Shenwan Hongyuan Group: Cosmetic retailers see high growth in March, expected to reach new high in 2026Q2 peak season.

Shenwan Hongyuan Group released a research report indicating that according to the National Bureau of Statistics, the growth rate of China's cosmetics sector in March was 8.3% for the month and 5.9% for the first quarter of the year, outperforming the overall market. This confirms the resilience of the beauty demand side while also demonstrating the trend of demand steadily recovering month by month for the past 26 years. With these positive trends, it is expected that in the second quarter of 2026, especially during the 618 promotion, growth will reach new highs against the relatively low base of the same period in the previous 25 years. The main points of view of Shenwan Hongyuan Group are as follows: Steady growth in brand side, marginal improvement in manufacturing side Outlook on the performance of the beauty and medical cosmetic industry in the first quarter of 2026. In terms of cosmetics, revenue and profits of brands are steadily growing, while there is marginal improvement in manufacturing. Guangzhou Ruoyuchen Technology: acquisition of international high-end brand Aolenasuo to improve brand matrix, outstanding performance of beauty and health products, driving high-speed revenue growth in the first quarter, with triple-digit growth in GMV through Douyin channels, continuously increasing momentum. Shanghai Jahwa United: Three major brands, combined with Taobao and Douyin channels, achieved high growth in GMV in the first quarter, with Six Gods' large single item mosquito-repellent egg, Bai Cao Ji's new product fairy grass oil, Yuzhe dry sensitive cream and oil sensitive cream helping to drive revenue growth. High focus on e-commerce operations sectors, companies such as Hangzhou Onechance Tech Corp., Qingmu Tec Co., Ltd. are expected to see high profits. Due to the peak in e-commerce traffic and brand self-operation, the e-commerce operations sector began to experience a downturn in performance after 2020. The medical beauty sector is slightly weakened by macroeconomic factors, with expectations of slight weakness in both upstream and downstream performance, as high volumes of pharmaceutical supplies are released, with more new products expected to drive consumer interest in the coming 26 years. Target aspects Cosmetics: Core recommendations: 1) Channels/brand matrix improvement, high GMV growth for MAO GEPING (01318), CHICMAX (02145), Shanghai Jahwa United (600315.SH); 2) Expected marginally improving performance for Proya Cosmetics (603605.SH), Guangdong Marubi Biotechnology (603983.SH), Runbio Biotechnology (603193.SH), GIANT BIOGENE (02367), Yunnan Botanee Bio-Technology Group (300957.SZ), Bloomage Biotechnology Corporation Limited (688363.SH). 3) Maternal and child sector: Shengbeila (02508), Kidswant Children Products (301078.SZ). Medical beauty: Focus on upstream companies with high barriers to entry in research and development and strong profitability, especially those with strong single product drives and broad product pipeline layouts, recommended: Imeik Technology Development (300896.SZ), Lancy Co., Ltd. (002612.SZ). E-commerce operations + self-owned personal care brand recommendations: Guangzhou Ruoyuchen Technology (003010.SZ), Hangzhou Onechance Tech Corp. (300792.SZ), SY Group (300740.SZ), Qingmu Tec Co., Ltd. (300610.SZ). Risk warning Increased macroeconomic uncertainty; market demand fluctuations; intensified industry competition; stricter regulatory control in medical beauty sector.