30 Oct 2026 CMB International Global Markets | Equity Research | Company Update

Proya Cosmetics (603605 CH) 3Q26 revenue beat; share-gain spend crimps earnings beyond

Proya Cosmetics (603605 CH)

3Q26 revenue beat; share-gain spend crimps expectations earnings beyond expectations

Proya’s 3Q26 revenue rose 29.8% YoY to RMB2,253mn, well above our expectations. However, recurring attributable NP fell 65.2% YoY to RMB79mn, below our expectations, due to trimmed GPM and rising selling ratio. FlowerKnows consolidation and rapid growth in emerging brands reinforced the broader portfolio’s contribution to sales. The Ruby Cream 4.0 launch and Douyin expansion also lay the groundwork for future growth, although heavier investment and a lower gross margin from shifting brand and category mix weighed on near-term profitability. The group’s growth drivers are broadening, and the early Double 11 performance indicates that investment in 3Q26 is starting to pay off. We maintain BUY and retain our earnings forecasts and TP of RMB89.58, based on a target P/E of 30x.

Target Price RMB89.58 Up/Downside 65.0% Current Price RMB54.29

China Consumer Staples Miao ZHANG

(852) 3761 8910 zhangmiao@cmbi.com.hk

Yiwen Xu xuyiwen@cmbi.com.hk

 The broader portfolio supported sales. 1) Established brands are showing signs of improvement: Proya’s 3Q26 revenue fell by single digits YoY, dropping its share of group revenue below 50%. Management reported strong Double 11 presales for Ruby Cream 4.0 (>1mn units) and the Yunbai series (>RMB100mn), which could help stabilize flagship-brand sales. TIMAGE’s YoY decline narrowed to single digits in 3Q26. 2) Emerging brands maintained strong momentum: OR (>50% YoY in 9M26), Awaken Seeds (+103.5% YoY in 1H26) and INSBAHA (>100% YoY in 9M26).

Stock Data

Mkt Cap (RMB mn) 15,392.3 Avg 3 mths t/o (RMB mn) 303.7 52w High/Low (RMB) 76.36/53.98 Total Issued Shares (mn) 283.5

Source: FactSet

Shareholding Structure

Hou Juncheng 34.7% HKSCC 23.6%

 A more balanced channel mix highlights omnichannel strengths. The group’s channel mix became more balanced in 9M26, as offline revenue grew by high double digits YoY and accounted for a larger share of total revenue. Among online platforms, Douyin’s contribution to flagship-brand revenue surpassed Tmall’s (30%+ v.s. 25%+). Proya remains an industry leader in omnichannel execution.

Source: SSE

Share Performance

Absolute Relative 1-mth 0.6% 7.0% 3-mth -11.2% 0.0% 6-mth -12.8% 2.7%

 Lower GPM and heavier selling expenses squeezed core profitability. GPM fell 4.9ppts YoY to 69.8% in 3Q26 on lower margin of FlowerKnows, higher offline contribution and changes in brand and category mix. The selling ratio rose 3.5ppts YoY to 53.4%, driven by Ruby Cream 4.0 launch spending, investment in emerging brands, and higher traffic costs and spending on Douyin. Recurring NPM fell 9.6ppts YoY to 3.5%, suggesting a near-term focus on market share over profitability.

Source: FactSet

12-mth Price Performance

 Valuation: We maintain BUY and retain our TP of RMB89.58, based on an unchanged target P/E of 30x. Despite a larger-than-expected decline in 3Q26 recurring NP, we maintain our full-year forecasts for now, supported by greater earnings contribution in 4Q and the solid start to Double 11. Risks: slower-than-expected core-brand recovery, traffic-cost hike, and weaker-than-expected earnings contributions from emerging brands.

Source: FactSet

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 10,778 10,597 10,957 12,043 12,865

YoY growth (%) 21.0 (1.7) 3.4 9.9 6.8 Net profit (RMB mn) 1,552.0 1,497.8 1,686.0 1,405.6 1,511.2

YoY growth (%) 30.0 (3.5) 12.6 (16.6) 7.5 EPS (Reported) (RMB) 3.92 3.78 4.26 3.55 3.82 Consensus EPS (RMB) na na 4.65 4.43 4.88 P/E (x) 13.9 14.4 12.8 15.3 14.2 P/B (x) 3.9 3.4 3.3 3.0 2.7 Yield (%) 2.9 3.7 4.1 3.4 3.7 ROE (%) 31.7 25.7 26.6 20.8 20.4 Net gearing (%) (75.1) (80.1) (82.2) (84.5) (86.6) Source: Company data, Bloomberg, CMBIGM estimates

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

1

Figure 1: Proya’s results summary

9M26 YoY

1Q26 YoY

2Q26 YoY

3Q26 YoY

RMB mn 9M26

1Q26 2Q26 3Q26

• Revenue 7,627 7.5% 2,305 3,069 2,253 -2.3% 2.2% 29.8% by brand

Skincare and cleanser 5,118 -7% 1,671 2,240 1,207 -11% -4% -8% Makeup 1,718 60% 396 500 821 6% 8% 249% Body & hair 781 57% 234 326 221 109% 57% 24%

Gross Profit 5,566 6% 1,718 2,277 1,572 0% 3% 21%

Selling expenses 4,060 15% 1,172 1,684 1,204 9% 6% 39% Admin. expenses (exl.R&D) 382 32% 116 121 146 16% 55% 29% R&D expenses 150 6% 43 56 51 0% 9% 9%

Net profit 1,256 22% 367 801 88 -6% 96% -61% Core net profit 743 -26% 341 323 79 -10% -18% -65% EPS (RMB) 3.20 24%

Gross profit margin 73.0% -0.7 ppt 74.5% 74.2% 69.8% 1.7 ppt 0.3 ppt -4.9 ppt Net margin 16.5% 2.0 ppt 15.9% 26.1% 3.9% -0.6 ppt 12.5 ppt -9.2 ppt

Source: Company data, CMBIGM

Figure 2: Proya’s operating matrix

9M26 YoY

1Q26 YoY

2Q26 YoY

3Q26 YoY

9M26

1Q26 2Q26 3Q26

Vol. sold (mn unit)

Skincare and cleanser 78.8 2% 24.2 32.6 22.0 -5% 6% 4% Makeup 28.1 136% 5.3 6.5 16.3 32% 27% 484%

• Body & hair 8.0 64% 2.3 3.3 2.5 89% 78% 36%

Revenue (RMB mn)

Skincare and cleanser 5,118 -7% 1,671 2,240 1,207 -11% -4% -8% Makeup 1,718 60% 396 500 821 6% 8% 249% Body & hair 781 57% 234 326 221 109% 57% 24%

ASP (RMB/unit)

Skincare and cleanser 64.9 -9% 69.2 68.6 54.8 -6% -9% -12% Makeup 61.1 -32% 74.8 77.2 50.2 -20% -15% -40% Body & hair 97.0 -5% 103.7 99.9 87.4 11% -12% -9%

Vol. produced (mn unit)

Skincare and cleanser 84.8 -11% 24.4 30.5 29.9 -11% 1% -22% Makeup 35.6 178% 5.9 8.8 21.0 110% 34% 509%

• Body & hair 9.4 50% 3.0 3.1 3.3 81% 39% 37%

unit sold / unit produced

Skincare and cleanser 93% 12.2 ppt 99% 107% 74% 6.4 ppt 4.9 ppt 18.4 ppt Makeup 79% -14.0 ppt 90% 74% 78% -52.9 ppt -3.8 ppt -3.3 ppt Body & hair 86% 7.8 ppt 75% 106% 77% 2.9 ppt 23.2 ppt -0.8 ppt

Source: Company data, CMBIGM

Figure 3: CMBIGM estimates vs consensus

Source: Company data, Bloomberg, CMBIGM estimates

Figure 4: Valuation Comps

Giant Biogene 2367.HK 19.65 2,659 9.4 x 8.4 x 7.4 x 10.3 12.9 13.3 1.8 12.2 13.1 80.3 34.7 69% 7.1% 5.8% 1.2 x Mao Geping 1318.HK 43.18 2,698 12.3 x 10.0 x 8.3 x 28.1 23.8 21.3 24.0 23.2 21.1 84.2 23.9 42% 2.6% 2.5% 0.4 x Chicmax 2145.HK 21.96 1,115 12.2 x 8.0 x 6.5 x -1.3 16.5 16.8 -45.1 52.0 22.9 76.4 12.6 46% 6.4% 7.9% NA Forest Cabin 2657.HK 51.20 925 12.3 x 9.0 x 6.9 x 41.0 33.6 29.0 52.4 35.9 30.7 82.0 14.7 34% 2.1% 3.5% 0.2 x Beautyfarm Med 2373.HK 16.20 519 8.2 x 6.8 x 5.9 x 30.6 12.9 11.5 35.9 19.8 16.2 49.1 11.3 47% 4.4% 6.1% 0.2 x Proya 603605.SH 54.29 3,227 12.8 x 15.3 x 14.2 x 3.4 9.9 6.8 12.6 -16.6 7.5 73.3 14.6 52% 3.7% 3.6% NA Btn 300957.SZ 29.61 1,883 20.4 x 17.5 x 15.4 x 11.1 10.4 9.3 27.4 16.6 13.9 74.5 9.6 54% 2.2% 2.2% 0.9 x Shanghai Jahwa 600315.SH 17.02 1,718 20.7 x 22.1 x 18.5 x 11.1 10.8 10.1 64.4 -6.3 19.1 62.6 4.2 60% 1.4% 1.2% 0.5 x Fuerjia Technology 301371.SZ 19.84 1,549 21.7 x 19.0 x 16.6 x 24.1 16.3 14.1 14.0 14.1 14.4 80.1 22.9 96% 4.0% 3.4% 1.5 x Marubi 603983.SH 24.19 1,456 32.2 x 26.9 x 23.3 x 9.2 11.7 10.6 25.2 19.7 15.5 74.0 7.1 81% 2.1% 2.0% 1.2 x Syg 300740.SZ 17.06 1,127 40.0 x 29.6 x 24.9 x 9.7 10.8 10.2 35.7 34.9 18.9 65.5 3.0 26% 0.6% 1.1% 1.0 x Runben Biotechnology 603193.SH 17.10 1,039 18.7 x 15.8 x 13.6 x 19.8 17.8 16.2 20.2 18.2 16.7 58.3 20.4 59% 2.7% 2.0% 0.8 x Average 18.4 x 19.2 x 16.4 x 14.8 14.5 13.1 25.7 19.5 17.3 71.2 12.4 56% 2.7% 2.8% 0.8 x

Source: Company data, Wind, CMBIGM Note: Proya’s data from CMBIGM estimates (data as of 30 Oct 2026)

Figure 5: PE band

(RMB)

Share price Average ‘-2SD

160

140

120

100

30.9 x

25.9 x

20.8 x

80

15.8 x

60

10.8 x

40

Source: Company data, Bloomberg, CMBIGM (data as of 30 Oct 2026)

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn)

• Revenue 8,905 10,778 10,597 10,957 12,043 12,865 Cost of goods sold (2,677) (3,084) (2,833) (2,849) (3,126) (3,335) Gross profit 6,227 7,695 7,764 8,108 8,917 9,530 Operating expenses (4,692) (5,821) (5,973) (6,621) (7,265) (7,748) Selling expense (3,972) (5,161) (5,259) (5,821) (6,398) (6,835) Admin expense (455) (366) (404) (477) (512) (534) R&D expense (174) (210) (217) (226) (248) (265) Others (91) (84) (93) (97) (107) (114) EBITDA 1,617 1,967 1,895 1,590 1,749 1,873 Depreciation 63 75 82 80 73 67 Other amortisation 19 19 22 22 23 24 EBIT 1,535 1,873 1,791 1,487 1,652 1,782 Net Interest income/(expense) 59 36 29 29 29 29 Other income/expense (99) (20) 50 561 50 50 Pre-tax profit 1,495 1,889 1,871 2,077 1,731 1,861 Income tax (265) (304) (328) (349) (291) (313) Minority interest 37 33 45 42 35 37 Net profit 1,194 1,552 1,498 1,686 1,406 1,511 Adjusted net profit 1,270 1,599 1,500 1,182 1,406 1,511 Gross dividends 549 622 788 887 739 795

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 5,545 5,613 6,136 6,500 7,208 8,037 Cash & equivalents 4,011 4,082 5,061 5,412 6,030 6,791 Account receivables 345 518 70 73 80 85 Inventories 797 661 635 638 700 747 Prepayment 203 224 169 175 193 206 Other current assets 189 128 201 202 205 208 Non-current assets 1,778 1,917 2,351 2,286 2,232 2,186 PP&E 827 907 893 813 741 675 Investment in JVs & assos 114 111 441 441 441 441 Intangibles 405 429 444 459 477 497 Goodwill 0 0 0 0 0 0 Other non-current assets 433 469 573 573 573 573 Total assets 7,323 7,530 8,487 8,786 9,440 10,223

Current liabilities 2,120 1,213 1,374 1,363 1,424 1,461 Short-term borrowings 200 0 80 80 80 80 Account payables 1,055 676 798 803 881 940 Tax payable 223 126 95 95 95 95 Other current liabilities 642 410 401 386 368 347 Non-current liabilities 803 831 847 847 847 847 Long-term borrowings 0 0 0 0 0 0 Deferred income 6 15 23 23 23 23 Other non-current liabilities 796 816 824 824 824 824 Total liabilities 2,923 2,044 2,221 2,210 2,270 2,308

Share capital 1,510 1,525 1,161 1,161 1,161 1,161 Retained earnings 3,040 4,233 4,930 5,820 6,447 7,229 Other reserves (201) (323) 125 (497) (566) (639) Total shareholders equity 4,350 5,435 6,216 6,483 7,042 7,750 Minority interest 51 51 51 92 127 164 Total equity and liabilities 7,323 7,530 8,487 8,786 9,440 10,223

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 1,495 1,889 1,871 2,077 1,731 1,861 Depreciation & amortization 81 94 103 103 96 91 Tax paid (265) (304) (328) (349) (291) (313) Change in working capital 140 (417) 597 (1) 9 7 Others 17 (156) (49) (566) (36) (37) Net cash from operations 1,469 1,107 2,193 1,262 1,509 1,609

Investing Capital expenditure (180) (300) (169) 0 0 0 Acquisition of subsidiaries/ investments (131) (44) (36) (37) (41) (44) Others (165) (922) (32) 0 0 0 Net cash from investing (476) (1,265) (238) (37) (41) (44) Financing

Dividend paid (407) (371) (799) (837) (813) (767) Net borrowings 0 (200) 0 (37) (37) (37) Others (53) (188) 36 0 0 0

Net cash from financing (460) (758) (763) (874) (850) (804) Net change in cash Cash at the beginning of the year 3,161 4,011 4,082 5,061 5,412 6,030 Exchange difference 1 (0) (0) 0 0 0 Others 316 988 (213) 0 0 0 Cash at the end of the year 4,011 4,082 5,061 5,412 6,030 6,791

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 39.5% 21.0% (1.7%) 3.4% 9.9% 6.8% Gross profit 39.9% 23.6% 0.9% 4.4% 10.0% 6.9% EBITDA 32.2% 21.7% (3.7%) (16.1%) 10.0% 7.1% EBIT 33.1% 22.0% (4.4%) (17.0%) 11.1% 7.9% Net profit 46.1% 30.0% (3.5%) 12.6% (16.6%) 7.5% Adj. net profit 33.6% 25.9% (6.2%) (21.2%) 18.9% 7.5%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 69.9% 71.4% 73.3% 74.0% 74.0% 74.1% EBITDA margin 18.2% 18.3% 17.9% 14.5% 14.5% 14.6% Adj. net profit margin 14.3% 14.8% 14.2% 10.8% 11.7% 11.7% Return on equity (ROE) 30.3% 31.7% 25.7% 26.6% 20.8% 20.4%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) (0.9) (0.8) (0.8) (0.8) (0.8) (0.9) Current ratio (x) 2.6 4.6 4.5 4.8 5.1 5.5 Receivable turnover days 14.1 17.5 2.4 2.4 2.4 2.4 Inventory turnover days 108.7 78.3 81.8 81.8 81.8 81.8 Payable turnover days 143.9 80.1 102.9 102.9 102.9 102.9

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 18.0 13.9 14.4 12.8 15.3 14.2 P/E (diluted) 18.0 13.9 14.4 12.8 15.3 14.2 P/B 4.9 3.9 3.4 3.3 3.0 2.7 Div yield (%) 2.5 2.9 3.7 4.1 3.4 3.7

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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