On December 10, 2024, Mao Geping Cosmetics Co., Ltd. (hereinafter referred to as "Mao Geping" or the "Company" ), the well-known domestic beauty brand, strike the gong and went public in Hong Kong, being successfully listed on the main board of the Hong Kong Stock Exchange and winning the title of "the first high-end domestic beauty stock" in the Hong Kong stock market. Its IPO price was HK$ 29.80 per H share, the Company intended to issue 78,423,400 H shares globally, and the net proceeds would reach HK$2.187 billion.
According to Frost & Sullivan, the Company is the only domestic market player among the top ten premium beauty groups in China, ranking seventh based on the total retail sales of all premium brands owned by each group in 2023. In this IPO, the Hong Kong public offering was oversubscribed by 919.18 times, with 100 shares per lot and a signing rate of 100%.
In addition, the Company has introduced CPE Investment XV Limited, Loyal Valley Capital, Seraphim Advantage Inc., IvyRock Asset Management (HK) Limited, Brilliant Partners Fund LP and China Core Fund, and Mega Prime Development Limited as cornerstone investors. Six cornerstone investors jointly subscribed for a total amount of approximately US$100 million of the offer shares.
As shown in the prospectus, the Company was founded in 2000 by a renowned makeup artist in China’s beauty industry, Mr. Mao Geping, and has established a strong presence in China’s beauty industry after twenty years of development. Drawing upon the aesthetic philosophy of its founder, the Company has created beauty products that capture the essence of light and shadow makeup artistry and oriental aesthetics to bring out the best makeup effects. It primarily operates two beauty brands, namely, the flagship brand MAOGEPING and Love Keeps.
The Company's flagship brand MAOGEPING was launched in 2000 and is the first premium beauty brand in China, leading among all domestic brands. According to Frost & Sullivan, MAOGEPING was the only domestic brand among the top 15 premium beauty brands in China, ranking 12th by retail sales in 2023. Besides, MAOGEPING was also the largest domestic color cosmetics brand in terms of retail sales generated from offline channel (in particular, the department store channel in China by retail sales in 2023).
Currently, the Company has established an extensive sales network integrating online and offline channels, with a focus on self-operated counters in premium department stores, and relied on a comprehensive sales network to provide customers with an experiential shopping experience, improving its brand image on an ongoing basis. Both of the offline and online channels expanded rapidly during the track record period. In the first half of 2024, revenue from its offline and online channels accounted for 50.9% and 49.1% of the total revenue from product sales, respectively.
As the leader among China’s domestic premium beauty brands, MAOGEPING has experienced rapid growth recently, and its revenue growth rate significantly exceeded the industry average, constantly solidifying its market leadership and brand equity within the premium beauty industry. In 2021, 2022 and 2023, the Company achieved total revenue of approximately RMB1.6 billion, RMB1.8 billion and RMB2.9 billion, respectively, with a CAGR of 35.3%; net profit of approximately RMB330.9 million, RMB352.1 million and RMB663.5 million, respectively, with a CAGR of 41.6%. In the first half of 2024, the Company recorded revenue and net profit of approximately RMB2.0 billion and RMB492.5 million, respectively, representing a year-on-year increase of 41.0% and 41.0%.
With the improvement of China’s economic level and residents’ cultural identity, national aesthetic consciousness is awakening, and domestic brands will have greater opportunities for development. According to Frost & Sullivan, the domestic beauty market in China reached RMB263.1 billion in 2023, representing a CAGR of 9.8% from 2018 to 2023, and is expected to continue growing at a CAGR of 10.3% to reach RMB430.2 billion by 2028. The improvement of consumers’ recognition of domestic brands will further promote the growth of the domestic beauty market.
At the listing ceremony, Mr. Mao Geping, the founder, chairman of the Board and Executive Director, stated in his speech: " In the future, we will actively utilize the Hong Kong capital market platform to attract more international talents to join our beauty business, continue to strengthen product research and development and channel construction, carefully sculpt each product, serve each customer with dedication, continue to strengthen the brand's product power, technology power and service power, enhance the brand's global popularity and reputation, and create an international high-end beauty group originating from China. We will reward our shareholders and investors with solid and sustainable business performance."
Successfully entering the capital market will create a broader space for the sustainable development of the Company, which is conducive to the continuous enhancement of its comprehensive competitiveness, the expansion of the brand's internationalization and influence, and the release of long-term investment value. According to the disclosure in the prospectus, in the future, the Company intends to use approximately 25% of the net proceeds from the IPO for expanding sales network, approximately 20% for branding activities, approximately 15% for overseas expansion and acquisitions, approximately 10% for strengthening production and supply chain capabilities, approximately 9% for enhancing product design and development capabilities, approximately 6% for makeup artistry training institutes, approximately 5% for digitizing operations and information infrastructure, and approximately 10% for working capital and general corporate purposes.
