IPO queue for nearly 5 years "nail household" Mao Geping makeup will be tested whether carrying the "Jiuding" gene can successfully break through the barrier and be admired

According to the official website of the China Securities Regulatory Commission, Mao Geping Cosmetics Co., Ltd. (hereinafter referred to as Mao Geping Makeup) will officially attend the meeting on October 21.

According to the latest version of the application materials, Mao Geping Makeup intends to raise 512 million yuan for channel construction, research and development centers, image design training institutions and supplementary working capital.

From the submission of the listing application to the CSRC in December 2016 to the final meeting of the issuance review committee, Mao Geping makeup has waited for nearly 5 years, becoming the most embarrassing "nail household" in the IPO filing team of the Shanghai Stock Exchange.

One of the reasons why it took so long in the queue may be related to its existence of the "Jiuding system" gene, according to the draft declaration, Suzhou Pushhin Jiuding Investment Center (Limited Partnership) (hereinafter referred to as Pushen Jiuding) holds 10% of its equity and is the largest external shareholder of Mao Geping Makeup.

Since Jiuding Group was investigated by the CSRC in March 2018, its IPO projects have almost run aground, and in September 2021, the IPO project of Jiangsu Dana Chemical Co., Ltd., which is owned by Jiuding Group, was rejected.

It is worth noting that in addition to the key major shareholders, Mao Geping makeup, which has always been known for "teaching people to learn makeup", has cosmetic products as the main source of income, but the production of Mao Geping makeup is completely dependent on outsourcing processing (entrusted to cosmetics manufacturing enterprises to produce), and it has no self-built production facilities, and the proportion of outsourcing processing is 100%.

<h2>Gross profit margin exceeded that of Shiseido in the same period</h2>

Since the data disclosed by Mao Geping's makeup IPO was frozen in mid-2017, there is no way to know the financial data of Mao Geping's makeup in recent years.

Especially with the rapid development of live e-commerce, is the proportion of e-commerce channels still maintained at about 2%? Has R&D expenses, which account for less than 1% of revenue, increased? Whether there is a certain gap between these data and the current development of Mao Geping makeup is not known at present, but from the draft declaration disclosed by Mao Geping makeup, we can still see the fundamentals of its development.

Mao Geping's makeup business is mainly divided into two parts: the research and development, production, sales and makeup skills training of makeup skin care products, of which MGPIN and Zhi'ai Life are responsible for makeup and skin care products.

Although Mao Geping makeup is well known to consumers for "teaching you to learn makeup", the proportion of training courses in operating income does not exceed 20%, and makeup and skin care products are the main sources of his income.

According to the draft declaration, from 2014 to the first half of 2017, the total operating income of MGPIN and Zhi'ai lifetime was 238 million yuan, 265 million yuan, 284 million yuan and 164 million yuan, respectively.

It is worth mentioning that the gross profit margin of Mao Geping Makeup during the reporting period has exceeded 70%, which is higher than that of companies in the same industry.

Taking 2016 as an example, according to the draft declaration, the gross profit margin of Mao Geping's makeup products (MGPIN and Zhi Ai Life) was 82.82%, while the gross profit margins of Shiseido and L'Oréal in the same period were 75.59% and 71.58%, respectively.

Although mgPIN and Zhi'ai Life two brands create a lot of revenue for Mao Geping makeup, Mao Geping makeup does not have self-built production facilities, nor does it have a cosmetics production license, but all rely on outsourcing processing, of which outsourcing processing is divided into outsourced processing, outsourcing system and outsourced products.

Taking MGPIN, which is positioned as a high-end brand, as an example, according to the draft declaration, from January to June 2017, the costs of outsourced processing, outsourcing and purchased products were 0.11 billion yuan, 0.049 billion yuan and 0.043 billion yuan respectively, while outsourcing processing accounted for the highest proportion of costs, reaching 53.89%.

"Is outsourcing processing in line with industry practices, what are the issuer's special processes, and how to ensure product quality?" Regulators have mentioned this in the inquiry letter.

Mao Geping makeup disclosed the risks of outsourcing processing in the draft declaration, including insufficient product supply, product quality problems, etc. Mao Geping makeup believes that a strict quality control system can reduce risks.

<h2>Carry the "Jiuding" gene to break through</h2>

Mao Geping Makeup has experienced seven capital increases in its history, and Pushen Jiuding appeared in the list of shareholders of Mao Geping Makeup in the seventh capital increase.

According to the draft declaration, in September 2015, Kunwu Jiuding Investment Management Co., Ltd. (hereinafter referred to as Kunwu Jiuding) acquired 10% of the equity of Hangzhou Huidu Cosmetics Co., Ltd. (the predecessor of Mao Geping Makeup, hereinafter referred to as Hangzhou Huidu) from the new development joint venture capital enterprise (hereinafter referred to as the new development) for a transfer price of 12.22 yuan per share, thus becoming the fourth largest shareholder of Hangzhou Huidu at a price of 73.3 million yuan.

However, the subscription lasted less than a month, and Kunwu Jiuding transferred its equity to Pushen Jiuding at the same price.

At this point, Pushen Jiuding replaced Kunwu Jiuding as the fourth largest shareholder of Hangzhou Huidu, which was also the last capital increase of Hangzhou Huidu before the IPO.

"Supplementary explanation of the reasons for kunwu jiuding to be transferred and transferred equity." Regulators raised questions in the inquiry letter.

In this regard, Mao Geping said that Pushen Jiuding was not able to raise enough funds when the equity transfer was carried out in the new development, and did not meet the requirements of the new development for financial status and payment capacity, so Kunwu Jiuding first participated in the online auction organized by the Shanghai United Property Rights Exchange, and after it successfully transferred the equity of the target and Pushen Jiuding raised funds in place, Kunwu Jiuding then transferred its equity to Pushen Jiuding.

Among them, the managing partner of Pushhin Jiuding is Tibet Kunwu Jiuding Investment Management Co., Ltd. (hereinafter referred to as Tibet Kunwu), and the sole shareholder of Tibet Kunwu is Kunwu Jiuding.

In addition, among the external investors in Mao Geping's makeup, Zhejiang Tianyi Investment Management Co., Ltd. (hereinafter referred to as Tianyi Venture Capital), and the shareholding structure of Tianyi Venture Capital and Pushen Jiuding and whether there is a relationship with the issuer have also been questioned by regulators.

It is worth mentioning that since Jiuding Group was investigated by the CSRC in March 2018, the proposed IPO projects in which it participated were almost stagnant, until the middle of 2021, the IPO project of the Jiuding Department- Meineng Clean, was successfully held at the end of July, and the IPO projects in which the Jiuding Department participated were finally smoothly advanced.

However, another IPO project in which the Jiuding department participated, Dana Chemical, was rejected at the end of September this year, and the issue of the investment of the Jiuding department became the focus of attention at the development review meeting, which may also mean that there is still uncertainty in the IPO project carrying the "Jiuding system" gene.

At the upcoming development review conference, the identity of the "Jiuding system" may still become a concern of regulators.

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