In line with the rumors four months ago, Juzi Bio submitted a form on the Hong Kong Stock Exchange on May 5, with Goldman Sachs and CICC as joint sponsors. According to the news, Juzi Bio plans to raise $5 to $1 billion through this IPO.
According to the prospectus, Juzi Bio, which was registered in 2000, mainly designs, develops and produces professional skin care products with recombinant collagen as the key bioactive ingredient. At the same time, the company also develops and produces functional foods based on rare ginsenoside technology.
According to the prospectus, the key bioactive ingredient types commonly used in the beauty and health field mainly include hyaluronic acid, collagen and ginsenosides. Collagen is the most abundant protein in the body, and its main effects are skin repair and anti-aging; ginsenosides are active ingredients extracted from ginseng that help strengthen the immune system, lower blood lipid and blood sugar levels, and help inhibit tumor growth.
Compared with the brand of "Giant Bio", beauty lovers are more familiar with the company's skin care products - the "fumei" with more than 30,000 related notes in the Little Red Book is mainly a humanoid collagen dressing, and it is also a "medical beauty mask" with high public awareness, but this statement is not rigorous, and the fumei dressing is actually a medical skin repair dressing medical device managed by the second class.
According to Frost & Sullivan, Kefumei is the fourth best-selling brand in China's professional skin care products industry in terms of retail sales.
As of the latest practicable date, Juzi Bio has a total of 8 major brands, in addition to Kefumei, there are also Kolijin, Kepro, Ke trace, Kefuping, Liyan, SKIGIN and Ginseng, with a total of 105 SKUs in the product portfolio, covering functional skin care products, medical dressings and functional foods. The more well-known Kollign is mainly a humanoid collagen mask, which belongs to the cosmetic product.
The figure is from the prospectus
The IPO of two major skincare brands
The two brands of Kefumei and Klargin dominate the source of income of Juzi Bio.
From 2019 to 2021, the revenue of Juzi Bio was 957 million yuan, 1.191 billion yuan and 1.553 billion yuan, respectively. During the same period, sales of professional skin care products under the two brands of Kefumei and Klargin accounted for 80.6%, 82.4% and 91.7% of the total revenue, respectively. Juzi Bio said that it is expected that the sales revenue of these two brands will continue to become a major part of the company's revenue in the future.
According to the prospectus, in 2019 and 2020, the revenue of the Krigon brand will account for a higher proportion, but by 2021, the situation will change, and the revenue of a single brand in the United States will account for 57.8%, and the increase in the proportion of the latter's revenue will largely depend on the popularity of the so-called "medical beauty mask" in recent years.
Titanium Media App Mapping, Data Source: Prospectus
In 2011, Juzi Bio launched the Kefumei brand, which belongs to one of the medical dressings, humanoid collagen dressings, successfully obtained the Second Class Medical Device Registration Certificate, and is the first collagen-based product in China to obtain such registration. At present, there are 30 SKU products under the Kefumei brand, of which 3 are medical dressing series registered as medical devices, and the other 27 SKU products are skin care products for mass consumers, including masks, toners, lotions, sprays, essences, creams and gels. The retail price range of the products under the entire Kefumei brand is 99 yuan to 459 yuan.
Around 2018, "medical beauty masks" began to appear and quickly attracted people's hearts, that is, "medical skin repair dressings" or "medical cold compresses" that belong to the category of medical devices, but the latter has been completely withdrawn from the market by the "First Class Medical Device Product Catalog" at the end of 2021. Compared with the professional title of medical excipients, the name of "medical beauty mask" with medicine and beauty blurs the boundaries of cosmetics and medical device products, and is highly sought after by beauty lovers.
With the growth of light medical beauty consumers, more and more people need to do skin repair after the completion of photon skin rejuvenation, laser freckles and other light medical beauty projects, which is one of the driving forces for medical skin repair dressings to become popular, and gradually, medical dressings have also penetrated into the wider consumer group that have not participated in light medical beauty projects.
According to the prospectus, the humanoid collagen dressing in the form of a mask in the Kefumei brand has been the best-selling product of all its brands for three consecutive years since 2019. And the giant creatures are also accelerating their layout after eating dividends. It is currently developing 16 new medical dressings and expects to obtain medical device registration for 5 of them within the next two years.
As of December 31, 2021, the Krikin brand is a functional skin care brand launched by Juzi Biotech, and as of December 31, 2021, Krikin's portfolio includes 60 SKUs, including sprays, masks, creams, serums, lotions and gels, with retail prices ranging from $109 to $680. Among them, the humanoid collagen skin care spray launched in December 2014 is the best-selling.
The popularity of the Klarion brand depends on the rapid growth of the functional skincare industry in recent years, which is driven by multiple factors such as the expansion of sensitive skin groups, the enhancement of users' awareness of skin care, the rise of social media marketing and ingredient parties, and the growth of the medical aesthetic market.
Among the current 8 major brands of the company, there are not many who can really carry the banner of income, and it can be said that other brands are "showcases" that fill the matrix of the track. In 2018, the revenue of categories other than Kefumei and Kriging even accounted for less than 10%.
Whether it is medical excipient products or functional skin care products, the competition in the track is becoming increasingly exciting. Although Juzi Bio has been well versed in the online "traffic password" since early on, in 2015, it expanded the sales of Kefumei to online channels, and then other products have been "online", but from the perspective of its sales expenses in recent years, the cost of traffic has become more expensive, which in turn has also affected the overall profitability of the company.
Sacrifice profits and "go online" to sell and buy products yourself
Revenue is expanding, but profitability is standing still.
In 2020 and 2021, the revenue growth rate of Juzi Bio was 24.4% and 30.4%, respectively, and the scale of revenue continued to expand, but in the same period, the net profit growth rate was 143.7% and 0.2%, and the company's net income last year was almost the same as the previous year, and the net profit margin was reversed by 16.1 percentage points.
Titanium Media App Mapping; Data Source: Prospectus
From the perspective of financial data, the doubling of sales and distribution expenses may be the main factor. From 2019 to 2021, its sales and distribution expenses were 93.788 million yuan, 158 million yuan and 346 million yuan respectively, with a growth rate of 118.5% in 2021, and the expense ratio increased by 9 percentage points year-on-year.
In this regard, Juzi Bio said in the prospectus that the expansion of online direct sales has increased its online marketing expenditure. The Company's sales and distribution expenses mainly include online marketing expenses, offline marketing expenses and employee compensation expenses, and online mainly includes platform marketing fees, platform service fees and related expenses of the Company's cooperation with new media opinion leaders.
In 2021, Juzi Bio's online and offline marketing and employee compensation expenses accounted for 88.6%, 6.7% and 3.6% of the total sales and distribution expenses, respectively, and the employee compensation part did not change much, but the online and offline expense distribution showed a sharp shift in focus: in 2019, its offline revenue expenses accounted for 26.5%, and after two years, it shrank to 6.7%.
The figure is derived from the prospectus
According to reports, Juzi Bio's direct sales channels, including DTC stores on e-commerce and social media platforms (including Tmall, JD.com, Douyin, Xiaohongshu and Pinduoduo) and the self-operated departments of e-commerce platforms, of which the revenue of DTC store channels accounts for a greater proportion, from 2019 to 2021, generating revenue of 156 million yuan, 274 million yuan and 574 million yuan respectively, the proportion has increased year after year, 16.3%, 23.0%, and 37.0% respectively.
It is worth noting that although more money has been invested in online sales, the proportion of sales channel revenue of its traditional dealers is still very high, and the proportion of revenue in the past three years is 79.9%, 72.2% and 55.6% respectively. Distributors mainly sell Products to customers such as individual consumers, hospitals, clinics, chain pharmacies, cosmetics chains and supermarket chains.
In contrast, in 2021, when heavy marketing is invested online, the proportion of dealer sales channels of Juzi Bio has decreased significantly, and its ability to control terminal sales is increasing. And from the perspective of gross profit, the gross profit margin of Juzi Bio is steadily improving, with 83.3%, 84.6% and 87.2% from 2019 to 2021, respectively.
Compared with the spending of marketing investment, the R&D expenditure of Juzi Bio is not too much, with a total of 49.735 million yuan in the past three years, less than one-third of its sales investment in 2021. By the end of 2021, its R&D team consists of 84 employees, accounting for 12.6% of the total number of employees, of which 43 have master's degrees or above, accounting for more than half.
"Heavy marketing, light research and development" is one of the characteristics of similar medical aesthetic product companies.
Specific to the medical dressing industry, its white film, black film, Shi Erjia once handed over the chinext board, from 2018 to 2021 Q1, its research and development expense rate is less than 1%, only 2 research and development personnel, while the sales rate in the same period is as high as 33.18%, 38.73%, 40.38%, 43.74%.
Chuanger Bio, a three-board company with two major brands of Chuangfukang and Chuangermei, previously intended to land on Kechuang, and its cumulative R&D investment in the past three years accounted for 5.04% of the operating income, barely meeting the requirements of enterprises declaring more than 5% of the R&D investment in the past three years of the science and technology innovation board. In the same period, Bethany was 4.5%, Bloomage Bio 5.01%, and Polaria 1.95%, which was not high.
Previously, Chuanger Bio withdrew its IPO application because its expected performance in 2021 could not meet the requirements of "the amount of operating income in the past year reached 300 million yuan". In January this year, the IPO review status of the Shierjia ChiNext Board was changed to "suspended", and the two companies in the same industry doubled their A shares.
Taking this as a lesson, Juzi Bio chose to list on the Hong Kong stock market. At present, in the field of medical excipients, functional skin care products, and even a wider range of collagen products, there are many companies with high voices, which have not yet been listed and plan to be listed in recent years. The success of the listing of Juzi Bio will profoundly affect the IPO direction of medical beauty companies.
(This article was first published on the Titanium Media App author 丨 Yang Yaru Editor 丨 Sun Cheng)
![Take stock of the popular and easy-to-use "domestic essence", which is the real treasure skin care products![fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)