Guotai Haitong: Divergence in the U.S. beauty and personal care sector intensifies in Q3; growth-oriented allocation value becomes prominent.

Guotai Haitong released a research report stating that in 26Q3, the beauty and personal care sector's revenue/net profit attributable to parent/net profit excluding non-recurring items changed by +10%/-36%/-29% year-on-year, with divergence within the sector intensifying: personal care remained steady, premium beauty outperformed mass beauty, and downstream medical aesthetics outperformed upstream. In the long term, the sector's growth attributes remain evident, and both valuation and positioning are currently at low levels. It is recommended to select, on a bottom-up basis, names with strong momentum and high growth, as well as those with recovery elasticity. Recommendations: 1) high-growth names with strong fundamentals; 2) leading names with relatively low valuations; 3) names with low expectations and potential for marginal improvement going forward.