On July 18, Ying Tong Holdings Limited submitted its listing application to the Hong Kong Stock Exchange’s main board. BNP Paribas and Citic Securities are its joint sponsors.

According to the prospectus, based on 2023 retail sales, Ying Tong Holdings is the largest perfume brand management company in the mainland of China, Hong Kong, and Macau. According to Frost Sullivan's data, based on 2023 retail sales, Ying Tong Holdings is the third largest perfume group in the mainland of China, Hong Kong, and Macau.

As of the last practicable date, the company manages a total of 63 brands, including Hermès, Van Cleef & Arpels, Chopard, Albion, and Laura Mercier. The company has more than 7,500 offline sales points in over 400 cities in mainland China, Hong Kong, and Macau. In addition, the company also sells products online through e-commerce platforms and social media platforms.

According to the financial report, for the three fiscal years ending on March 31, 2022, March 31, 2023 and March 31, 2024, the company's revenue was RMB 1.675 billion, RMB 1.699 billion, and RMB 1.864 billion, respectively. The corresponding net income was RMB 0.171 billion, RMB 0.173 billion, and RMB 0.206 billion.

So far, perfume sales remain the main source of revenue for Ying Tong Holdings. In the past three fiscal years, the revenue of the perfume category accounted for 89.3%, 88.5%, and 81.7%, respectively. However, the company also has a large and diversified brand portfolio, including not only perfume, but also cosmetics, skin care products, personal care products, glasses, and home fragrances.

The company disclosed that the proceeds of this financing will be mainly used for: further developing its own brands, as well as acquiring or investing in external brands; developing and expanding its self-operated retail channels; accelerating digital transformation, mainly through upgrading digital CRM systems, middleware systems, as well as financial and operation systems; enhancing visibility and reputation, and other purposes.

At the industry level, China has the world's second-largest cosmetics market, and based on 2023 retail sales, China's international market share in the cosmetics industry is 11.9%.

According to Frost Sullivan's data, by 2023, the average per capita expenditure on perfume in China will be RMB 16, far lower than that in Japan, South Korea, the United States and the United Kingdom, which are RMB 47, RMB 170, RMB 423 and RMB 406 respectively. The significant difference in per capita expenditure on perfume between China and other developed regions indicates the growth potential of the Chinese market.

In addition, it is expected that per capita expenditure on perfume in China will increase at a compound annual growth rate of 14.0% from 2023 to 2028. The total market size of perfume retail sales in mainland China, Hong Kong and Macau is expected to increase from RMB 14.6 billion in 2018 to RMB 26.1 billion in 2023, with a compound annual growth rate of about 12.3%, and is expected to further increase to RMB 47.7 billion by 2028, with a compound annual growth rate of about 12.8% from 2023 to 2028.

However, due to the brand agency distribution model of Ying Tong Holdings, the company also warned that there may be adverse effects on maintaining and expanding sales networks, and there is also the risk of expiration of distribution agreements with major brand parties.

According to the prospectus, in December 2022, the agreement between the company and a major brand authorized dealer will expire, but the brand dealer subsequently decided to operate independently. The sales of the brand by Ying Tong Holdings during that period brought in revenue of up to RMB 0.425 billion, accounting for 25.5% of the total revenue.

In addition, there is intense competition among industry distributors, and Ying Tong Holdings also faces potential risks such as supplier concentration, inventory occupying funds, and returns from major customers.

As of the fiscal years ended on March 31, 2022, March 31, 2023 and March 31, 2024, the purchases from the top five suppliers accounted for 85.1%, 84.0%, and 81.6% of the total purchases, respectively. The inventory book value for the same period was RMB 0.418 billion, RMB 0.358 billion, and RMB 0.39 billion, accounting for about 24.9%, 21%, and 20.9% of the revenue for the period.

The company also offers a special product return policy for major customers. As of the fiscal years ended on March 31, 2022, March 31, 2023, and March 31, 2024, the revenue generated from major customers who enjoyed this special product return policy accounted for 7.7%, 5.5%, and 6.3% of the total revenue, respectively.