Anti-Aging and Guochao Trends Propel Cosmetic Stock to a 500% Gain

Proya Cosmetics (SSE:603605) is a multi-brand cosmetics company, with Proya as its flagship brand, accounting for 64% of total revenue in the first half of 2023. Known for its skincare and anti-aging products, Proya has established itself as a leader in the cosmetics industry.

Timage, the second largest revenue contributor, brought in approximately 9% of the revenue in the same period, focusing on Chinese culture-inspired makeup products. The rising 国潮 trend, which sees Chinese consumers supporting unique cultural products made by domestic companies, has particularly benefited Timage.

Additionally, the next two brands, Hapsode and Off&Relax, each contributed less than 3% to the overall revenue. Hapsode targets those with oily skin with its skincare line, while Off&Relax offers hair and scalp care solutions. These major products are experiencing rapid growth; even the main brand, Proya, saw a 36% year-on-year increase in the first half of 2023. The smaller brands have been growing even faster, with increases upwards of 60% year-on-year.

From 2014 to 2022, Proya's revenue experienced a Compound Annual Growth Rate (CAGR) of 18%. The revenue growth accelerated from 2018, with the CAGR over the last five years reaching 28%.

While there are indications of a slowdown, with 3Q2023 revenue rising by 21% compared to the same period last year, this performance remains commendable, especially considering the weak consumer demand in China. For the first nine months of 2023, the year-over-year revenue growth was 32%.