Mao Geping eyes $1.8B IPO windfall

What happened Mao Geping Cosmetics, China’s homegrown high-end beauty trailblazer, is set to make its long-awaited debut on the Hong Kong Stock Exchange on December 10. The company aims to raise up to HK$2.1 billion ($270 million), valuing it at approximately HK$12.4 billion ($1.6 billion) to HK$14 billion ($1.8 billion). To bolster confidence, six cornerstone investors — including CPE, CDF Capital, and ACCF Capital — have committed $100 million, highlighting strong institutional support. This IPO follows a protracted eight-year journey of five listing attempts marked by regulatory setbacks in mainland China, underlining Mao Geping’s "IPO underdog" narrative. Founded in 2000, the company’s flagship brand Mao Geping was the first Chinese luxury beauty label. In 2023, it commanded 1.8% market share, ranking seventh overall. Meanwhile, its expansion into skincare and color cosmetics underpins its diverse portfolio of 387 SKUs, priced between $30 and $110. The Jing Take Mao Geping is poised to benefit from the rapid growth of China’s high-end beauty market. Frost and Sullivan predicts the market will expand at 9.9% CAGR to reach 311 billion RMB ($42.6 billion) by 2028. Notably, Chinese brands have outpaced international competitors, growing at a CAGR of 9.8% from 2018 to 2023, compared to 5.9% for global players. With 372 self-operated counters — the second highest beauty brand in the nation — and online revenue growing at a blistering 49.3% CAGR (2021-2023), Mao Geping’s omnichannel strategy is closing the gap between physical and digital. As of H1 2024, e-commerce accounted for 49.1% of sales. Despite revenue reaching 1.97 billion RMB ($270 million) in H1 2024, up 41% YoY, Mao Geping’s resilience on outsourced factory, OEM (original equipment manufacturer) and ODM (original design manufacturer) production, and limited R&D investment (below 1% of revenue) raise concerns. Marketing costs ballooned to 1.4 billion RMB ($193 million) in 2023, accounting for nearly half of total revenue, compared to R&D spending of just 24 million RMB ($3.4 million). Efforts to address these weaknesses include opening a proprietary R&D facility in Hangzhou, acquiring stakes in supply chain companies, and establishing a new cosmetics tech subsidiary with a 5 billion RMB ($68.6 million) capital injection. Mao Geping’s entry onto the Hong Kong Stock Exchange signals a pivotal moment for high end C-beauty narrative. As the only Chinese firm in the top 10 high end beauty companies in China by 2023 retail revenue, its listing underscores the global ascension of domestic luxury brands. However, questions about sustainability — balancing sky-high marketing costs with a thin R&D pipeline — will remain a critical investor focus. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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Mao Geping eyes $1.8B IPO windfall