The downtrend of cosmetics imports to China didn’t show any signs of improvement in the 1Q, Citigroup analyst Filippo Falorni says in a research note. China saw a 21% year-over-year decline in imports, and a 15% U.S. drop. “The continued decline of imports from the U.S. would suggest trends for Estee Lauder in Mainland China could remain sluggish for this quarter,” Falorni says. “However, we continue to believe the cycling of large inventory reductions in Korea/China travel retail could support a return to sales growth.” L’Oreal, on the other hand, can mitigate the impact of subdued China market growth and buy time until a recovery on easy comparatives in this region, Falorni adds. Citigroup’s top pick is the Chinese beauty company Proya for its strong earnings outlook at 25%-30% growth.