Source | Finance World WEEKLY After Finance World welcomed a new helmsman in June last year, Shanghai Jahwa's performance initially accelerated its deterioration. Now, over a year later, Shanghai Jahwa has stood up again. In Q3, revenue surged 28% against the trend, turning a profit of 140 million yuan. The capital market has voted with its feet, with the stock price up over 42% year-to-date and market cap increasing by 4.79 billion yuan.
Revenue Surges Double Digits Against the Trend
In recent years, the consumer sector has seen many comeback stories. In the domestic beauty track, the latest script has been picked up by Shanghai Jahwa. When mentioning Shanghai Jahwa, many people's first reaction might be "heard of it, but not familiar." But if you mention the summer essential "Liushen," the sensitive-skin-specific "Dr. Yu," or the infant care brand "Chicco," significantly more people know them. In fact, these are all brands under Shanghai Jahwa. For Shanghai Jahwa, beauty industry practitioners are more familiar, but whenever it's mentioned, they often sigh. In terms of history, Shanghai Jahwa is a true century-old enterprise, tracing back to its predecessor Kwong Sang Hong, even older than L'Oréal. In terms of industry status, back in the day, Lu Yixiong, the boss of Shanghai SMY, when he first came to Shanghai to start a business, dreamed of "one day being like Shanghai Jahwa." Now, Shanghai Jahwa's performance has been far surpassed by Shanghai SMY, not to mention L'Oréal. But at the end of October just past, Shanghai Jahwa delivered a report card with a significant revenue increase, reversing the trend of declining revenue in the same period over the past three years. According to financial data, in Q3 2025, Shanghai Jahwa's revenue increased by 28.29% year-on-year to 1.483 billion yuan, and net profit attributable to the parent turned from loss to profit, reaching 140 million yuan. This drove the first three quarters' revenue to increase by 10.83% year-on-year to 4.961 billion yuan, with net profit attributable to the parent at 405 million yuan, up 149.12% year-on-year. Shanghai Jahwa's report card was achieved against a backdrop of generally pressured industry performance. In Q3 2025, Proya, known as the "leader of domestic beauty," saw revenue decline 11.63% year-on-year; "hyaluronic acid king" Bloomage Biotech saw revenue decline 15.16%; and "medical beauty Maotai" Imeik saw a larger decline of 21.27%. For Shanghai Jahwa, this is not only the best performance since new Chairman and CEO Lin Xiaohai took office, but also, in terms of year-on-year growth rate, almost the best since China Ping An took over Shanghai Jahwa in 2011 and started the professional manager model. In June 2024, Lin Xiaohai, who had been CEO at Sun Art Retail and previously worked at P&G for 21 years, became the fourth professional manager of Shanghai Jahwa. After that, Shanghai Jahwa's performance went through a process from accelerated deterioration to slow recovery. In Q3 2024, after Lin Xiaohai took over, Shanghai Jahwa's revenue fell sharply by 20.93% year-on-year. In the following two quarters, the decline first narrowed to 20.19%, then significantly narrowed to 10.59%. Starting from Q2 2025, the trend changed dramatically, and Shanghai Jahwa began an upward narrative. In that quarter, the company's revenue increased by 25.28% year-on-year, turning from loss to profit. Subsequently, the growth trend continued into Q3, with not only a further expansion of the year-on-year revenue increase but also a nearly threefold increase in net profit attributable to the parent quarter-on-quarter. Regarding the return to growth, Shanghai Jahwa told the author, "In the first three quarters of 2025, the company has produced three hundred-million-yuan single products: Liushen Mosquito Repellent Egg, Dr. Yu's Second Generation Barrier Repair Cream, and Herborist's New Seven White Big White Mud, which have driven overall brand performance growth. In Q3, domestic online business revenue grew 1.7 times, with the proportion exceeding half for the first time." Big single products and online channels are the two keywords mentioned by industry insiders and company employees when reviewing Shanghai Jahwa's performance. Seeing Shanghai Jahwa rebound from the bottom, the capital market voted with its feet. As of the close on November 17, Shanghai Jahwa's stock price had risen 42.19% year-to-date, the highest in nearly 10 years, and the company's total market cap correspondingly increased from 11.35 billion yuan to 16.14 billion yuan. During the same period, Bloomage Biotech, also listed on the A-share market, saw a stock price increase of only 0.59%, while Proya, Imeik, and Fuerjia saw negative stock price increases of -13.85%, -12.08%, and -9.91%, respectively.
Following in the Footsteps of Peers
How did Shanghai Jahwa come back from the dead? There are two main keywords: one is pushing big single products, and the other is focusing on online channels. Before this, these were paths repeatedly validated by peers like Proya and Shanghai SMY to boost revenue. "The core of the cosmetics industry is brand premium, and the key is the big single product strategy. On one hand, brands can create a big single product through large-scale traffic investment to strengthen user loyalty and increase market share; on the other hand, through cross-selling and iterative upgrades, they can drive continuous increases in average order value," Bai Yunhu, a senior beauty commentator, told the author. Specifically for Shanghai Jahwa, after Lin Xiaohai took office, he divided all brand assets. Among them, Liushen and Dr. Yu were placed in the first tier; Herborist and Maxam in the second tier; and Chicco, Shuangmei, and GF in the third tier. For first-tier brands, Shanghai Jahwa provides the highest level of support in talent, marketing, and other resources. To increase Dr. Yu's visibility and exposure, the company invited table tennis player Fan Zhendong as a spokesperson. For new Liushen series products, Shanghai Jahwa made large-scale investments, with elevator media exposure reaching 5.8 billion times in Q3 alone, a 50% year-on-year increase. At the same time, after discarding the "offline burden," Shanghai Jahwa began to make up for online lessons without pause, not only building a live-streaming matrix but also adjusting its new product development approach to "reverse customization based on the online ecosystem and marketing needs," from gross margin and average order value to gram weight, all matched to the online operating environment. At the post-earnings conference, when asked about next year's plans, Shanghai Jahwa's senior management still gave the same two keywords: on one hand, focus on core brands and big single products, increasing marketing investment; on the other hand, focus on online channels, promoting gross margin improvement and cost reduction and efficiency enhancement. Regarding Shanghai Jahwa's return to growth, former employee Feng Qian added another perspective to the author. In his view, the strong Q3 report is also related to the relatively low base in the same period last year. Lin Xiaohai took office in June 2024 and until the end of last year mainly focused on channel integration and personnel appointments and removals, with relatively few business-related actions. With a low base last year, it was easier to achieve a significant increase this year. In terms of channels, it is reported that Shanghai Jahwa, on one hand, took back the national KA stores (mainly referring to sales terminals in department stores and chain supermarkets) to the head office for direct operation, and subsequently closed 28 branch companies; on the other hand, it converted some online distribution businesses from agency to self-operated models. In terms of personnel adjustments, according to Feng Qian, after Lin Xiaohai took office, he introduced several executives with P&G backgrounds, and some old Shanghai Jahwa employees left the core team. To support channel integration, Shanghai Jahwa reduced more than 500 headcounts, mainly from offline. According to statistics, among all A-share listed cosmetics companies, Shanghai Jahwa had one of the highest numbers of layoffs in 2024. These adjustments affected performance in the short term. In the 2024 annual report, Shanghai Jahwa stated that the adjustment of department store channels led to a decrease in invoiced revenue, and returns formed by the conversion of online agency to self-operated had a certain impact on the company's operating income and profit. In addition, some departing employees said that Shanghai Jahwa provided relatively high severance compensation, which also affected the company's profitability to a certain extent. However, in the long run, this laid the foundation for Shanghai Jahwa's performance to "first decline and then rise." "It was bad in 2024, but by 2025, it's good to travel light," Feng Qian admitted.
Still Needs to Continuously Prove Itself
In the beauty circle, the helmsman of Shanghai Jahwa is considered one of the "hardest" jobs. All three of Lin Xiaohai's predecessors, after taking office, made adjustments that led to a significant performance rebound, but then performance growth slowed and profitability declined, and they were quickly replaced. In 2020, Pan Qiusheng, with L'Oréal experience, was appointed CEO of Shanghai Jahwa. Then in 2021, Shanghai Jahwa successfully reversed the decline, delivering a report card with both revenue and net profit growth. But the good times didn't last; starting from 2022, Shanghai Jahwa turned back into a "decline" channel, and Pan Qiusheng resigned for personal reasons. Going further back, Xie Wenjian and Zhang Dongfang were appointed CEO of Shanghai Jahwa in November 2013 and December 2016, respectively. In the second year of their tenures, Shanghai Jahwa's performance also clearly rebounded, but it didn't last afterward. First, revenue growth slowed to single digits, then net profit attributable to the parent after deducting non-recurring items declined significantly, and then both resigned. The reason is that after China Ping An took over Shanghai Jahwa and started the professional manager model, with operating pressure upfront, although each CEO could boost performance in the short term with a series of measures, they lacked sustainability, and some even had to cover for their predecessors' mistakes. Feng Qian joined Shanghai Jahwa in 2009 and has experienced the management of four professional managers. Feng Qian lamented to the author: "Each professional manager has a different background and their own ideas, all wanting to build their own team and business methods, leading to a lack of policy continuity. The biggest feeling over the past 16 years is that Shanghai Jahwa is iron-clad, but CEOs come and go like water." The most typical example is that during the tenure of the first, Xie Wenjian, who focused on short-term gains, emphasized marketing over R&D, and Shanghai Jahwa lost many core developers, "leading to the decline of brands like Qingfei and their withdrawal from first-tier department store counters." Then, the second, Zhang Dongfang, had to clean up the mess and integrate multiple channels and brands. Because of frequent CEO changes, Shanghai Jahwa missed many opportunities. "In the latter half of Pan Qiusheng's tenure, the Chinese cosmetics market underwent drastic channel and market changes. Shanghai Jahwa's performance was declining, and it didn't try these opportunities in time, while Proya and Shanghai SMY ran out," Bai Yunhu lamented to the author. Perhaps because of this, regarding the current Lin Xiaohai, even though he has delivered a good report card, the industry mostly holds a cautious wait-and-see attitude. After all, there have been too many examples of fleeting success before. Compared to his predecessors, Lin Xiaohai is undoubtedly luckier. "After Lin Xiaohai took over, the channel and market competition landscape in Chinese cosmetics has basically been set, and there won't be uncontrollable environments. Lin Xiaohai has also found a playstyle that suits the market," Bai Yunhu said, adding that although achievements have been made now, the present doesn't represent the future. "First, the big single product and online channel efforts are already facing huge challenges. Achieving a certain degree of revenue growth through increased traffic investment and marketing costs is unsustainable. This is also one of the reasons why Proya's stock price has been hovering at low levels for a long time," Bai Yunhu said. Looking further into the future, there are currently two consensus views in the beauty circle: one is to increase investment in technology and specialty ingredients to escape the pure price-based involution; the other is to scale up through investment and M&A. Although Lin Xiaohai is promoting the implementation of these consensus views, it seems they have not yet been clearly reflected in Shanghai Jahwa's performance. (Feng Qian is a pseudonym in the article.)