HAITONG INT'L: Maintains "outperform" rating on MAO GEPING (01318) with a target price of 108.2 Hong Kong dollars.

HAITONG INT'L released a research report stating that they maintain a "outperform" rating for MAO GEPING (01318) and give a target price of 108.2 Hong Kong dollars for 2026, corresponding to a 32X PE ratio, with a potential upside of 23.1%. The firm believes that the brand strength and fundamentals of MAO GEPING remain solid, and they see the company's core value in its strong positioning as a high-end brand and its continuous product innovation capabilities. The advancement of strategic partnerships is expected to open up new growth opportunities. The firm advises investors to pay attention to the implementation of future cooperation agreements and the specifics of the planned share reduction, while maintaining a positive view on the company's long-term value. Key points from HAITONG INT'L include: - Expect strong growth in 2H25 for MAO GEPING following a strong performance in 1H25 - The firm anticipates that competition in the cosmetics industry will continue to intensify in 2026, following strong returns of overseas high-end brands with a low base since 2025. They expect MAO GEPING to maintain its strong growth in 2H25, benefiting from strong offline sales driven by strong same-store performance, despite weakening consumer spending in the second half of the year. The expansion of membership numbers and high repurchase rates support sales growth. Online growth remains strong, with intensified competition during Double 11. The company is expected to continue its fast growth in 2026, given its high-end brand positioning, continuous product innovation, distinction between offline and online products, and flexible marketing strategies. As a result, the firm forecasts operating revenues of 5.101 billion/6.489 billion/8.115 billion yuan for 2025-2027, with year-on-year growth of 31.3%/27.2%/25.0%; net profits attributable to shareholders are expected to be 1.201 billion/1.494 billion/1.848 billion yuan, with year-on-year growth of 36.4%/24.4%/23.7%. - The company has signed a strategic agreement with investment institution Louvicent, injecting international and capital momentum - According to the announcement, the two parties plan to collaborate in global market expansion, establishment of a high-end beauty investment fund, and optimization of corporate governance. The firm believes that if this cooperation is successfully implemented, it will significantly enhance the company's brand penetration in overseas high-end markets and may open up opportunities for future outward growth through the investment fund platform, marking an important strategic step towards global expansion. - Major shareholders and some directors plan to reduce their holdings - The announcement shows that related shareholders intend to reduce their holdings by no more than approximately 3.51% of the total share capital (i.e., no more than 1720 shares, calculated at 1.51 billion Hong Kong dollars based on the closing price of 87.95 Hong Kong dollars per share for MAO GEPING on January 7th), primarily due to personal financial planning needs. The firm notes that this reduction will not lead to a change in control, as MAO GEPING and their relatives will still maintain around 70% of the company's equity; and the related shareholders continue to be dedicated to the company's operations, so their impact on the company's fundamentals and long-term governance structure is expected to be limited. Investors should pay attention to the market pace during the implementation of this plan. Risks: Unexpected delays in cooperation progress, intensified industry competition, changes in macroeconomic consumption environment, negative public sentiment.