According to the Zhongtong Finance APP, Guosen Securities released a research report stating that this year's overall consumption continues to show a steady recovery trend, and the short-term promotion of the 618 promotion is conducive to improving Q2 sales of certain categories. However, overall, residents' consumption potential still needs to be released, and with the increase in the difficulty of brand operation, the differentiation of operation has also increased. Specifically: 1) the beauty and skin care industry has shown an accelerating trend of recovery this year, and the trend of the rise of Chinese beauty and skin care products is clear. Under the stimulation of the 618 promotion, leading brands with high-quality product reserves are expected to accelerate their growth; 2) with the expectation of a long-term rise in gold prices, the demand for resident value-preserved consumption is expected to be further stimulated.

The view of Guosen Securities is as follows:

The rules for the 618 promotion have been simplified, and sales performance through live streaming has been under pressure.

Major platforms have cancelled pre-sale activities and mainly use simple and clear full reduction or official reduction activities in their rules, trying to attract more consumers through simpler but more effective rules. The overall sales of super head anchor Li Jiaqi and others have been somewhat under pressure due to the diversion of other platforms and traffic stars. According to Qingyan Intelligence, from 8:00 p.m. on May 19th to 2:00 a.m. on May 20th, the GMV of Li Jiaqi's beauty category exceeded 2.675 billion yuan, a year-on-year decrease of 46.3% on the first day of last year’s 618 promotion. However, Chinese brands have continuously improved their market share through outstanding product power, and the GMV of Chinese brands accounted for 30.1% of the total GMV of live broadcasts, an increase of 4.54 percentage points from the same period last year, where Proya and Kefumei ranked first and second, respectively.

Tmall's cancellation of pre-sales releases consumer enthusiasm, and domestic brand leaders continue to perform well.

According to 36kr data, in the first wave of activities of Tmall’s 618 promotion, 185 brands exceeded RMB 100 million in transactions, 11 brands exceeded RMB 1 billion, and more than 50 new trend tracks had a transaction volume of more than RMB 1 billion. Compared with the same period last year, the transaction volume of 37,000 brands increased by more than 100%. Specifically, in the beauty and skin care industry, according to Tmall’s official public account for beauty products, as of the end of the first phase of the June 18 promotion on May 28th, four of the top 20 beauty and skin care sales were Chinese brands, of which Proya remained the top-selling brand, Kefumei entered the top ten for the first time and ranked seventh.

Douyin’s live streaming is stable, and domestic brands show strong momentum.

From the perspective of the beauty industry, according to Douyin official, from May 15th to May 24th, three domestic beauty and skin care brands are among the top five on the Douyin beauty and skin care brand list, of which Proya still ranks first, Han Shu and Ku fumei rank fourth and fifth, respectively. In addition, according to Qingyan Intelligence, on the first day of the June 18th promotion, the top 20 beauty and skin care brands by GMV in Douyin are equally split between Chinese and foreign brands, of which Kefumei, which ranks first, had a GMV of more than RMB 500 million on that day.

Investment advice:

According to the Zhongtong Finance APP, Guosen Securities released a research report stating that this year's overall consumption continues to show a steady recovery trend, and the short-term promotion of the 618 promotion is conducive to improving Q2 sales of certain categories. However, overall, residents' consumption potential still needs to be released, and with the increase in the difficulty of brand operation, the differentiation of operation has also increased. Specifically:

1) Beauty and skin care: the industry has shown an accelerating trend of recovery this year, and the trend of rise of Chinese beauty and skin care products is clear. Under the stimulation of the 618 promotion, leading brands with high-quality product reserves are expected to accelerate their growth. Recommendations: Lushang Freda Pharmaceutical (600223.SH), Proya Cosmetics (603605.SH), etc.;

2) Gold and jewelry: with the expectation of a long-term rise in gold prices, the demand for resident value-preserved consumption is expected to be further stimulated. At the same time, enterprises continue to explore channels and invest in product design, which is conducive to the improvement of market share and the expansion of sales scale. Recommendations: Lao Feng Xiang (600612.SH), Tsann Kuen China (605599.SH), etc.;

3) Cross-border e-commerce: Overseas consumer demand and online penetration still have room for improvement, policy support promotes industry expansion, and companies achieve continuous optimization of profitability through their own digital technology and industrial resources empowerment. Recommendations: Zhejiang China Commodities City Group (600415.SH), Anker Innovations Technology (300866.SZ), etc.;

4) Offline retail: Offline consumer traffic is steadily returning, and enterprises actively respond to changes in consumer trends by carrying out new business model transformations such as discount retailing to activate new growth points. Recommendations: Miniso (09896), Chongqing Department Store (600729.SH), Shanghai Bailian Group (600827.SH), etc.

Risk warning: Consumer recovery is slower than expected; Low-price competition in the industry will intensify and affect profitability; The launch of new products by brand companies is not as expected, etc.