The Maogeping Cosmetics Co., Ltd. (referred to as 'Maogeping') updated its listing prospectus with the Hong Kong Stock Exchange on October 11, as reported by the 'Star Market Daily' six months later.

The prospectus shows that Maogeping was founded in 2000 and positioned as a domestic high-end beauty group. In the early years, Maogeping was the personal makeup artist of the well-known actress Liu Xiaoqing. Through a series of television dramas such as 'Yang Naiwu and Xiaobaicai,' 'A Family in Shanghai,' 'Empress Wu,' and 'Burning of the Palace,' Maogeping gained recognition.

Since 2000, Maogeping has established multiple image design art schools and created two beauty brands, MAOGEPING and Zhi Ai Zhongsheng. It is worth noting that Maogeping's previous attempts to IPO on the A-share market were repeatedly blocked.

Before the IPO, Maogeping, as the largest shareholder, directly held 43.63% of the shares; Maogeping's wife, Wang Liqun, was the second-largest shareholder, holding 11.34% of the shares. In addition, shareholders with more than 5% ownership include Maogeping's sisters Maoni Ping and Ma Huiping, who hold 11.34% and 9.60% respectively; and his brother Wang Lihua, holding 6.11%.

Sales and marketing expenses have been rising year by year, with a gross margin reaching 80%.

The latest prospectus shows that from 2021 to 2023, Maogeping's revenues were 1.577 billion yuan, 1.829 billion yuan, and 2.886 billion yuan, respectively. The revenue for the first half of 2024 was 1.972 billion yuan. The corresponding net profits were 0.331 billion yuan, 0.352 billion yuan, 0.663 billion yuan, and 493 million yuan.

According to the prospectus disclosure, both the gross margin of Maogeping's cosmetics and skincare products are over 80%, and have been increasing year by year, with the skincare category exceeding 87%. Specifically, the gross margins for the past three years were 83.4%, 83.8%, and 84.8%. The gross margin increased from 84.5% to 84.9% in the first half of this year, while the skincare category's gross margin reached 87.7% in the first half of this year.

However, the reporter of "Star Market Daily" also noted that in terms of net margin, Maogeping's net margin corresponds to between 20%-25%. This means that Maogeping's products are still constrained by industry commonalities, with net income being eroded by sales expenses, management expenses, etc.

During the reporting period, Maogeping's sales and marketing expenses were 0.763 billion yuan, 0.962 billion yuan, 1.412 billion yuan, and 0.937 billion yuan, accounting for 48.4%, 52.6%, 48.9%, 47.51% of the operating income of the same year, respectively; among them, sales and promotion expenses were 0.223 billion yuan, 0.32 billion yuan, 0.557 billion yuan, 0.435 billion yuan, accounting for 29.2%, 33.3%, 39.4%, and 46.5% of the total marketing expenses.

It can be seen that both revenue and marketing expenses, as well as sales and promotional expenses, are showing an upward trend.

At the same time, in terms of sales channels, from the first half of 2021 to the first half of 2024, the proportion of Maogeping's online channels has been increasing continuously, while the proportion of offline channels has been decreasing.

The prospectus shows that the proportion of offline direct sales decreased from 57.5% in 2021 to 51.7% in 2023, and in the first half of 2024, the proportion of offline direct sales is 46.1%. According to data from Frost Sullivan, as of June 30, 2024, Maogeping's self-operated counters nationwide numbered 372, ranking second among all cosmetic brands in China.

On the other hand, in terms of online channels, it has been rising steadily from 25.4% in 2021 to 33.5% in 2023, reaching 38.8% in the first half of 2024. This also means that cosmetic companies have a strong dependency on the live e-commerce model.

Intense competition in high-end cosmetics industry requires increased investment in research and development.

Currently, Maogeping's sales expenses continue to rise, perhaps related to its high-end positioning.

In terms of product pricing, Mo Geping's makeup products generally have a suggested retail price between 200-500 yuan, while skincare products generally have a suggested retail price between 400-800 yuan. Other data shows that in 2023, the average unit price of Mo Geping's skincare line products reached as high as 322.3 yuan.

The high-end market is currently one of the most competitive tracks in the beauty industry.

According to data from Frost & Sullivan, the top five high-end beauty brands are all international brands. In terms of retail sales in 2023, these brands occupy 32.1% of the total market share, forming a relatively concentrated competitive landscape. Mo Geping is the only Chinese company among the top ten high-end beauty groups in China's market, facing considerable survival pressure.

Based on retail sales in 2023, Mo Geping ranks seventh. Its brand MAOGEPING is the only domestic brand among the top fifteen high-end beauty brands in the Chinese market. According to retail sales in 2023, it ranks twelfth with a market share of 1.8%.

Its popular single products, the Glowing Invisible Powder Series and the Luxury Caviar Mask, achieved retail sales of over 0.2 billion yuan and 0.45 billion yuan respectively in the first half of 2024. The sales of these two best-selling products accounted for 32.96% of the company's total revenue in the first half of the year. At the same time, the full-year sales of the Luxury Caviar Mask are expected to break through 1 billion yuan.

Industry experts pointed out that high-end cosmetic brands often have a long brand history and rich brand culture. Through effective brand marketing strategies, they have shaped unique brand images, making consumers willing to pay a premium for the brand value.

According to the performance data disclosed by international high-end brands like L'Oréal from France and Shiseido Company,Limited Sponsored ADR from Japan in the Chinese market, the high-end skincare market in China is sluggish. Mo Geping needs to do more to further advance.

The 'Star Market Daily' reporter noted that high-end cosmetic brands often emphasize the unique effects of their products, such as anti-aging, deep repair, etc. These effects often require more complex R&D processes and more expensive ingredients.

However, compared to other high-end brands, Maoge Ping's investment in research and development is not high. From 2021 to the first half of 2024, Maoge Ping's research and development investment was 13.703 million yuan, 14.548 million yuan, 23.975 million yuan, 15.267 million yuan, accounting for 0.87%, 0.80%, 0.83%, and 0.77% of revenue respectively, lower than the average research and development expense rate of 2% for cosmetics companies.

It is worth noting that out of Maoge Ping's 49 patents, only 2 are invention patents, namely a warm-water removable eyeliner powder block and its preparation process, and a long-lasting moisturizing lipstick and its preparation process; 4 are utility model patents, and the remaining 43 are design patents.

According to the prospectus, in this upcoming listing of Maoge Ping, the focus is on using the majority of the funds raised for marketing and promotion. Specifically, 25% will be used to expand the sales network, 20% for brand building activities, 15% to support overseas expansion and acquisitions, 10% to enhance production and supply chain capabilities, 9% to strengthen product design and development, and approximately 6% for the development of cosmetic art training institutions.