Jinwu Financial News | Guotou Securities research points out that Mao Geping (01318) is a brand-driven rather than product-driven company. High-end brands need to be seen and purchased by their target audience, and the key is to capture the core group. By the end of H1 2024, the Mao Geping brand has 12.4 million online and offline members. The growth of Mao Geping is attributed to product and channel as surface driving forces, behind which is the expansion of core membership. Additionally, the institution believes that the supply chain is not a shortcoming. Mao Geping's products are not highly effective but focus on overall aesthetics and user experience; Mao Geping is not lacking in R&D but rather focuses its R&D efforts on aesthetic design. Moreover, in the cosmetics field, professional manufacturers like Yingtelie boast a mature industry, delivering high-quality products when cost budgets are sufficient.
The institution states that, in terms of products, Mao Geping's offerings mainly consist of classic items, fun new products, and limited edition collectibles. Currently, there is no sign of a ceiling for products like powder foundations and contouring products, and luxury caviar masks still have room for growth. Furthermore, the color product segment has vast potential. In terms of channels, the company is focusing on online channels. According to statistics from Chanmama, during this year's Singles' Day Sales, Mao Geping ranked second in Douyin’s cosmetics category, and there is still room for growth in Tmall channels in the future. For offline channels, by the end of H1 2024, there are 372 self-operated counters, and it is expected to open 30 new domestic counters and 2-4 overseas counters annually while renovating 70-100 counters each year.
The institution initiates coverage and gives a "Buy-A" investment rating, with a 6-month Target Price of 66.91 HKD. The institution expects the company's revenue growth rates for 2024 to 2026 to be 41.3%, 30.5%, and 21.7% respectively, with adjusted Net income growth rates of 40.0%, 31.9%, and 24.4%, indicating significant growth potential. The Buy-A investment rating is assigned with a 6-month Target Price of 66.91 HKD, which corresponds to a dynamic PE of 30x for 2024 based on an Exchange Rate of 1.0723 HKD/CNY.