Maogeping, the first domestic beauty stock in Hong Kong - (01318.HK) December 2024 new stock analysis
$MAO GEPING(01318.HK)
Sponsor: China International Capital Corporation Hong Kong Securities Limited
Offer Price: HK$26.30 - HK$29.80
Fundraising Amount: HK$1.856 billion - HK$2.104 billion
Total Market Cap: HK$12.376 billion - HK$14.024 billion
H-share Market Cap: HK$6.371 billion - HK$7.219 billion
Board Lot: 100 shares
Minimum Subscription: HK$3,010.05
Subscription Period: December 2, 2024 - December 5, 2024
Dark Pool Trading: December 9, 2024
Listing Date: December 10, 2024 (Tuesday)
Total Offer Shares: 70.5882 million H-shares
International Placement: 63.5293 million H-shares (90.00%)
Public Offering: 7.0589 million H-shares (10.00%)
Stabilizing Agent: CICC
Interest Calculation Days: 1 day
Issue Ratio: 15.00%
P/E Ratio: 18.19
Company Profile:
MAOGEPING is a leading Chinese high-end cosmetics group. Founded in 2000 by Mr. Mao Geping, an iconic figure in China's beauty industry, the company has established strong influence in the sector. If successfully listed on the Hong Kong Stock Exchange, it will become "the first domestic color cosmetics stock in Hong Kong".
According to Frost & Sullivan, MAOGEPING is the only Chinese company among China's top 10 high-end cosmetics groups, ranking seventh by 2023 retail sales with 1.8% market share.
MAOGEPING operates two major beauty brands: flagship brand MAOGEPING and ZAZHONGSHENG, covering color cosmetics, skincare products, and makeup artistry training to meet diverse consumer needs.
The company adopts a balanced offline-online sales strategy. Since opening its first counter in Shanghai's Grand Gateway 66 in 2003, MAOGEPING had operated 372 self-owned counters nationwide by June 30, 2024 - ranking second among all beauty brands in China.
With over 2,500 beauty consultants providing immersive experiences through makeup trials, the company has seen online sales grow from 35.4% in 2021 to 49.1% in H1 2024 via Tmall, Xiaohongshu, and Douyin.
Financial Highlights (2021-2023 & H1 2024):
Revenue: RMB1.577B (2021) → RMB2.886B (2023), 35.26% CAGR
Gross Profit: RMB1.316B → RMB2.448B, 36.40% CAGR
Net Profit: RMB331M → RMB663M, 41.59% CAGR
Gross Margin: 83.43%-84.89%
Net Margin: 20.98%-24.98%
As of June 2024, current assets totaled RMB1.177B with operating cash flow of RMB619M and cash balance of RMB553M.
Key Investment Points:
• China's only domestic brand among top 15 high-end cosmetics (1.8% market share)
• 85% gross margin outperforms peers like Proya (603605.SH)
• 6 cornerstone investors subscribed 39.31%
• H-share market cap (HK$6.37B-7.22B) meets Stock Connect requirements
Subscription Analysis:
• Margin financing already 7x oversubscribed via Futu alone
• Estimated 50% lottery win rate for retail investors
• HK$19.8B fundraising with 6.75% expense ratio
After resolving shareholder issues (buying back 10% stake from JQ Investment for RMB730M), MAOGEPING presents a compelling case as a profitable "cash cow" with valuation at 20-30x P/E. However, risks include brand concentration and R&D limitations. Investors should evaluate based on their outlook for China's premium beauty market.
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