implying a 23.1% upside potential. The firm believes the company's brand strength and fundamentals remain robust, asserting that its core value lies in its solid high-end brand positioning and continuous product innovation capabilities. The advancement of strategic partnerships is expected to unlock new growth trajectories. Investors are advised to monitor the implementation details of the subsequent cooperation and the specifics of the share reduction plan, while the firm maintains a positive outlook on the company's long-term value. The main points from Haitong International are as follows:
It is anticipated that MAO GEPING will sustain its strong growth momentum from the first half of 2025 into the second half. As international high-end brands stage a strong comeback from a low base, competition in the cosmetics industry has intensified since 2025, a trend the firm expects to continue into 2026. MAO GEPING's continued strong performance in 2H25 is expected to be driven by robust offline same-store sales fueled by volume growth; despite some weakening in consumer spending power in the latter half of the year, expansion in membership numbers and high repurchase rates support volume increases. Furthermore, online growth remains vigorous; while competition during the Double Eleven shopping festival is fierce, the company is leveraging its marketing resources to capitalize on the Double Twelve and Christmas sales periods to drive online growth acceleration. Although intensified industry competition may exert some pressure on profit margins, the company, supported by its premium brand positioning, ongoing product innovation, distinct offline and online product strategies, and flexible market approach, is well-positioned to maintain rapid growth in 2026. Based on this, the firm forecasts the company's operating revenue for 2025-2027 to be RMB 5.101 billion / RMB 6.489 billion / RMB 8.115 billion, representing year-on-year growth of 31.3%/27.2%/25.0%. Net profit attributable to shareholders is projected to be RMB 1.201 billion / RMB 1.494 billion / RMB 1.848 billion, with year-on-year increases of 36.4%/24.4%/23.7%.
The company has entered into a strategic agreement with investment firm L Catterton to inject internationalization and capital market momentum. According to the announcement, the two parties intend to collaborate on global market expansion, the establishment of a high-end beauty investment fund, and the optimization of corporate governance. Haitong International believes that if successfully implemented, this cooperation could significantly enhance the company's brand penetration in overseas high-end markets and potentially create opportunities for future extensional growth through the investment fund platform, marking a crucial strategic step towards globalization.
The company's controlling shareholder and certain directors plan to reduce their shareholdings. The announcement indicates that the relevant shareholders intend to divest up to approximately 3.51% of the company's total share capital (amounting to no more than 17.2 million shares, valued at approximately HK$1.51 billion based on MAO GEPING's closing price of HK$87.95 per share on January 7th), primarily for personal financial planning purposes. The firm notes that the company has emphasized that this reduction will not lead to a change in control, as MAO GEPING and his relatives will retain around 70% of the company's equity. Furthermore, the relevant shareholders remain committed to the company's operations; therefore, the impact on its fundamentals and long-term governance structure is expected to be limited. Investors should pay attention to the market pacing of this plan during its actual execution.
Risk warnings include slower-than-expected progress in cooperation, intensified industry competition, changes in the macro consumer environment, and negative public sentiment.
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