The Industrial and Commercial Bank of China International: "Double 11" beauty sales growth good, domestic brands perform steadily under high base.

Ping An International released a research report stating that according to Qing Eye intelligence, as of November 10th, major e-commerce platforms in the beauty industry achieved double-digit growth in GMV during the "Double 11" period, with Taotian/JD/TikTok increasing by 25.8%/10.5%/21.8% respectively. With the overall recovery in e-commerce sales, the beauty industry performed well during this year's "Double 11". The growth of major Chinese cosmetics brands has slightly slowed down due to the high base effect, but with the trend of increasing investment in international brands driving brand growth, it is believed that top domestic brands still have strong competitiveness in the mass skincare industry. It is recommended to pay attention to GIANT BIOGENE (02367) and Proya Cosmetics (603605.SH). The main points of Ping An International are as follows: The longest "Double 11" event in history ended, and the sales growth in personal care and beauty products is satisfactory. According to Xingtu Data, during the "Double 11" promotion period (October 14, 2024 - November 11, 2024 vs. October 24, 2023 - November 11, 2023), the sales of personal care and beauty products on comprehensive e-commerce platforms (including Diantao) increased by 22.5% year-on-year. According to Qing Eye intelligence, as of November 10th, major e-commerce platforms in the beauty industry achieved double-digit growth in GMV during the "Double 11" period, with Taotian/JD/TikTok increasing by 25.8%/10.5%/21.8% respectively. Although the year-on-year growth includes some scale growth due to the extension of the promotion time, it is still believed that the growth of the online beauty industry during this year's "Double 11" has returned to a relatively rapid growth track. The length of the promotion period was extended again, and the price war cooled down. As predicted, the length of this year's "Double 11" promotion period was extended again. Taking Tmall and TikTok as examples, "Double 11" started on October 14th and October 8th respectively, which is 1 week and 12 days longer than last year's "Double 11". The extended promotion period provides consumers with more time for comparison and consideration, which is also to adapt to the current weak consumer environment. Based on this, it was observed that although low prices are still the focus of competition for merchants during this year's "Double 11", the competitive environment has also become more rational. Some brands have jumped out of the vortex of price wars by adjusting gift combinations or raising prices (compared to past promotion prices). This is mainly because beauty brands have already lowered prices during their daily sales, so there is limited room to further reduce prices during the promotion period. Jumping out of the price war also allows brands to reshape their brand image and have greater profit margins. International brands counterattack, but domestic brands remain mainstream. Compared to the strong performance of domestic brands during the "Double 11" period in previous years, international brands have seen a noticeable increase in popularity this year. In the top 20 brands in beauty transactions on Tianmao during "Double 11," international brands occupied 16 seats, similar to last year's "Double 11," but the rankings of domestic brands have significantly decreased - with ViNova dropping from fifth place to ninth. Ping An International believes that the good performance of international brands in this year's major promotions is due to: (1) increased investment in reaching audiences: international big brands have moved up in rankings on TikTok channels; (2) Japanese brands have rebounded after the nuclear wastewater pollution incident, and brands like SK-II and su:m37 have seen rises in brand rankings compared to last year. The overall trend of domestic brand substitution continues. In the same ranking, domestic brand Proya Cosmetics also ranked first during last year's "Double 11", maintaining its position. Major domestic beauty companies performed steadily. Proya Cosmetics: The company announced that during the 2024 "Double 11" period, the company's main brand Proya Cosmetics ranked first in the beauty category on platforms such as Tianmao, TikTok, and JD (based on GMV). The main brand Proya Cosmetics saw year-on-year growth of 10%+/60%+/30%+ on Tianmao, TikTok, and JD platforms respectively (data calculated from October 8 to November 11, 2023 and 2024). According to Ping An International's estimation, the main brand's GMV during "Double 11" increased by around 20% year-on-year. GIANT BIOGENE: According to the company's announcement, during the 2024 "Double 11" promotion, products such as recombinant collagen dressing, collagen sticks, and focus creams from Can Remake ranked at the top of various sub-segment lists, with a total brand exposure of 1.38 billion times. During the "Double 11" period, Can Remake saw GMV growth of 50%+/100%+/200%+ on Tmall, TikTok, and JD channels respectively, with overall growth of 80%+; Can Lily Gold saw GMV growth of 100%+/500%+/200%+ on Tmall, TikTok, and JD channels respectively, with overall growth of 150%+. Overall, the brands under GIANT BIOGENE performed as expected during "Double 11." Investment risks: Slowing industry demand; intensifying online competition in the cosmetics industry.