Citic Securities: International Beauty Brands See Rebound in 2Q; Chinese Market Grows Steadily

Citic Securities' research report revealed that international beauty brands such as L\'Oréal (LRLCY.US) and Procter & Gamble (PG.US) have reported improved growth rates in the domestic market, with effective skincare and medical aesthetics leading the way. With a significant rebound in risk appetite by the end of 2025, the beauty sector is expected to continue growing, driven by changes in product and channel strategies. We recommend focusing on companies with existing products and channels that can adapt quickly to changes.

Citic Securities' main views are as follows:

L\'Oréal (LRLCY.US): All four business segments reported growth, with Chinese market growth rate reversing from previous quarter

1H25 revenue reached €224.7 billion, a year-on-year increase of 3.0%, with 1Q and 2Q growth rates of 2.6% and 3.7%, respectively. Net profit reached €37.83 billion, a year-on-year increase of 1.0%. By business segment, professional beauty care led the way with a year-on-year growth rate of 6.5%, while consumer skincare, high-end cosmetics, and skin science beauty products grew by 2.8%, 2.0%, and 3.1%, respectively. By region, the Chinese mainland market reported a year-on-year growth rate of 3% in 2Q, with skin science beauty and professional beauty care segments performing particularly well.

Procter & Gamble (PG.US): Beauty business rebounds, single-quarter profitability improves

2Q revenue reached $208.89 billion, a year-on-year increase of 2%, while net profit rose to $36.26 billion, a year-on-year increase of 15%. The company revised its 2026 fiscal year guidance to 1-5%. By business segment, beauty grew by a small margin of 0.2% year-on-year, with net profit increasing by 4%. Health and wellness, fabric care, and household protection segments all reported year-on-year growth rates of 2%, with double-digit increases in profitability.

Galderma: 1H25 revenue grows 15% year-on-year for injectables and fillers

In the first half of 2025, Galderma's net revenue reached $24.48 billion, a year-on-year increase of 12.2%, with 2Q growth rate reaching 15.8%. The company raised its full-year net sales guidance to 12-14% (previously 10-12%). By business segment, injectables and fillers grew by 9.8%, 7.7%, and 26.9%, respectively, with injectable sales growing 14.7%, driven by the success of new products such as liquid A-type botulinum toxin, which has been launched in 17 markets.

By region, seven major markets reported double-digit growth, with injectables performing well in Brazil, Canada, and China. Daily skincare business (including brands like Stataf) performed strongly in China and India.

Risk Warning: intensified competition, weak consumer demand, and slower-than-expected channel expansion.