CMB International: Maintains "Buy" rating on GIANT BIOGENE (02367) with a target price of HK$66.15.

CMB International released a research report stating that it maintains a "buy" rating on GIANT BIOGENE (02367) and continues to be optimistic about the rapid growth of the company's skincare category. It is expected that collagen injection products will be approved in 1Q25E. The company's profit forecast for FY24-26 has been slightly raised, and the target price has been increased to 66.15 Hong Kong dollars based on the DCF model (WACC: 10.9%, perpetual growth rate: 3.0%). CMB International's main points are as follows: At the end of the 2024 Double 11 shopping festival, the company's two core brands, Ke Fumei and Ke Li Jin, showed impressive online growth. During the Double 11 period (October 8 to November 11), Ke Fumei and Ke Li Jin's online GMV through all channels increased by over 80% and over 150% year-on-year, respectively, outpacing the "618" festival this year. Ke Fumei and Ke Li Jin saw explosive growth on the Douyin platform, with year-on-year increases of over 100% and over 500% during Double 11. According to the ranking of brands published by "Tianxia Net Merchant" in collaboration with Tmall (October 21 to November 11), Ke Fumei ranked 14th in Tmall's fast-moving consumer goods brand sales list, 12th in the skincare brand sales list, and third in the domestic brand rankings. Ke Fumei ranked fourth on the overall skincare brand list in the Douyin e-commerce Double 11 promotion, and third among domestic brands. The Double 11 promotion started in October, and Ke Fumei and Ke Li Jin showed strong growth. In 2024, the Double 11 promotions on major platforms started earlier than in previous years, generally beginning in mid to late October, around 10 days earlier than in 2023. With the overlapping of the Double 11 promotion and the impact of the off-season, according to the Magic Mirror database, Ke Fumei's online GMV in 10M24 showed strong year-on-year growth of 90%, with GMV on Tmall Taobao and Douyin platforms increasing by 83% and 120% year-on-year, respectively. Ke Fumei successfully invested in marketing on the Douyin platform, such as setting up Douyin live broadcast rooms, driving rapid growth on the platform. Ke Fumei's collagen stick continues to show high growth, with new products performing well. The classic product Ke Fumei's recombinant collagen dressing continued to rank first in the wound dressing category on Tmall. The core best-selling product Ke Fumei collagen stick ranked first in the facial essence and liquid essence category on Tmall and also topped the list in the liquid essence category on Douyin. According to the Magic Mirror database, in 10M24, Ke Fumei's facial essence category on Tmall Taobao showed a 156% year-on-year growth in GMV, mainly driven by the collagen stick, which continued to grow rapidly. The focus cream launched in April 2024 ranks second in the Tmall repair cream hot-selling list of Chinese brands. According to the Magic Mirror database, in 10M24, Ke Fumei's emulsion/cream category on Tmall Taobao showed a 333% year-on-year growth in GMV, becoming the second largest category by GMV for the Ke Fumei brand, mainly due to the rapid increase in sales of the focus cream. In addition, the Ke Fumei order spot pimple stick launched in June ranked first in the JD platform's best-selling list of balanced water and oil facial essences. The bank believes that the constantly expanding product matrix will drive long-term growth for the brand. Ke Li Jin's new products show growth potential. According to the Magic Mirror database, Ke Li Jin's online GMV in 10M24 showed a strong year-on-year growth of 109%, higher than the Ke Fumei brand. GMV on Tmall Taobao and Douyin platforms increased by 65% and 138% year-on-year, respectively. The new products Gelatin Cream and Gelatin Eye Cream brought growth to Ke Li Jin. The Magic Mirror database shows that, benefiting from the new Gelatin series products, the emulsion/cream and eye care categories of Ke Li Jin showed significant year-on-year increases of 180% and 6,549% in GMV on Tmall Taobao in 10M24.