Recently, the Hong Kong Stock Exchange once again ushered in an IPO "veteran" - Mao Geping Cosmetics Co., Ltd. (hereinafter referred to as "Mao Geping" or "Mao Geping Company"), which submitted an application for listing on the main board of the Hong Kong Stock Exchange, with CICC as the sole sponsor.
Since the first hit on A-shares in 2016, Mao Geping has experienced ups and downs in the past 8 years. At the beginning of this year, it just withdrew its A-share listing, and quickly chose to switch to Hong Kong stocks after a passionate dividend of 1 billion yuan.
In the embrace of the capital market, Mao Geping's hidden worries have gradually been exposed.
In one or three years, it is easy to make a profit of more than 6 billion yuan, and the cumulative sales of two single products have reached 900 million
According to the prospectus, Mao Geping was founded in 2000, and the company was named after its founder, Mao Geping. It has two major beauty brands: MAOGEPING and Zhiai Life. According to reports, Mao Geping is committed to providing consumers with a beauty experience through beauty products, makeup artist training and customer service.
Overall, Mao Geping's revenue is very impressive. During the reporting period (2021-2023), Mao Geping's revenue was 1.577 billion yuan, 1.829 billion yuan and 2.886 billion yuan respectively, with a compound annual growth rate of 35.3%, and in the same period, the net profit was 331 million yuan, 352 million yuan and 664 million yuan respectively, with a compound annual growth rate of 41.6%.
It is not difficult to find that Mao Geping's revenue growth is stable and his profitability has been strengthened. During the reporting period, the company's gross profit was 1.316 billion yuan, 1.533 billion yuan and 2.448 billion yuan respectively, and the gross profit margin was 83.4%, 83.8% and 84.8% respectively, which was at a high level.
According to Bedo Finance, Mao Geping's revenue is mainly due to the sales of his beauty products. According to the prospectus, its main business has two main sectors, one is the sales of makeup and skin care products, and the other is makeup art training.
During the reporting period, Mao Geping's cosmetics and skin care products accounted for 94.8%, 97.0% and 96.4% of the revenue respectively. Among them, Mao Geping's flagship brand MAOGEPING, launched in 2000, made a huge contribution, accounting for 96.6%, 98.4% and 99.0% of the total product sales revenue respectively.
Unlike other beauty brands that rely solely on individual items to become popular, Mao Geping has made his own makeup and skin care products equally divided through "teaching" and "planting". As of December 31, 2023, Mao Geping Company supplied 334 makeup products and 44 skin care products.
During the reporting period, Mao Geping's sales revenue of cosmetics products was 1.026 billion yuan, 1.003 billion yuan and 1.622 billion yuan respectively, and its fist products included light-sensitive traceless powder. In the same period, the sales revenue of skin care products was 469 million yuan, 772 million yuan and 1.160 billion yuan respectively, and the key products were luxury caviar masks.
2. Polarization of evaluation Highly dependent on OEM
In the domestic beauty market, there are not many beauty brands that adopt such a "teaching", "planting" and "buying" operation model, and Mao Geping is a typical case.
According to the prospectus, as of December 31, 2023, Mao Geping has founded 9 makeup art 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.
In 2023, Mao Geping's makeup artist training and related sales revenue will reach 104 million yuan, becoming a new growth point for the company's business.
Caption: Mao Geping Makeup Artistry Institute Beijing Campus
In the actual experience, some people once sighed that "Mao Geping's cabinet sister (brother) is really amazing". Different from general brands, Mao Geping's counter has a very strong sense of experience, and tellers with professional makeup skills are set up to give customers on-site makeup and explain professional techniques, in order to achieve the effect of makeup with products.
But in fact, not everyone can "turn decay into god" like Mr. Mao Geping after buying a product, so when everyone equates the use of Mao Geping products with "changing heads", the gap between the actual consumption experience and the expected effect will lead to polarization of product evaluation.
According to the prospectus, the suggested retail price of Mao Geping's hot-selling brand MAOGEPING makeup products is generally between 200 yuan and 500 yuan, and the suggested retail price of skin care products is generally between 400 yuan and 800 yuan.
This single brand structure layout has a sense of recklessness, after all, in the mid-to-high-end beauty market, domestic products are always struggling.
Domestic products always can't go far in the beauty market, which is largely related to the investment in R&D forces, and Mao Geping seems to be unable to escape such a fate.
During the reporting period, Mao Geping's R&D investment was 13.703 million yuan, 14.548 million yuan and 23.975 million yuan respectively, although the number has increased, but the proportion of revenue has stayed within 1%, and even some employee welfare expenses, property and plant equipment depreciation are calculated, and these may be less.
The prospectus also revealed that Mao Geping has not yet built its own cosmetics production facilities, and the production of products is mainly carried out through the outsourcing processing mode, which puts forward strict requirements for the company's product quality control level, and also leads to the risk that the company may have insufficient product supply.
On the contrary, Mao Geping's brand marketing expenses are very generous. During the reporting period, Mao Geping's sales and marketing expenses were 763 million yuan, 962 million yuan and 1.412 billion yuan respectively, accounting for 48.4%, 52.6% and 48.9% of the revenue in the same period.
In other words, about 50% of Mao Geping's income is spent on promotion.
3. Can the carnival before handing over the table usher in the final victory?
According to the prospectus, Mr. and Mrs. Mao Geping and their family members together control about 90% of the company's shares.
Among them, Mao Geping and his wife Wang Liqun hold a total of about 57.26% of the shares, Mao Geping's two sisters Mao Niping and Mao Huiping hold 11.34% and 9.6% of the shares respectively, Mao Niping and Mao Huiping's sons Xu Kejun and Ding Tao hold 2.5% of the shares respectively, and Mao Geping's wife and brother Wang Lihua directly hold 6.11% of the shares.
At the general meeting of shareholders held in February this year, Mao Geping Company declared a dividend of 500 million yuan to all shareholders, and at the general meeting of shareholders held in April, it declared a dividend of 500 million yuan to all shareholders. As of the time of submission, $881 million has been paid and $119 million is still outstanding.
Although it claims to be open to all shareholders, according to the proportion of shareholdings, more than 800 million yuan has flowed to the Mao family. This also means that this listing has achieved another "wealth-making" phenomenon, and it is Mao Geping, Wang Liqun and their family members who have benefited.
Not long ago, the Shanghai and Shenzhen stock exchanges stated that in preliminary consideration, if the cumulative dividend amount in the reporting period exceeds 80% of the net profit in the same period, or the cumulative dividend amount in the reporting period accounts for more than 50% of the net profit in the same period and the cumulative dividend amount exceeds 300 million yuan, and the total proportion of replenishment and loan repayment in the raised funds is higher than 20%, it will not be allowed to be issued and listed.
In addition, in the process of Mao Geping's sprint to IPO, there are also shareholders who withdraw early. Starting from January 2024, Mao Geping and his wife have successively taken over the shares held by Suzhou Pushen Jiuding Investment Center at prices of 551 million, 107 million and 71.905 million through Dijing Investment, Shenzhen Dushi and Suzhou Jinhong.
Since entering the market in 2015, Suzhou Pushen Jiuding Investment Center has successfully "cashed out" 730 million yuan to obtain the equity of Mao Geping at a cost of 73.3 million yuan.