Mao Geping, who has been unsuccessful in sprinting to A-shares for many years, officially changed to Hong Kong stocks.
Yesterday (April 8), Mao Geping Cosmetics Co., Ltd. (hereinafter referred to as "Mao Geping") officially submitted a prospectus to the Hong Kong Stock Exchange, planning to be listed on the main board, with CICC as the sole sponsor.
Founded in 2000, Mao Geping is a leading high-end beauty group in China. According to Frost & Sullivan, Mao Geping is the only Chinese company among the top 10 high-end beauty groups in the Chinese market.
According to the prospectus, Mao Geping submitted a listing application to the China Securities Regulatory Commission as early as December 2016, and after several twists and turns, the listing application was withdrawn by the company in January 2024 in view of the company's business prospects, future development strategy and market environment at that time.
If Mao Geping successfully lands on the Hong Kong Stock Exchange, he will become the "first domestic cosmetics stock in Hong Kong".
The only domestic product among the top 10 high-end beauty groups
The annual revenue is moving towards 3 billion
After more than 20 years of development, Mao Geping has established a strong presence in China's beauty industry. According to Frost & Sullivan, Mao Geping set a number of firsts:
1. The only Chinese company among the top 10 high-end beauty groups in the Chinese market, ranking 8th in terms of retail sales in 2022.
2. Brand MAOGEPING is the first high-end beauty brand in China and is in a leading position among all domestic brands. In terms of retail sales in 2022, the MAOGEPING brand is the only domestic beauty brand among the top 15 high-end beauty brands in the Chinese market, ranking 15th.
3. The first domestic cosmetics group to set up counters in high-end department stores. MAOGEPING IS THE LARGEST DOMESTIC MAKEUP BRAND IN TERMS OF OFFLINE RETAIL SALES, ESPECIALLY IN CHINA'S DEPARTMENT STORE CHANNELS IN 2022.
Mao Geping's main business development milestones are taken from the prospectus
The strong growth of performance is an important factor in establishing Mao Geping's market position.
From 2021 to 2023, Mao Geping's revenue will increase from 1.577 billion yuan to 2.886 billion yuan, with a compound annual growth rate of 35.3%, and according to this growth rate, its revenue may exceed 3 billion this year. During the period, its net profit increased from 331 million yuan to 664 million yuan, with a compound annual growth rate of 41.6%. This growth rate is significantly higher than the industry average.
At the same time, from 2021 to 2023, Mao Geping's gross profit margin remained relatively stable, at 83.4%, 83.8% and 84.8% respectively, which is also higher than that of most listed beauty companies.
Mao Geping's business territory can be roughly divided into two modules: building a beauty brand and makeup artist training.
At present, Mao Geping has two major beauty brands: MAOGEPING and Zhiai Life. MAOGEPING is the company's flagship brand launched in 2000 and contributes the majority of revenue. From 2021 to 2023, this brand accounted for 96.6%, 98.4% and 99.0% of the total product sales revenue, respectively. In 2008, Mao Geping expanded his portfolio with Zhiai Life, a brand tailored to consumers looking for value for money.
In terms of makeup artist training, it has established 9 makeup artist institutions across the country (i.e. Hangzhou, Beijing, Shanghai, Chengdu, Shenzhen, Chongqing, Wuhan, Qingdao and Zhengzhou). Up to now, Mao Geping's training institutions have more than 170 trainers and more than 2,500 course participants. According to Frost & Sullivan, this nationwide makeup training service network has made Mao Geping one of the largest makeup artist training institutions in China in terms of the number of participants enrolled in the 2022 course.
Skincare exceeded 1 billion for the first time
Implementing the "Make-up + Skincare" strategy, Mao Geping has ensured the brand's strong growth momentum. In 2023, Mao Geping's makeup and skin care product sales revenue accounted for 58.3% and 41.7% of the total product sales revenue, respectively.
Make-up is the foundation of its steady growth. From 2021 to 2023, the sales revenue of Mao Geping's cosmetics products will be 1.026 billion yuan, 1.003 billion yuan and 1.622 billion yuan respectively, accounting for 65.1%, 54.8% and 56.2% of the total revenue in the same year, with a compound annual growth rate of 25.7% during the period. As of December 31, 2023, Mao Geping offers 334 makeup products that meet the needs of consumers in a complete makeup routine, from pre-care, setting to complexion retouching, covering foundations, highlighters and shadows, eye and lip makeup products.
According to the prospectus, Mao Geping has established a proven track record of launching popular makeup products that cater to modern aesthetic standards and lead industry trends. For example, its light-sensitive traceless powder series achieved retail sales of more than 300 million yuan in 2023.
Skincare products are also an important driving force for Mao Geping's business growth. From 2021 to 2023, its sales revenue of skin care products will be 469 million yuan, 772 million yuan and 1.160 billion yuan respectively, with a compound annual growth rate of 57.3% during the period. As of December 31, 2023, Mao Geping offers 44 skincare products, including creams, eye care, masks, serums and facial cleansers.
According to the prospectus, some of Mao's best-selling products, such as the Luxury Caviar Mask and the Luxury Skin Cream, are widely recognized for their ability to deeply repair and smooth fine lines and reduce the appearance of pores after makeup. Specifically, one of its best-selling skincare products, the Luxury Caviar Mask, achieved retail sales of more than 600 million yuan in 2023.
Domestic makeup ranked first offline
At present, Mao Geping has established an extensive sales network, integrating online and offline channels, with a focus on self-operated counters in high-end department stores. In 2023, revenue from offline and online channels accounted for 57.6% and 42.4% of its total revenue from product sales, respectively.
Offline, Mao Geping's main layout includes: self-operated counters in high-end department stores, sales to high-end multinational beauty retailers and offline distributors. From 2021 to 2023, its revenue generated through offline channel sales was RMB966 million, RMB1.081 billion and RMB1.602 billion, respectively, with a compound annual growth rate of 28.8% during the period. In 2022, the retail sales generated by Mao Geping's offline channels ranked first among domestic makeup brands.
As of December 31, 2023, Mao Geping had 357 self-operated counters nationwide, ranking second among all domestic and international beauty brands in China. As of now, Mao Geping has more than 2,500 beauty consultants in counters across the country, and according to Frost & Sullivan, Mao has built one of the largest counter service teams of any domestic and international beauty brand in China.
Online, from 2021 to 2023, Mao Geping's revenue generated through online channel sales was 529 million yuan, 694 million yuan and 1.180 billion yuan, respectively, with a compound annual growth rate of 49.3% during the period. So far, Mao Geping has attracted more than 850,000 followers on Xiaohongshu and more than 1.6 million likes and favorites, his Douyin homepage has more than 2.5 million followers and nearly one million likes, and his Tmall online store has more than 5 million followers.
In addition, founder Mao Geping's personal reputation and influence in the industry has become a strong asset for the brand. SO FAR, MR. MAO HAS MORE THAN 6 BILLION INTERACTIONS ON HIS SOCIAL MEDIA PLATFORMS ABOUT MR. MAO GEPING AND MAOGEPING.
200 billion high-end beauty market
How did Mao Geping break the game?
According to Frost & Sullivan, China's high-end beauty market grew at a CAGR of 9.3% from 2017 to 2022, reaching RMB182 billion in 2022 and is expected to continue to grow at a CAGR of 10.2% to reach RMB295.7 billion in 2027.
With insights into Chinese consumer preferences, the Chinese beauty group is better able to meet the cultural pride and growing demand. According to the data, the market size of China's domestic beauty brands grew at a CAGR of 11.0% from 2017 to 2022, higher than the CAGR of 6.6% for international beauty brands in the same period.
Mao Geping is a representative of the strong growth of domestic beauty. According to the prospectus, in the future, Mao Geping will also expand the growth point through many aspects.
First, explore new categories. In 2024, Mao Geping plans to launch an exclusive fragrance collection – fragrances and fragrances that reflect the brand's unique personality. According to the prospectus, this move will enrich its product matrix and enhance the brand's attractiveness and competitive positioning in the broader cosmetics market.
Second, invest in brands. Mao plans to explore and pursue opportunities to invest in and acquire brands that are expected to grow and create synergies to enrich the existing product matrix. The main target is brands that already have a certain market position and market share, have their own technology, product formula and R&D patents, and are in a mid-to-high-end position in the beauty industry. However, to date, Mao Geping has not identified any potential investment or acquisition targets, nor has he signed any agreements in this regard.
Third, the implementation of overseas strategies. Mao Geping is preparing to strategically enter overseas markets and build a dual-channel approach of department store counters and online stores in overseas markets. This expansion strategy aims to expand the brand's exposure to consumers around the world.
Fourth, set up a headquarters R&D base. Up to now, Mao Geping is building a Hangzhou R&D center to strengthen product design and development capabilities. In the future, Mao Geping will set up a headquarters R&D base and establish a R&D center overseas. These overseas R&D centres will attract and employ local professionals to provide them with an international perspective and direction for product R&D.
It is reported that Mao Geping has been committed to designing and developing new products to upgrade and innovate the existing product portfolio to maintain its market position. During the track record period (2021 to 2023), Mao Geping developed a total of more than 100 new products for MAOGEPING and Zhiai Lifetime, with an average of about 60 product items upgraded per year.
According to Frost & Sullivan, China's high-end beauty industry is highly concentrated, with the top five beauty groups accounting for 54.8% of the market share in terms of retail sales in 2022, and all of them are international beauty groups, with Mao Geping being the eighth largest high-end beauty group.
This time he switched to the Hong Kong Stock Exchange, in order to further strengthen his core competitiveness through the capital market, or one of the keys to Mao Geping's breakthrough.
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