Mao Geping's IPO stranded for 5 years after the end of the year will be less than 1% of the R & D investment is completely dependent on OEM processing

● Zhang Lu, reporter of Yangtze River Business Daily

Changjiang Business Daily news Stranded for 5 years, the IPO of Mao Geping Cosmetics Co., Ltd. (hereinafter referred to as "Mao Geping") has finally made significant progress, and the first launch has been successful.

Mao Geping is a company founded by the well-known makeup artist Mao Geping, mainly engaged in the research and development, production, sales and makeup skills training business of makeup and skin care products, and 70% of its revenue comes from the "MGPIN" brand with direct sales model.

The Yangtze River Business Daily reporter noted that as the seed player of the first share of domestic beauty, Mao Geping had officially submitted a prospectus in 2016, and after resubmitting the prospectus in 2017, he suspended the review, and there has been no update since then.

Mao Geping's research and development level has been criticized. According to its previously submitted prospectus, from 2014 to the first half of 2017, the company's research and development expenses accounted for less than 1% of revenue, far lower than that of peers. Moreover, it does not have a self-built factory, and its products are all processed on behalf of others.

Perhaps Mao Geping is also aware of such a problem, this IPO, Mao Geping intends to raise 512 million yuan for channel construction, research and development center construction, etc.

70% of revenue comes from the MGPIN series

In the TV series "Wu Zetian", Liu Xiaoqing's Wu Zetian style has become a classic, and the styling design behind it is the Chinese makeup art master Mao Geping, who is also well known to the public, and in 2000, he founded a personal brand "Mao Geping", mainly engaged in the research and development, production, sales and makeup skills training business of makeup and skin care products.

The Reporter of Changjiang Business Daily noted that as early as December 2016, Mao Geping submitted a prospectus to the Shanghai Stock Exchange to seek an A-share IPO. However, after Mao Geping resubmitted the prospectus in 2017, he suspended the review. For the next 5 years, Mao Geping has been in a state of "pre-disclosure update", and his prospectus has not been updated since 2017.

According to the prospectus disclosed in 2017, from 2014 to the first six months of 2017, Mao Geping achieved revenue of 280 million yuan, 321 million yuan, 343 million yuan and 201 million yuan, and net profit of 0.47 billion yuan, 0.54 billion yuan, 0.53 billion yuan and 0.35 billion yuan respectively, and the overall performance growth was relatively stable.

At present, Mao Geping's cosmetics are divided into "MGPIN" and "Love For Life" two product lines, "MGPIN" positioning high-end market, the average price is set at 300-450 yuan, and Lancome, Estée Lauder and other mainstream makeup brands the price is basically the same, the same use of counter direct mode; and "Love Lifetime" positioning in the low-end market, the average price of products between 150 yuan and 260 yuan, to the distribution model.

Among them, from the perspective of revenue composition, the high-end brand MGPIN is the main source of income for Mao Geping. From 2014 to the first half of 2017, the sales revenue of the brand series products accounted for 71.61%, 69.23%, 74.16% and 72.8% of the total revenue, respectively, and the company relied heavily on a single brand.

According to the prospectus, from 2014 to June 2017, the gross profit margin of Mao Geping products has remained at about 83%, which is higher than the gross profit margin of 71% of the international big names L'Oréal and 74% of Shiseido.

This mainly depends on the direct sales model of the company's MGPIN brand, and the revenue from the department store's direct sales channels accounts for 75.04%. According to the prospectus, the number of direct-operated counters in Mao Geping Department Store has increased year by year, and the number of direct-operated counters from 2014 to the first half of 2017 was 96, 109, 118 and 125 respectively. CBNData data shows that as of March 2020, Mao Geping's number of counters across the country has increased to 224.

Less than 1% of products invested in research and development rely on oem processing

Mao Geping, who focuses on high-end brands, has been criticized for "not paying attention to research and development".

According to the prospectus, from 2014 to the first half of 2017, Mao Geping's research and development expenses were 2.4469 million yuan, 3.0511 million yuan, 3.4227 million yuan and 1.5717 million yuan, accounting for only 0.88%, 0.95%, 1.00% and 0.78% of the total revenue, respectively, while the industry's research and development investment accounted for an average of 3% of revenue.

As of the end of June 2017, Mao Geping's R&D team had only 15 people, accounting for 1.14% of the company's total number of 1321 people. Mao Geping, who does not attach importance to research and development, has slow product updates. As of the first half of 2017, Mao Geping had only 4 research projects. Currently, these 4 series are the company's best-selling items.

From 2014 to the first half of 2017, Mao Geping's advertising expenses and business publicity expenses were at the highest level of 14.4125 million yuan in 2016, accounting for about 0.4% of the revenue in the same period. In this regard, Mao Geping mentioned in the prospectus that due to insufficient financial strength, the brand's marketing investment in the field of Internet media and other fields is insufficient. However, in the past two years, its investment and actions in marketing have increased significantly, enhancing Mao Geping's personal IP influence and shifting the focus of product sales to online.

According to industry analysts, the shortcomings in marketing and research and development reflect to some extent that Mao Geping is not prepared for listing, or because of this, after Mao Geping suspended the listing road in 2017, there was no actual progress.

It is worth mentioning that, according to the prospectus, Mao Geping does not have self-built production facilities, all rely on outsourcing processing, of which outsourcing processing is divided into outsourced processing, outsourcing system and outsourced products, which also means that Mao Geping products are more IN form and do not have the ability to produce independently.

In this regard, the regulator mentioned in the inquiry letter: "Whether outsourced processing is in line with industry practices, what special processes does the issuer have, and how to ensure product quality?" ”

In this application for IPO, Mao Geping intends to issue no more than 20 million shares and raise 512 million yuan, which will be used for channel construction, research and development center construction, image design training institution construction and liquidity supplementation.

According to industry analysts, Mao Geping does not yet have the ability to develop, and if the listing is successful, it may be able to make up for this shortcoming and have a better role in promoting its later development. If the enterprise has been maintaining the development model of research and development with little core technology, it may face greater challenges in future development.