CICC maintains MAO GEPING (01318) with an "outperform" rating and a target price of HK$127.

CICC released a research report stating that they maintain MAO GEPING's profit forecast for 2025-2026, with the current stock price corresponding to a P/E ratio of 41/31x for 2025-2026. They maintain an outperform industry rating and a target price of HKD 127, corresponding to a P/E ratio of 50/38x for 2025-2026, with a 22.5% upside potential. The bank recently organized an NDR exchange after MAO GEPING's performance. The company's category extension is progressing smoothly, with the launch of new skincare products such as the Spark Root series in Q3, color supplements in cosmetics, and good market feedback on new fragrances. The offline channel is entering high-end counters while the online channel continues its high growth momentum. The company is also expanding its brand internationally, opening up long-term growth opportunities. The bank reaffirms its optimism about MAO GEPING's growth potential as a rare high-end domestic cosmetics group. CICC's main points are as follows: Skincare product matrix continues to expand, good market feedback for new fragrances The company has successfully established the MAO GEPING brand around the concept of Oriental aesthetics and is smoothly extending its product categories. 1) Skincare: The product matrix including essences and creams continues to expand, with the launch of the Black Gold Water in the first half of 2025 and the gradual increase in production of the Black Gold series; the new Spark Root series launched in September focuses on combating the issues of aging from an Oriental skin perspective, supplementing with anti-aging creams, essences, emulsions, and essential water products in the mid-to-high-end price range. 2) Cosmetics: Rich in color products, with the launch of the new Starry Sky Eyeshadow in the first half of 2025 and the new Earth-tone eyeshadow in Q3. 3) Fragrance: 13 new fragrances launched in May, still in high demand in July-August with good market feedback. Entering high-end counters offline confirms brand strength, online breaking through to young consumers 1) Offline: Following the entry into Beijing SKP and Hangzhou Hubin Pedestrian Street in the first half of 2025, the bank expects the opening of a counter in Hangzhou Mixc City in the second half of 2025, with plans for counters in Shenzhen Mixc City, Henglong series, and Taikoo series malls underway; the same-store growth significantly outperforms the offline market, with a same-store growth of about 18% in the first half of 2025, confirming the strength of the products, offline service system, and member management capabilities; offline performance since Q3 meets company expectations. 2) Online: A healthy balance between self-broadcasting and reaching out to young online consumers, with activities such as the Sanya Foundation Festival and Super Product Day reaching out to young online consumers continuously since the beginning of the year. According to the bank's monitoring data, the total GMV of MAO GEPING on Tmall and Douyin increased by +47% year-on-year in July-August, maintaining high growth momentum. Expanding internationally, optimistic about the company's growth potential as a rare high-end domestic cosmetics group The company has entered into China Hong Kong's Sephora, and is expected to open its first counter in Hong Kong Harbour City in October, with plans to expand into Southeast Asia, Japan, and Europe from 2026. The bank is optimistic about the company's growth potential as a rare high-end domestic cosmetics group.