Oriental Securities: Demand for beauty is steady, brand differentiation intensifies

The Zhitong Finance App learned that Orient Securities released a research report saying that in July, beauty salons outperformed the consumer market by zero, leading online domestic goods resonated with high-end international brands, and the differentiation of the Douyin channel intensified. Currently, the share of fund holdings in the beauty care sector is at a historically low level. It is recommended to focus on the following three directions: 1) the 2026H1 brand GMV has been verified and cost efficiency improvement targets; 2) benefits from structural trend targets such as high-end and effective skincare; 3) has strong multi-platform management capabilities and opens up new volume targets through overseas expansion.

Orient Securities's main views are as follows:

In July, beauty agency zero continued to significantly outperform the overall consumer market

In July 2026, total retail sales of social consumer goods increased 0.6% year on year, and retail sales of consumer goods per unit above the limit decreased by 3.4% year on year; retail sales of cosmetics above the limit during the same period were +6.8% year over year, about 6 pct higher than the market. The cumulative year-on-year growth rate of the cosmetics category in January-July was +6.3%, which is significantly faster than the cumulative growth rate of 1.2% of the total amount of society zero. Despite a natural decline in growth after the high base in June, beauty continued to grow above the middle single digit in July, showing continued demand resilience and relative economic advantage.

In July, online beauty switched from a big boost to normal operation, leading domestic products and high-end international brands took the lead

1) Online overall: According to Blue Eye Intelligence, the monthly transaction volume of the top 20 skincare brands in July was roughly 100 million yuan to 400 million yuan, while the top 20 makeup and perfume top20 was around 70 million yuan to around 200 million yuan. Domestic brands such as Han Shu, Perea, Gu Yu, Shizentang, Mao Geping, and Kaziran continue to be at the forefront, while international brands such as Lancôme, L'Oréal, Estée Lauder, The Mysteries of Aquamarine, Dior, and Saint Laurent remain strong. The leading pattern shows the characteristics of improving the efficiency of domestic goods and coexisting with international high-end resilience. 2) Douyin performance: According to data from Mama Cicao, Pereya's main brand and Caitang showed positive double-digit growth; Han Shu, a subsidiary of Shangmei Shares, showed a slight decline, and both showed high growth; Marumi, the main brand of Marumi Biotech, declined in double digits, and the growth of Love Fire showed high double digits; Yuze and Baicaoji, a subsidiary of Shanghai Jiahua, both showed high growth; the main Mao Ge Ping brand grew by more than 50%; Mao Ge Ping's main brand grew by more than 50%.

Overseas beauty care leaders 2026H1/Q2 financial reports have been disclosed, showing that industry demand is still resilient, but regional and category differentiation continues

1) L'Oréal: 26H1 sales +6% year-on-year, comparable to +6.5% after adjustment. China's high-end cosmetics business achieved double-digit growth, while dermatology, beauty and professional hairdressing businesses all achieved about double-digit growth. 2) Unilever: Basic sales in the 26H1 beauty and health business grew by about 6%, and Q2 accelerated to high single digits. Dove, Sunsilk, and Vaseline all achieved double-digit growth; the personal care business grew in single digits. The Chinese market is growing in single digits, with the beauty and health business as the main driving force. 3) Beiersdorf: Organic revenue from the 26H1 consumer goods business fell by about 4%, mainly dragged down by NIVEA's high-single-digit decline; Derma's business grew by about a single digit and achieved outstanding growth in the Chinese market in Q2. 4) Shiseido: Revenue in the 26H1 statement increased by about 6%, but remained flat after excluding effects such as exchange rates; China and the travel retail business are still in a weak recovery phase. 5) Kao: The 26H1 cosmetics business grew by about 7%, with a marked improvement in operating profit, leading the growth rate in the Asian market; 6) Amorepacific: 26Q2 sales increased by about 15% and operating profit increased by more than 50%, but revenue in the Greater China region still declined, mainly affected by channel optimization. 7) P&G: The company's beauty revenue increased by about a single digit in FY2026. Organic growth in April-June was about 4%. Hair care and personal care were better than skin care. Although the SK-II product portfolio improved, sales in Greater China were still under pressure. 8) Essity: The company's Q2 personal care report revenue growth was about double digits, single digit in organic growth, and categories such as women's care were strong. 9) LVMH: 26H1's organic revenue from the perfume and cosmetics business was basically the same, with a slight decline in Q2; Dior perfumes, and Guerlain perfumes performed well; at the same time, the company sold DFS Greater China business and continued to optimize the travel retail layout.

Risk warning: Demand for terminal consumers continues to weaken, new product promotion falls short of expectations, and industry competition intensifies.