The Zhitong Finance App learned that open source securities released a research report saying that the core reason for the recent strong performance of the US care sector is that investment sentiment is picking up in the consumer sector, market capital allocation is a sector where performance is guaranteed, and it has fallen beyond 2023. The bank said that the medical and aesthetic industry is stable in the short term, and that the long-term penetration rate has not changed, the growth logic of compliance and localization has not changed. It is concerned about high-potential segmentation tracks, the cosmetics industry continues to recover moderately, and market changes are intensifying. It is recommended to focus on structural opportunities in terms of ingredients and segmentation tracks. Overall, the fundamentals of the beauty care sector are steady. In 2023, the sector experienced the largest decline in the whole year due to excessive market pessimism. In the future, it is expected to show better resilience in the context of restructuring stock capital allocation.

Open source securities views are as follows:

The overall beauty care sector surpassed the decline in 2023, and the sector has performed strongly since January 2024

On January 10, the beauty care index rose by 3.73%. Among them, companies such as Bethany (+8.30%), Runben shares (+5.90%), Aimeike (+5.52%), Huaxi Biotech (+5.36%), etc., showed impressive gains; since the beginning of 2024, the beauty care index has risen 1.87%, ranking high and recovering significantly (the 2023 beauty care index fell 32.03%, ranking last among the 31 tier 1 industries).

Steady fundamentals are compounded by emotional and financial catalysts. The beauty care sector is expected to show better flexibility in 2024

The bank believes that the core reason for the recent strong performance of the US care sector is the recovery in investment sentiment in the consumer sector, the market's tendency to allocate capital to a sector with guaranteed performance and a sharp decline in 2023. (1) Fundamentals: In terms of medicine and aesthetics, Aimeike's net profit in 2023 is expected to be +43% to +50% year-on-year, with impressive growth; in the 2023 Double 11 cycle, Pelaea's main brand ranked first in the Tmall beauty and skincare list, Caitang ranked second in the makeup list, and other domestic beauty companies such as Giant Biotech also performed well; overall, leading beauty care companies are expected to operate steadily in 2023. (2) Sentiment: The popularity of ice and snow tours in Harbin continued to rise in 2024, reflecting strong consumer demand; in addition, companies such as Aimeike and China Free Express issued advance performance announcements, all of which are expected to achieve impressive growth; the above events jointly catalyzed a significant recovery in investment sentiment in the consumer sector of the market. (3) Financial side: Driven by investment sentiment, stock capital is seeking opportunities to adjust sector allocation. Sectors that overfell in 2023 and were reduced became the better choice, and are expected to show relative returns in 2024. Overall, the bank believes that the fundamentals of the beauty care sector are stable. In 2023, the sector experienced the biggest decline in the whole year due to excessive market pessimism. In the future, it is expected to show better recovery flexibility in the context of restructuring stock capital allocation.

Medicine and aesthetics focus on high-potential segmented racetracks, and the cosmetics sector seeks opportunities for segmented racetrack structures

Medicine and beauty: The industry is stable in the short term, and the growth logic of long-term penetration, compliance, and localization has not changed. It is recommended to focus on high-potential segments, such as collagen (a material with both efficacy and safety; compliant filler products are expected to continue to expand in 2024), regenerative (product terminal premiums are high, institutions are willing to promote), hair (novel categories), water light needles (compliant products are expected to be launched), etc.; in addition, it is recommended that institutions lay out their own brands to improve profitability and explore new models. Cosmetics: The industry continues to recover moderately, and market changes are intensifying. It is recommended to focus on structural opportunities in terms of ingredients and track segmentation, and be optimistic about tracks such as recombinant collagen and children's sunscreen. The bank believes that market changes are both a challenge and an opportunity for domestic brands. Currently, it is difficult for beauty companies to seize the market through a single advantage. They need to pay attention to comprehensive construction such as channels, ingredients, and brand matrices. Companies with strong comprehensive competitiveness and a firm brand philosophy are expected to seize share in market changes.

Investment advice: Focus on leading medical, aesthetic, and cosmetics companies with strong performance certainty

1) Medical and aesthetic sector: Leading product companies that focus on compliance and have strong performance certainty, and leading medical and aesthetic institutions that continue to promote chainization and expand upstream in the industry chain. They focus on recommending Aimeike (300896.SZ) and Langzi Shares (002612.SZ), which benefit from the target Cordi-B (02487);

2) Cosmetics sector: On the one hand, it focuses on leading domestic cosmetics companies with strong product power, strong brand power and strong operating ability, focusing on recommending companies such as Perilla (603605.SH) and Giant Biotech (02367); on the other hand, it focuses on companies with marginal margins of subsequent management, focusing on Freda (600223.SH), Shuyang (300740.SZ), Bethany (300957.SZ), etc.; benefiting targets such as Runben Co., Ltd. (603193.SH), Marumi Co., Ltd. (), and Shangmei Co., Ltd. (02145). 603983.SH

Risk warning: Consumption recovery falls short of expectations; industry competition intensifies; policy regulation risks.