GF Securities: Maintaining Mao Geping's (01318) “buy” rating at a reasonable value of HK$73.68, the third quarter revenue is expected to increase 22%-24% year-on-year

The Zhitong Finance App learned that GF Securities released a research report stating that it maintains Mao Geping (01318)'s “buy” rating and a reasonable value of HK$73.68 per share. The bank expects the company to achieve net profit of 1.79 billion yuan in 2027. The company announced the operating conditions and financial results for the third quarter of 2026. It is estimated that revenue for the third quarter will increase 22%-24% year on year, net profit will increase 22%-24% year on year, and profit growth rate will increase compared to the first half of the year. Revenue for the first three quarters is expected to increase by 24%-26% year on year, net profit is expected to increase by 20%-22% year on year, and net interest rate remains stable. The bank believes that the company has deep brand assets, a stable mentality for core products, and is optimistic that growth will continue during the peak season.

The main views of GF Securities are as follows:

Third-quarter revenue continued to grow in double digits, and profit margins remained stable

The company announced the operating conditions and financial results for the third quarter of 2026. It is estimated that revenue for the third quarter will increase 22%-24% year on year, net profit will increase 22%-24% year on year, and profit growth rate will increase compared to the first half of the year. In the first three quarters, revenue increased 24%-26% year on year, net profit increased 20%-22% year on year, and net interest rate remained stable. Against the backdrop of increased competition in the industry, the company's ROI and profitability remained steady, demonstrating the professional brand mentality and channel operation advantages.

Classic single product repurchases are steady, and new products continue to contribute to growth

The company continues to improve its product matrix around the advantages of base makeup. Following “skin clothing,” the company launched “primer before makeup” and “sunscreen before makeup” to cover different skin types and pre-makeup needs. In terms of skincare, the company expands repair and high-end care scenarios through black cream, caviar series, and Ryukou Revitalizing series to promote the expansion of the makeup customer base to the skincare category.

Inspired by panda flowers, the Magic Flower Kingdom makeup series incorporates Oriental aesthetics and youthful expression into the product design, and the new product is outstanding. Combined with the steady repurchase of classic items, it continues to enrich the source of brand growth.

Professional service consolidates brand mentality, and omni-channel operation enhances consumer reach

The company continues to encrypt the layout of high-tier cities and promote counter upgrades, enhance product performance display with professional beauty consultants, makeup testing experiences and personalized services, and accumulate user trust and brand reputation.

On the online side, the company meets consumer demand through content management and talent cooperation, and improves the exchange of Tmall and Douyin membership points and levels, enhances member interaction and repurchases, and promotes the extension of professional service advantages to omnichannel operations.

Risk Alerts

Demand for terminals is weak; offline store expansion is limited; sales fall short of expectations.