JP Morgan views MAO GEPING as the top pick in the Chinese beauty sector and maintains an "Overweight" rating

JP Morgan's report indicates that MAO GEPING (01318.HK) had a strong performance last year, with sales and profits increasing by 30% and 37% year-on-year, exceeding the company's guidance. The management remains confident for 2026, with sales and profit growth targets both set at 30%, planning to add 20 to 30 new stores, and a same-store sales growth target of 12%.

The bank pointed out that MAO GEPING has a gross margin as high as 84%, and the impact of rising raw material prices on profits is limited. There is significant potential for member growth, with offline members reaching 6.4 million (target customer base of 40 million) and online members reaching 15.6 million (target customer base of 300 million to 400 million). The company remains flexible regarding merger and acquisition opportunities to build a multi-brand portfolio.

JP Morgan also believes that the company's growth visibility this year is robust, with a strong performance in the first quarter, mainly benefiting from its optimal positioning in the experiential consumption trend, a clear roadmap for store network expansion, and increased brand awareness.

JP Morgan generally maintains its earnings forecasts for MAO GEPING for 2026 and 2027, with a target price of 130 yuan, corresponding to a forecasted price-to-earnings ratio of 31 times for 2027, maintaining an "Overweight" rating and viewing it as a preferred stock in the Chinese beauty sector