Citi: First payment for Mao Geping (01318) “buy” rating, target price of HK$130

The Zhitong Finance App learned that Citi released a research report saying that it covered the local Chinese cosmetics company Mao Geping (01318) for the first time and gave it a “buy” rating, with a target price of HK$130. The bank believes that Mao Geping has established a strong position in China's high-end cosmetics market for more than 20 years and continues to seize market share from international brands. It is difficult for local peers to easily replicate their competitive advantage.

Citi believes that Mao Geping's advantages include: strong founder IP and professional artistic makeup brand positioning; enhancing professional reputation through makeup training institutions; and cross-selling high-end skincare products through a solid network of offline DTC stores to enhance user stickiness.

Citi expects Mao Geping to continue strong online growth during the JD “618” shopping festival and achieve a 31% compound annual growth rate (CAGR) of net profit between 2024-2027. Based on its stronger brand equity, profitability and growth prospects, Citi believes the company should enjoy a higher valuation premium than its peers. In the ranking of investments in the Chinese cosmetics industry, Citi's preferred order is Giant Biotech (02367) → Mao Geping → Perea (603605.SH).