Guojin Securities says China’s beauty sector is moving to refined, stock-based
operations. 618 sales slipped slightly but mix improved; brands are shifting
toward repurchase-driven growth and profit orientation. Upgraded categories such
as color cosmetics and fragrances are the main sources of incremental demand.
Policy now for the first time includes beauty subsidies, with targeted support
for leading domestic and high-end efficacy brands. AI-driven, end-to-end cost
reduction and efficiency gains are materialising—AI-generated creative and
ad-placement/managed-service automation are lifting margins. Channel dynamics:
Taobao/Tmall remain the domestic brands’ base, while Douyin is the primary
battleground for foreign-capital pushback; domestic names need to deepen moats
in efficacy skincare and national-style color cosmetics. Recommended focus:
three stock buckets — Q2 earnings recovery, firms with stable high-end brand
equity, and mass-market names with clear value-for-money advantages — to capture
structural opportunities.
