A few days ago, Shanghai Shangmei Cosmetics Co., Ltd., which owns beauty brands such as Hanshu , Yiyezi, Red Elephant , and other beauty brands, passed the listing hearing on the Hong Kong Stock Exchange. Looking back at Shangmei's company's listing journey, this is the substantial progress it has made after its third IPO. Judging from the performance disclosed in the latest prospectus, Shanghai Mei Company's revenue grew steadily from 2019 to 2021 but the growth rate slowed down; revenue began to show a downward trend in the first half of 2022. At present, the growth drivers of Shanghai Mei Company are still the three "old brands" of Han Shu, Yiyezi and Red Elephant. In addition, the recent moves of focusing on marketing and neglecting R&D have also kept the market waiting and see the long-term development of Shangmei Company in the future. Industry insiders believe that from a long-term perspective, the quality of beauty products plays a decisive impact.
passed the listing hearing
On November 4, Shanghai Shangmei Cosmetics Co., Ltd. passed the listing hearing on the Hong Kong Stock Exchange. The joint sponsors are JPMorgan Chase , CICC, CITIC Securities .
passed the listing hearing this time, 11 months have passed since Shanghai American Company’s first submission to the Hong Kong Stock Exchange. On January 17, Shanghai American Company officially submitted its prospectus to the Hong Kong Stock Exchange, but it was invalid due to a long time failure to pass the hearing. In October, Shanghai American Company updated its prospectus and continued to sprint for the Hong Kong Stock Exchange.
In fact, Shangmei Company had an IPO plan many years ago. In 2015, Han Shu founder and CEO O Lv Yixiong said that after the company was renamed Shanghai Mei Company, it plans to go public in 2018. In 2021, Shangmei Company, which completed the shareholding reform, once considered listing on A shares of and signed a listing guidance agreement with CITIC Securities, but it was not completed in the end.
In this regard, some financial industry insiders analyzed that as the threshold for listing A-shares has become higher and higher, Shanghai American Company's move may be to speed up the listing process, which also shows its urgent need to expand the company's business.
information shows that this time, the funds raised by Shangmei Company will be mainly used for brand building activities, improving R&D capabilities, strengthening production and supply chain capabilities, increasing the breadth and depth of the sales network, improving digital and information infrastructure, working capital and other general corporate purposes. Judging from the performance of
in recent years, Shanghai Mei Company's revenue and profit have achieved stable growth but the growth rate has declined. The latest prospectus shows that from 2019 to 2021, Shangmei Company's revenue was 2.87 billion yuan, 3.38 billion yuan and 3.62 billion yuan, respectively, and the revenue growth rate dropped from 17.6% in 2020 to 7% in 2021; net profits during the same period were 59 million yuan, 203 million yuan and 339 million yuan, respectively, and the profit growth rate dropped from 242.1% in 2020 to 66.7% in 2021.
In the first half of 2022, Shangmei's revenue showed negative growth based on the previous slowdown in growth. The prospectus shows that Shangmei Company's revenue in the first half of the year was 1.262 billion yuan, a year-on-year decrease of 31.1%; the adjusted profit in the first half of the year was 84 million yuan, a year-on-year decrease of 59.2%.
In this regard, Shanghai Mei Company explained in its prospectus that the decline in performance in the first half of 2022 was due to the impact of the epidemic on its production and delivery in Shanghai.
relies on three major "old brands"
. It was founded in 2004. It focuses on skin care, facial masks, maternal and infant care, and is a major brand.
In 2003, Shangmei Company launched the brand Han Shu, targeting women aged 25 to 40; in 2014, the brand -yezi , with a target audience of young women aged 18 to 35; in 2015, the brand Red Elephant was launched, targeting professional maternal and child care . During the record period, Shanghai Mei Company's revenue mainly came from these three brands, contributing a total of 86.6%, 91.8%, 92.2% and 93.0% of the company's total revenue from 2019 to 2021 and the six months ended June 30, 2022.
point brand, Han Shu's contribution has increased year by year, from 32% in 2019 to 45.1%, and reached the highest level so far in the first half of 2022; the proportion of the maternal and infant care brand red elephant to total revenue has also increased year by year, from 18% in 2019 to 24.1% in 2021, and reached 24.2% in the first half of 2022.
In contrast, Yiye, which was popular for a while, is showing an increasingly weak trend. From 2019 to 2020, the revenue scale of Yiyezi brand was above 1 billion yuan. In 2019, Yiyezi once became the brand that contributed the most to the company's revenue that year with a revenue of 1.051 billion yuan. But in 2021, the revenue scale of Yiye brand fell from the level of one billion yuan, and it only achieved revenue of 831 million yuan that year. The prospectus shows that Yiyezi's contribution to Shangmei's total revenue has dropped from 36.6% in 2019 to 21% in the first half of 2022. In addition to the three major brands of
, Shangmei Company is also incubating and developing new brands targeting different consumer groups. In its prospectus, Shangmei Company stated, "In recent years, we have continued to launch new brands and new products and constantly updated our product portfolio. In order to cope with the increasing demand for high-quality functional products, we have launched Gaojieng, Anmier and Jifang to broaden the product range of sensitive skin care, mid-to-high-end pregnancy care and hair care products."
However, Shangmei Company, which relies on the contribution of the three major brands, has performed slightly weakly in the new brand. The prospectus shows that other brands such as Gaojineng, Anmier, and Jifang under Shangmei Company had a total revenue of RMB 38 million, RMB 28 million, RMB 29 million and RMB 08.8 million respectively from 2019 to 2021 and the first half of 2022, accounting for only 13.4%, 8.2%, 7.8% and 7.0% of Shangmei Company's total revenue respectively.
intensive marketing grab voice
industry believes that its Han Shu, Yiyezi and Red Elephant brands are familiar to the public and are inseparable from the intensive investment in marketing and promotion by Shangmei Company.
When the brand was initially developed, Shanghai Mei Company spent 740 million yuan to let Han Shu name "If You Are the One", breaking the record of Chinese TV advertising at that time, and Han Shu also became a household name beauty brand. Since then, Shangmei Company has begun to conduct large-scale marketing activities for its brands: the popular Hunan Satellite TV Golden Eagle Exclusive Theater, which has been named by the popular Hanshu brand, has cooperated with variety shows and dramas including "Three Lives Three Worlds Ten Miles of Peach Blossoms", " Mars Intelligence Bureau ", " This Is Street Dance ", " Son-in-law " and so on; Shangmei Company has also signed popular stars to support its own Hanshu and Red Elephant brands.
In addition, the "money burning" action of Shanghai Mei Company's online retail channel is also keeping pace with the trend. In 2019, Shangmei Company established a social retail department to build a channel for cooperation with KOLs, and dig deep into new traffic positions such as Douyin, Xiaohongshu, and live broadcast.
But the large-scale marketing that has increased year by year has followed by high marketing costs. In recent years, Shanghai Mei Company's sales investment has been increasing year by year, and the amount even exceeds its net profit. The prospectus shows that from 2019 to 2021, Shanghai Mei Company's expenses in sales and distribution were RMB 1.325 billion, RMB 1.536 billion and RMB 1.572 billion, respectively, of which the expenses for marketing and promotion were RMB 803 million, RMB 1.07 billion and RMB 1.034 billion, respectively, accounting for 60.6%, 69.6%, and 65.8% of the total sales and distribution expenses in the same period, respectively, and accounted for 27.9%, 31.6% and 28.6% of the revenue in the same period, respectively.
Compared with marketing investment, Shanghai Mei Company does not seem so "focused" in R&D. The prospectus shows that from 2019 to 2021, R&D costs were RMB 83 million, RMB 77 million and RMB 105 million, respectively, accounting for 2.9%, 2.3% and 2.9% of total revenue, respectively.
It is worth mentioning that the high marketing investment has not made Shangmei Company occupy the front position in the beauty market. Shangmei Company disclosed in its prospectus that according to the Frost-Sullivan report, Shangmei Company's retail sales in 2021 were 7.56 billion yuan, accounting for 1.7% of the domestic cosmetics market, ranking fourth in the domestic cosmetics market, with the top three being Pechoin, Galan Group and Perchoa . In 2021, Shangmei Company ranked 14th in the overall cosmetics market in China, accounting for 0.8% of the domestic cosmetics market.
Industry insiders believe that in the crowded beauty track, although high marketing investment can open up the market and seize the minds of consumers for a while, if you want to retain customers for a long time, you still have to strive for hard strength.
