文 | 来咖智库，作者 | 蓝猫，编辑 | G3007
When the spring flowers were blooming, new news came from Mao Geping's road to listing after more than 7 years: three months after voluntarily withdrawing the A-share IPO declaration, Mao Geping began to seek a listing of Hong Kong stocks. The updated financial data shows that in the past three years, Mao Geping's income has exceeded 6 billion, the net profit has reached 1.3 billion, and the net book assets by the end of 2023 are 1.5 billion. In addition, for the first time in the prospectus, the plan to "go to sea" was mentioned.
With excellent financial data, adjusted shareholding structure, and overseas ambitions, it is worth paying attention to whether the IPO of this high-end domestic beauty brand, which has been established for more than 20 years, can go as it wishes.
01 Got rid of the "Jiuding system" and switched to Hong Kong stocks, and Mao Geping's IPO set off again
On April 8, three months after voluntarily withdrawing the A-share IPO declaration, Mao Geping submitted a prospectus to the Hong Kong Stock Exchange, once again launching a sprint for IPO.
Looking back on Mao Geping's road to listing, it can be said that it is not bumpy. In December 2016, it disclosed its prospectus for the first time, becoming the first cosmetics company to apply for listing on the main board of A-shares, but it came to a standstill the following year. Over the past 7 years, Mao Geping has been on the road to listing, during which domestic cosmetics companies such as Proya, Marubeni, and Bethany have been listed one after another.
In January this year, when Mao Geping voluntarily withdrew his IPO, Suzhou Pushen Jiuding was Mao Geping's fourth largest shareholder, holding 10% of the shares, and was also the largest external shareholder except for Mao Geping's family. In recent years, the IPO of a number of companies held by the "Jiuding system" has been blocked.
According to the prospectus disclosed by Mao Geping, Suzhou Pushen Jiuding has transferred its shares and no longer holds Mao Geping's shares, and in the latest equity structure, Mao Geping and his wife hold 57.26% of the shares. It is worth mentioning that in 2015, Suzhou Pushen Jiuding acquired 10% of Mao Geping's equity at a price of 73.3 million, and the total transfer price was 730 million, less than 10 years, and obtained nearly ten times the return, which is a real return.
Founded in 2000 by Mr. Mao Geping, a famous makeup artist, Mao Geping founded the beauty brand MAOGEPING and Zhejiang Mao Geping Image Design Art Agency in the same year. According to public information, before Mr. Mao Geping founded his personal brand, he had won awards such as the "Golden Image Award" for makeup of the China Film and Television Technology Society. It can be said that since the advent of the Mao Geping brand, it has been inseparable from the founder's personal IP. Since its establishment, Mao Geping has always adhered to the high-end brand positioning, and it can be seen from the prospectus that in the future development plan, Mao Geping will still adhere to the high-end route.
According to Frost & Sullivan, Mao Geping is the only Chinese company among the top 10 high-end beauty groups in the Chinese market, ranking eighth in terms of retail sales in 2022. China's premium beauty market grew at a CAGR of 9.3% from 2017 to 2022 to reach RMB182 billion in 2022 and is expected to continue to grow at a CAGR of 10.2% to reach RMB295.7 billion in 2027.
Always adhere to the brand tonality of high-end positioning, coupled with the influence of the founder's personal IP, after getting rid of the burden of the "Jiuding system" this time, the road to IPO in 7 years is dull and untraceable.
02 Bright profits, outstanding marketing, and R&D crotch?
As mentioned above, the "Jiuding system" invested in Mao Geping, and the return was nearly ten times in less than 10 years, which benefited from Mao Geping's thriving performance in recent years. The financial report shows that in the past three years, Mao Geping's income has exceeded 6 billion, gross profit has exceeded 5 billion, profits have exceeded 1.3 billion, and net assets of 1.548 billion at the end of 23, including 1.138 billion yuan in cash and cash equivalents.
The performance is booming and the cash flow is good, but the prospectus also highlights some characteristics of Mao Geping's company's operation.
First of all, in terms of revenue sources, makeup and skincare accounted for 96.4%, and makeup artist training and related sales accounted for 3.6%, and it is clear that the sales of makeup and skincare products account for the absolute majority. However, judging from consumer cognition and discussion on social platforms, many consumers' motivation for buying Mao Geping's products comes from its "professional" brand tonality, among which the influence of both Mr. Mao Geping and Mao Geping's makeup training school has made the brand reputation blessed, and the product power of the product itself is difficult to be correctly evaluated. In fact, in many discussions about Mao Geping's products, some people ridiculed that "buying Mao Geping's makeup must be matched with Mao Geping's hands", which will have certain psychological barriers in consumption for ordinary consumers with average makeup skills.
Secondly, from the perspective of sales channels, Mao Geping's offline channels currently account for more than 50% and are still his main channels. In 2003 and 2005, Mao Geping set up counters in high-end department stores as his main offline channels, and in 2003 and 2005, he opened counters in Shanghai Ganghui Hang Lung and Hangzhou Hubin Intime Department Store respectively. Many consumers came to Mao Geping's counter for makeup technology, thus promoting purchases.
According to the prospectus, new entrants to China's beauty industry may encounter offline channel barriers. High-end beauty brands are usually dominated by high-end department stores and high-end cosmetics stores, where brands can interact directly with consumers and quickly understand changes in consumer preferences and needs, so as to adjust their brand strategies in a timely manner. However, in recent years, affected by the epidemic and the change of consumption patterns, Mao Geping's company is also actively expanding online sales channels, covering Tmall, JD.com, Xiaohongshu, Douyin and other platforms.
In addition, more than 80% of Mao Geping's cost of sales is the cost of raw material procurement and the cost paid to ODM/OEM (Original Design Manufacturer/Original Equipment Manufacturer) suppliers.
The ODM/OEM model is widely used in the cosmetics industry, and Mao Geping's prospectus also emphasizes that when choosing ODM/OEM suppliers, he retains the right to decide on product attributes, efficacy and aesthetic performance, but for Mao Geping, who has been deeply involved in the high-end cosmetics market for more than 20 years, such a model can easily make people question the stability of his business. In the review meeting of the 2021 Issuance Review Committee, the Issuance Review Committee said: "The reason and reasonableness of the high purchase amount from Intercos Technology and Shanghai Zhixin Biotech (author's note: Mao Geping's main ODM/OEM supplier) are whether there is a significant dependence on specific outsourcing processing manufacturers such as Intercos Technology and Shanghai Zhixin Biotechnology, and whether there is an operational risk of outsourcing processing manufacturers canceling cooperation." Obviously, Mao Geping has reacted to this, and the prospectus mentions that its Hangzhou production base is under construction and is expected to be completed in 26 years.
Finally, it is the industry phenomenon of domestic cosmetics companies "emphasizing marketing and ignoring R&D", and Mao Geping's data performance is more obvious. In the past three years, Mao Geping's sales and marketing expenses totaled 310,000 yuan, accounting for almost 50% of revenue, that is, for every box of Mao Geping makeup products purchased by consumers, an average of half of the money was spent on marketing.
Even compared with domestic peers, Mao Geping also showed higher marketing rates and lower R&D rates. It is worth mentioning that in 2017, Mao Geping received an inquiry letter from the CSRC because the gross profit margin was higher than that of international groups such as L'Oreal and Shiseido, and he received objections again at the review meeting of the Issuance Examination Committee in 2021. Such objections will also exist in the minds of consumers: how much of the money we pay for "professionalism" is really spent on professionalism?
03 Will Mao Geping's going to sea be the next blue ocean?
In the Mao Geping prospectus, in addition to the expansion of sales network, brand building, production and other measures, compared with the previous prospectus, the significant change is that it is mentioned that 15% of the raised funds will be used for overseas business expansion, which shows Mao Geping's plan to go overseas.
In recent years, there has been fierce competition among domestic cosmetics brands, and many brands have chosen to go overseas to expand the market. According to the statistics of the General Administration of Customs, China's cosmetics exports will reach US$6.51 billion in 2023, a strong year-on-year increase of 16.7%, and the growth rate has increased year by year since 2020. Among them, beauty and skin care products are the main products of China's cosmetics exports, with a total export value of 3.74 billion US dollars, a year-on-year increase of 32.6%. As a representative of high-end domestic cosmetics, Mao Geping's move to go overseas will surely attract much attention.
There are two main points mentioned in the prospectus for the planning of going to sea. First, it will build a dual channel of department store counters and online stores in overseas markets, which is basically the same as its current sales channels in China, and will set up a local team to be responsible for product development, marketing and sales to ensure its localization. Second, in the future, Mao Geping will establish R&D centers overseas to make products more international, but according to Mao Geping's current plan for R&D investment, this move may only be a good vision and long-term plan, and it is difficult to achieve it in the short term. It is worth noting that the prospectus does not mention the countries and regions that go to sea, leaving a lot of room for reverie.
Since 2019, domestic beauty brands such as Perfect Diary, Hua Xizi, Tangerine, Colorkey, and Hua Zhizhi have begun to go overseas one after another, with destinations including Japan, Southeast Asia, the United States, Australia, etc. Among them, Japan and Southeast Asia are the first stops for many domestic cosmetics to go overseas. According to a report by Tiger Sniff during Singles' Day 2023, Japan's imports of makeup products from China totaled 10.4 billion yen in 2022, a year-on-year increase of 44%, and in the first half of 2023, the amount also increased by 45% year-on-year. In the Japanese market, domestic products mainly occupy the "waist market" with a price of 100-200 yuan, and the consumption patterns of Japanese consumers are very different from those in China. Where to go overseas and how to do it well not only tests the brand's product strength, operation ability, and marketing ability, but also tests the brand's intentions.
04 Don't forget the original intention
When discussing the Mao Geping brand, Mr. Mao Geping's personal IP, Mao Geping Makeup Training School, and Mao Geping Cosmetics complement each other and are inseparable.
In Mao Geping's future plan, it also mentions the insistence on brand positioning based on makeup artistry, and the use of funds to continue to invest in training schools is mentioned. In the beauty industry, Mao Geping's training school is known as the "Whampoa Military Academy", and has sent more than 150,000 makeup and styling professionals to the society. Judging from the financial data alone, the gross profit of Mao Geping Makeup Training School is much lower than that of cosmetics sales, and if you only talk about making money, it is obviously more profitable to sell cosmetics.
Regardless of whether Mao Geping continues to invest in the establishment of a training school for the sake of brand reputation or to expand the business territory, judging from the results, it is a very respectable thing to do this with a not very profitable attitude and send a large number of professionals to the development of the industry.