MAO GEPING (01318): Performance resilience revalidated "pricing power core" Davis double-click expectation has already been on the verge of action.

On August 28, MAO GEPING (01318) reported its interim results for the six months ending June 30, 2026. During the reporting period, the company achieved revenue of 3.267 billion yuan, a year-on-year increase of 26.2%; net profit of 807 million yuan, a year-on-year increase of 20.3%; adjusted net profit of 815 million yuan, a year-on-year increase of 21.3%; and a gross profit margin of 84.8%, up 0.6 percentage points year-on-year. The significance of this performance is particularly pronounced in the current industry context. According to Euromonitor International data, the compound annual growth rate (CAGR) of the Chinese skincare market from 2020 to 2025 is just 0.38%, while that of the color cosmetics market is only 1.43%. The overall market is nearly stagnant, and the industry has completely shifted from incremental dividends to the deep waters of stock game. Price wars are ongoing, and traffic costs are continually rising, with most brands struggling to survive in the quagmire of single-digit growth. However, MAO GEPING has achieved a revenue growth rate of 26.2%, significantly outpacing the industry average by several multiples. Its cosmetics business has a CAGR of an impressive 31% from 2021 to 2025, while its skincare business boasts a CAGR of 41%, resulting in a substantial scissor difference with the industry average. Behind these figures lies a clear industrial conclusion: MAO GEPING has successfully built an Alpha capability that transcends cycles, with its performance trajectory independent of industry fluctuations, making it a veritable growth island in the era of stock game. This article will dissect the resilience logic behind this financial report on three levels: from the breakthrough against the trend in performance, to the origin of the moat in core pricing power, and finally to the valuation outlook of the Davis double play, systematically demonstrating why MAO GEPING can continuously generate independent momentum amidst the industrys winter and the long-term value reassessment opportunities encompassed by its current undervalued state. Resilient BreakthroughThe Growth Island in an Industry Downturn According to Euromonitor International data, the CAGR of the Chinese skincare market from 2020 to 2025 is only 0.38%, and the CAGR of the color cosmetics market is merely 1.43%. The overall market is nearly stagnant, with the industry having completely transitioned from volume increase to value increase at a structural inflection point. In this harsh industry winter, MAO GEPING has delivered results that are entirely independent of the cycle. From 2021 to 2025, its cosmetics business has a CAGR of 31%, over 20 times the industry average; its skincare business achieves a CAGR of 41%, more than 100 times greater than the industry average. This significant scissor difference between the slow industry and fast growth verifies that MAO GEPING possesses Alpha capabilities that can transcend cycles. Even during the low point in 2022 when the industry was under overall pressure, the company maintained positive growth, decoupling its performance trajectory from the industrys cyclical fluctuations. Recent macro data and financial reports further corroborate this trend: in the first half of 2026, data from the National Bureau of Statistics indicates that the retail sales of cosmetics by enterprises above designated size reached 244.5 billion yuan, with a year-on-year growth of 6.3%. Meanwhile, MAO GEPING continued its high growth trajectory and remained ahead of the industry, with color cosmetics revenue reaching 1.967 billion yuan, significantly up by 38.3% year-on-year; skincare revenue was 1.212 billion yuan, a year-on-year increase of 11.5%; and fragrance revenue was 17 million yuan, growing by 46.0% year-on-year. More importantly, this performance resilience has ultimately translated into counter-cyclical market share expansion. During the deep reshuffle of the industry, leading high-end brands are forming a siphoning effect on smaller brands through their strong brand momentum. MAO GEPING has not only strengthened its own fundamental base but has also successfully broken through in high-end beauty, a sector long dominated by international brands, continuously capturing market share from major international players. Its color cosmetics market share has firmly secured its position as the top domestic brand, indicating that MAO GEPING has not only successfully traversed the cycle but is also leveraging market fluctuations for counter-cyclical expansion, laying a solid foundation for future long-term value reassessment. Source of ResilienceThe Core of Pricing Power in High-end Competition It is believed that the underlying secret to MAO GEPING's performance resilience lies in its precise positioning and deep monetization of the structural dividend of premiumization. As Euromonitor data indicates, premiumization is the core engine driving growth in the beauty market. Whether its the increase in high-end skincares share of the overall skincare market from 42.7% in 2020 to a projected 46.3% in 2025, or the significantly faster growth of high-end color cosmetics compared to mass-market categories, it shows that consumers are accelerating their migration towards high value-added, high-quality experiences. In the industrys transition from volume growth to value growth, those who can grasp high-end pricing power can extract the greatest profit elasticity amidst stock competition. In this trend, MAO GEPING, as a rare domestic high-end beauty leader, has successfully built its own core of pricing power. Supported by strong brand premium capabilities, MAO GEPINGs premiumization process is being efficiently translated into tangible performance increments through collaboration among product + channel + membership. On the product side, the company has spent a decade honing its competitive edge with exceptional products. On the one hand, the product matrix has become increasingly complete, with approximately 80 SKUs upgraded or developed in the first half of the year, bringing the total to 493. Key products such as the powder foundation, caviar cushion, and new primer have achieved retail sales exceeding 300 million, 200 million, and 100 million yuan respectively, while annual retail sales for the caviar mask surpassed 1 billion yuan and the black cream approximately 290 million yuan. On the other hand, from a medium to long-term perspective, the companys deep roots in its unique Eastern aesthetics system provide a comprehensive aesthetic expression throughout product formulation, presentation, and color pairing. This deep aesthetic design capability not only creates a high brand barrier but also grants the company strong bargaining power. On the channel side, MAO GEPING is redefining offline value with its unique business logic. Its offline counters have surpassed the traditional understanding of a sales channel, evolving into high-net-worth experience arenas. Relying on over 3,300 professional beauty advisors to provide in-depth trial services, the company has successfully built a complete loop from offline experience to member conversion to online repurchase. This experience-heavy model has resulted in significantly high single-store output. In the first half of 2026, the company opened 466 brand counters (including 431 self-operated counters) across 132 cities in the country. The average comparable income from self-operated counters rose from 2.8 million yuan in the same period last year to 3.3 million yuan, with single-counter output efficiency continuously optimizing. The first overseas self-operated counter in Hong Kongs Harbour City has driven a 457% increase in overseas product revenue, continuing to strengthen high-end channel networks. In terms of members, the number of online and offline members reached 18.64 million and 7.44 million respectively, with repurchase rates increasing to 24.8% and 30.6%, respectively, enhancing the loyalty of high-net-worth clientele. At the same time, the company is continuously strengthening its high-end expression through Eastern aesthetics and light and shadow sculpting professional barriers. By becoming the official beauty service provider for TEAM CHINA at the Milan Winter Olympics, launching the panda-themed collaboration series, and hosting VIC salons and masterclasses in Hong Kong, MAO GEPING continually reaches high-net-worth customers, transforming cultural narratives into high-end brand momentum. This differentiated high-end positioning directly translates to impressive profitability on the financial statements in the first half of 2026, the companys gross profit margin rose to an extraordinarily high level of 84.8%, perfectly illustrating the high added value brought about by premiumization. From a financial perspective, this nearly 85% gross margin not only reflects the brand's premium directly but also serves as a profit buffer that allows the company to withstand fluctuations in upstream raw material prices and rising downstream traffic costs, granting it strong risk resistance in a complex macro environment. In summary, MAO GEPINGs success essentially lies in utilizing the full-chain premiumization approach to make consumers accept the high premium of domestic products in a low-growth market environment, thereby firmly grasping the pricing power in the high-end market. This not only builds a profound competitive moat for the company but also offers a replicable business model for domestic beauty brands to break the foreign monopoly and achieve long-term value reassessment. Resilience for the Long HaulThe Davis Double Play Expectations in Valuation Undervaluation It is precisely through its core of pricing power and deep brand moat that MAO GEPING has established high scarcity in the capital market. While most consumer companies are mired in price wars, with continuously pressured profit margins, the company has successfully escaped the homogeneous competition dilemma through its precise positioning in high-end clientele and its unreplicable brand consciousness. Its high certainty of performance and sustained excess growth not only provide investors with high-quality bottom-line assets that can withstand cycles but also repeatedly validate a core proposition in the market: domestic high-end brands with core barriers are fully capable of thriving independently in the era of stock competition. However, this strength in fundamentals has yet to be fully reflected in valuations. As of August 28, 2026, the companys price-to-earnings ratio (TTM) is approximately 15.91 times, with a PE of only 4.27, representing a substantial valuation discount compared to the 20-30 times PE central tendency of international high-end beauty leaders. CICC is optimistic about MAO GEPING's growth prospects to become a global high-end cosmetics group, setting a target price of 84.5 HKD, while Guotai Junan also clearly identifies it as a top beauty stock at the valuation bottom. Meanwhile, institutional holdings in the beauty sector in Q2 were below 0.1%, at an historically low level, indicating that the expectation gap is already quite sufficient. In conclusion, this significant divergence between valuation and fundamentals precisely sketches a clear Davis double play path for value investors. On the performance front, the premiumization dividend and dual-driven pattern continue to manifest, with certainty of strong double-digit growth assured; on the valuation front, as the market re-examines the pricing power and long-term value of domestic high-end brands, its valuation logic is profoundly shifting from cyclical growth stocks to certainty premium assets. When performance growth and valuation recovery resonate together, the potential for a double play becomes highly promising, and the current period represents a strategic window for laying out quality scarce assets.