Reporter of the Economic Business: Wu Zepeng Reporter of the Economic Business Business: Liang Xiao
Shanghai Shangmei Cosmetics Co., Ltd. (hereinafter referred to as Shangmei Group ) has made new progress in listing in Hong Kong. On October 5, the Hong Kong Stock Exchange disclosed that Yi updated the IPO application information of Shangmei Group.
Shangmei Group is the parent company of well-known cosmetic brands such as Hanshu , Yiyezi, and Red Little Elephant . According to a reporter from " Daily Economic News ", Shanghai Mei Group pressed the Hong Kong stock IPO start button at the beginning of this year, and received feedback on overseas listing issued by the International Department of the China Securities Regulatory Commission in February this year, and received the approval of the issuance from the China Securities Regulatory Commission in April this year. However, in July this year, its application materials were invalid.
In the updated application information, Shangmei Group additionally disclosed its 2021 performance. The reporter noticed that from 2019 to 2021, Shanghai Mei Group's revenue grew steadily, but the growth momentum was still the earliest Korean brand launched. Among the three major brands, -yezi 's revenue continued to decline, down nearly 20% year-on-year in 2021.
Shangmei Group explained that the decline in Yiyezi's revenue is related to the reduction in marketing expenses. Judging from the results, marketing methods are indeed a strong guarantee of Shangmei Group's revenue, so Shangmei Group's cost expenditure on the marketing side has remained high for many years. During the reporting period (2019-2021 and the first half of 2022, the same below), the proportion of sales and distribution expenses of Shanghai Mei Group in each period accounted for more than 40% of the corresponding annual revenue.
Brand Revenue: Han Shu has grown steadily, Yiyezi continues to decline
"There are three key points to be an excellent cosmetics company in the world, adhere to long-termism, multi-brand strategic layout, and continue to invest in scientific research." The sentence of the founder and CEO of Shangmei Group, Lv Yixiong, , is placed at the top of the introduction of Shangmei Group's official website. From this, you can get a glimpse of the characteristics of Shangmei Group.
Shangmei Group stated that according to observations on the development of the global cosmetics industry, the multi-brand strategy is a necessary condition for building a world-class cosmetics company. Therefore, Shangmei Group launched three major brands: Han Shu, Yiyezi and Red Elephant in June 2003, October 2014 and December 2015 respectively. One of them focuses on herbal skin care, while Red Elephant focuses on maternal and child care products. In addition, the brands under Shanghai Mei Group also include Gao Ji Neng, An Mier and Ji Fang.
At present, the performance support of Shangmei Group also comes from the above three major brands. During the reporting period, Shangmei Group's revenue was RMB 2.874 billion, RMB 3.382 billion, RMB 3.619 billion and RMB 1.262 billion, respectively. The total revenue of the three major brands reached 86.6%, 91.8%, 92.2% and 93.0% respectively.
Image source: Shangmei Group hearing information screenshot
"Daily Economic News" reporter noticed that the Hanshu brand has always been the core support for Shangmei Group's revenue, and it is also the continuous driving force for revenue growth during the reporting period. In the three complete years from 2019 to 2021, the Hanshu brand's revenue was RMB 920 million, RMB 1.332 billion and RMB 1.631 billion respectively.
In comparison, Yiyezi, the herbal skin care brand launched 8 years ago, has weak growth. It was the highest revenue among the three major brands in 2019, but it has continued to decline since then. The corresponding revenue in the three years was 1.051 billion yuan, 1.007 billion yuan and 831 million yuan respectively. The revenue ranked last among the three major brands in 2021.
Regarding the decline in Yiye brand's revenue, Shangmei Group said that in 2020, it was mainly due to "the revenue generated by offline channels was reduced by COVID-19, and partly offset by the increase in revenue generated by online channels"; in 2021, it was because "the Yiye brand is being upgraded to a pure beauty brand that uses plant science to target young consumers and reduce marketing expenses."
It should be noted that in 2020, the two major brands of Han Shu and Red Elephant were also affected by the epidemic, but their revenue growth exceeded 40%. Why are only one leaf brand "injured"?
marketing promotion spends 1 billion a year
"continuous investment in scientific research" is the key factor proposed by Shangmei Group, but in terms of investment amount, marketing is its focus of expenditure.
Shangmei Group disclosed that during the reporting period, the company incurred R&D expenses of RMB 83 million, RMB 77 million, RMB 105 million and RMB 50 million, respectively, accounting for 2.9%, 2.3%, 2.9% and 4.1% of the revenue respectively.At the same time, as of June 30, 2022, the company had a R&D team of 204 people, of which 81 people had a master's degree or above, accounting for about 39.7% of the R&D team. What is in sharp contrast to
is the investment in marketing by Shangmei Group. During the reporting period, the sales and distribution expenses incurred by Shanghai Mei Group were RMB 1.325 billion, RMB 1.536 billion, RMB 1.572 billion and RMB 608 million, respectively, accounting for 46.1%, 45.4%, 43.4% and 48.2% of the corresponding annual total revenue.
It is disclosed that marketing and promotion expenditures account for the majority of the above-mentioned sales and distribution expenses. In 2019, Shanghai Mei Group's marketing and promotion expenditure exceeded 800 million yuan, and in 2020 and 2021, both marketing and promotion expenditure exceeded 1 billion yuan.
Image source: Shangmei Group’s hearing information screenshot
Based on this calculation, Shangmei Group’s annual expenditure on marketing and promotion is about ten times its R&D investment.
OnMei Group introduced that as part of its strategy, the company has and will continue to invest a lot of financial and other resources to promote brand awareness and attract customers, including expanding its marketing and sales team, strengthening KOL (key opinion leaders, people with expertise and influence in relevant fields) marketing and purchasing advertising. The effect of vigorous marketing and promotion is obvious. Shangmei Group said that the company has hired several KOLs to promote products. During the reporting period, the revenue generated by the company's top five KOLs accounted for 1.8%, 6.4%, 10.3% and 5.9% of the corresponding annual total revenue respectively.
Regarding the above issues, the reporter tried to contact Shangmei Group through email and phone on October 6 to learn more about the situation, but no reply was received as of press time.
Daily Economic News
