Recently, the Shanghai Stock Exchange announced the termination of the review of the initial public offering of Mao Geping Cosmetics Co., Ltd. and its listing on the main board, which has aroused widespread concern in the market. There are many factors behind this decision, including policy adjustments, market competition, and corporate strategy. This article will provide an in-depth analysis of Mao Geping's withdrawal of listing application and explain the challenges faced by the beauty industry under new policies and fierce competition.
Listing problems caused by policy adjustments
Policy adjustment has always been an important variable in the process of listing enterprises. On August 27, 2023, the China Securities Regulatory Commission (CSRC) made it clear that the pace of IPOs will be tightened in stages to promote the dynamic balance between investment and financing. This policy measure aims to regulate the use of funds raised by listed companies, require them to invest in their main business, and strictly restrict diversified investment. This puts pressure on beauty companies like Mao Geping who want to accelerate their expansion through IPO financing.
Mao Geping is not alone, and the current beauty industry is generally affected under the new policy. As early as China, the IPOs of a number of beauty companies have been blocked, including Bawei Shares, Pai Peptide Biotech, Lalami and Misf. This shows that the change in policy is becoming a major difficulty for beauty companies to go public.
Mao Geping's performance and strategy
In the face of the decision to withdraw the listing application, Mao Geping's performance has become the focus of attention. According to public information, Mao Geping's annual revenue from 2020 to 2022 showed a good trend, with 882 million yuan, 1.431 billion yuan and 1.682 billion yuan respectively, with a compound annual growth rate of 24%. At the same time, the net profit attributable to shareholders of the parent company in the same period was 198 million yuan, 327 million yuan and 349 million yuan respectively, with a compound annual growth rate of 20.8%. These figures reflect the steady growth of Mao Geping in a certain period of time.
However, the performance was matched by a significant increase in selling expenses. Mao Geping's sales expenses increased from 371 million yuan in 2020 to 786 million yuan in 2022, with an average annual growth rate of 28.42%. This has raised some concerns, with investors generally questioning the high selling expenses of companies. Under the fierce market competition, whether Mao Geping can effectively control the cost of sales and achieve a healthier profit model has become the focus of attention in the industry.
It is worth mentioning that in the face of policy adjustment and market competition pressure, Mao Geping's R&D strategy has also attracted much attention. According to the prospectus, Mao Geping Company has always adhered to the strategy of "emphasizing sales over research and development". From 2020 to 2022, the company's R&D expenses were 10.6704 million yuan, 13.703 million yuan and 14.562 million yuan respectively, accounting for 1.21%, 0.96% and 0.87% of the current operating income year by year. This strategy may lead to sales growth in the short term, but whether it can maintain innovation and product competitiveness in the long term is still the core concern of the market and investors.
The competition in the industry is fierce, and the pressure on domestic beauty products is increasing
At the same time that Mao Geping withdrew its listing application, the company made it clear in the prospectus that the industry market in which it was located was highly competitive. International first-line cosmetics brands have fully entered the Chinese market, forming a fierce competition pattern with local brands. As a local beauty company, Mao Geping faces competitors with high international brand awareness and strong financial strength.
Mao Geping's withdrawal of the listing application has sparked extensive discussion in the market, and policy adjustments and intensified market competition have made the road to listing of beauty companies more tortuous. The first half of this article provides readers with a comprehensive understanding through an in-depth analysis of policy adjustments, Mao Geping's performance and strategy, and the situation of industry competition. In the next section, we will further explore other key factors and unravel the deeper reasons behind a company's withdrawal from listing.
The deep-seated reasons behind the policy
Behind the decision to withdraw the listing application is not only because of the listing difficulties caused by policy adjustments. The deeper reason lies in the multiple considerations of enterprises in market competition and development strategies. Although Mao Geping's R&D strategy emphasizes "emphasizing sales over R&D", whether this is in line with the current market trend and the future sustainable development path has become a topic worthy of in-depth discussion.
Among the new generation of domestic beauty brands, Mao Geping was the first to sprint to the market. As early as December 2016, Mao Geping had submitted a prospectus to sprint for A-shares. However, it has not yet been successfully listed. During this period, some other domestic beauty companies such as Proya, Marubeni, and Bethany have landed in the capital market one after another. This has raised questions in the industry about whether the policy encourages the listing of domestic beauty products, and has also made investors more cautious about the listing trends of beauty companies.
Industry competition and brand positioning
Mao Geping mentioned in the prospectus that the market in the cosmetics industry is fiercely competitive, especially the full entry of international first-line brands. In the face of such a competitive landscape, the company has adopted two brand positioning strategies, namely "MAOGEPING" and "Zhiai Life".
"MAOGEPING", as the core brand of Mao Geping Company, named after the founder of the company, Mao Geping, is mainly based on direct sales of mid-to-high-end department store counters and e-commerce sales, and is positioned as the core brand of the company, which has achieved certain recognition in the market. However, in the face of competition from international brands, the company said that the competitive pressure is high, which requires enterprises to continue to invest in brand building, product innovation and marketing to remain competitive. The "Love for Life" brand adopts a distribution model, mainly serving female consumers in second- and third-tier cities. This differentiated positioning aims to increase the coverage of the company's products and sales areas, but it also increases the company's operational pressure in different markets.
However, market feedback shows that although "MAOGEPING" has gained high popularity in some first-tier cities, it is still not competitive enough in the face of international brands. This also means that the company still needs more investment and efforts in brand building and enhancing international competitiveness.
The future development path that investors are concerned about
Mao Geping's withdrawal of the listing application has raised doubts among investors about the company's future development path. With the dual pressure of policy adjustment and market competition, companies need to re-examine their strategic planning. Under the current market situation, on the one hand, the impact of policy adjustment on IPO makes the road to listing more difficult, and enterprises need to consider the timing of listing more prudently; on the other hand, in the face of fierce market competition, Mao Geping needs to increase brand building and R&D efforts to improve its competitiveness in the international cosmetics market.
At the same time, investors are also concerned about whether the company can effectively adjust the sales expense structure, strengthen R&D investment, and achieve a sustainable profit model. Mao Geping's performance growth in the past few years has been good, but with the change of the market situation, how to maintain competitiveness in the upgrading consumer market has become an urgent problem for the company to solve in the future.
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