Recently, according to the latest disclosure on the Shenzhen Stock Exchange’s official website, Guangzhou Uniasia Cosmetic Technology Co., Ltd (referred to as “Uniasia”) has applied to withdraw its application for an initial public offering (IPO). This signifies the end of Uniasia’s IPO journey over the past two years.
It’s worth noting that Uniasia is the third beauty company, following Lalami and Misifu, to voluntarily withdraw its IPO application this year, a rather uncommon scenario. In response to this, industry experts have commented that “the consecutive withdrawals by companies may indicate that, influenced by market conditions and IPO policies, the ongoing trend of beauty companies going public for several years might be cooling off.
Over the past nearly two years, Uniasia withdrew its IPO
According to documents disclosed on the Shenzhen Stock Exchange’s official website, on November 20th, Uniasia submitted an application titled ‘Guangzhou Uniasia Cosmetics Technology Co., Ltd.’s Request to Withdraw the Application for Initial Public Offering of Stocks and Listing on the ChiNext Board.’ Consequently, the Shenzhen Stock Exchange decided to terminate the review process for Uniasia’s ChiNext listing. However, the documents did not disclose the reasons behind Uniasia’s withdrawal of the listing application.
Looking back at Uniasia’s journey to IPO, spanning nearly two years, it began on December 22, 2021, when Uniasia signed an IPO guidance agreement with CITIC Securities, marking the official commencement of their IPO endeavor.
In December 2022, Uniasia’s IPO project passed the guidance acceptance by the Guangdong Regulatory Bureau, signifying the completion of over a year of IPO guidance. Uniasia’s sprint towards IPO entered a new phase.
Subsequently, on the last day of 2022, Uniasia formally submitted the draft prospectus for its initial public offering of shares, aiming to list on the ChiNext board of the Shenzhen Stock Exchange. At that time, Uniasia, as a well-established domestic cosmetics company, was seen as a significant addition to the ranks of domestically listed beauty and cosmetics companies.
In March of this year, Uniasia’s IPO was paused due to updated financial information. Three months later, as Uniasia updated its prospectus data, the IPO review resumed. However, as of now, Uniasia has withdrawn its IPO.
According to the prospectus, Uniasia had previously aimed to raise a total of 607 million yuan through its IPO. The main uses of these funds included brand building and promotion projects, intelligent manufacturing and information system upgrade projects, and R&D center upgrade projects. Among these, investment in brand building and promotion projects accounted for 405 million yuan, representing over sixty percent of the total raised funds.
Revenue surpassing the 2-billion mark, firmly placing it among the top ten domestic cosmetic brands
It is reported that Uniasia adheres to a development strategy of ‘multiple brands, multiple categories, omni-channels, and global operations.’ Currently, it boasts four main flagship brands, namely ‘MEIFUBAO, FRANIC, Seeyoung, and SKYNFUTURE,’ along with segmented brands such as MOR, KEEP.Y, Youya, GITTAMY, VITA LIXIR, and MIOFURMI, covering skincare, cleansing, hair care, body care, and other daily chemical products.
According to the prospectus, Uniasia’s total revenue from 2020 to the first half of 2023 stood at 1.99 billion yuan, 2.16 billion yuan, 2.09 billion yuan, and 1.13 billion yuan, respectively. The year-over-year growth for 2021-2022 was 8.5%, followed by a decline of 2.9%. In the reporting period, after achieving growth last year, net profit reached 105 million yuan in the first half of this year, marking a 23.81% year-on-year decrease.
In addition, in recent years, Uniasia’s sales expense ratio has consistently exceeded 50%. From 2020 to the first half of 2023, the sales expense ratios were 50.97%, 54.22%, 51.89%, and 55.42%, respectively.
Regarding research and development expenses, Uniasia’s R&D expense ratio has remained around 3%, ranking among the top in the industry. From 2020 to the first half of 2023, the R&D expense ratios were 2.88%, 3.01%, 3.15%, and 2.97%, respectively.
Similar to most traditional cosmetic companies, Uniasia initially grew through offline channels but has vigorously embraced new channels such as live streaming and social e-commerce in recent years. During the reporting period, Uniasia’s sales model primarily consisted of direct sales, distribution, and consignment. In recent years, owing to the growth of direct e-commerce platforms, the proportion of Uniasia’s direct sales channels has rapidly increased from 27.02% in 2020 to 38.84% in the first half of this year.
In terms of brands, during the reporting period in 2022, SEEYOUNG, MeiFuBao, and FRANIC contributed 80.42% of the revenue, with SEEYOUNG generating 810 million yuan in 2022 and potentially becoming the first brand in the group to exceed 1 billion yuan. Meanwhile, in the first half of this year, Skin Future showed rapid growth, accounting for 24.38% of the main business revenue, with sales reaching 270 million yuan. In 2022, its share was only 9.55%, marking SKYNFUTURE’s surpassing of MeiFuBao to become Uniasia’s second-largest brand in the first half of this year.
Based on the disclosed performance, Uniasia has consistently ranked among the top ten domestic cosmetic companies in recent years. According to Euromonitor and Chaileedo statistics, in 2021 and 2022, Uniasia ranked sixth and ninth among local cosmetic companies, respectively. As per the first-half data of this year, Uniasia ranked ninth with a revenue of 1.13 billion yuan.
As one of the early entrants into overseas business, Uniasia has made new strides in international markets this year. In 2015, the Uniasia Group acquired the Australian high-end fragrance care brand MOR and established a cosmetics production base locally. MOR has successfully entered multiple overseas markets including Australia, New Zealand, the UK, the US, Malaysia, Singapore, and opened its first store in Beijing this year.
However, according to the prospectus, in the first half of this year, overseas revenue accounted for only 0.88% of the main business revenue. This was due to some brands produced and sold by the company’s Australian subsidiary still being in the brand incubation stage, and the short operational time of the Australian factory. As of June 2023, the company’s Australian subsidiary remained in a loss-making state.
The ebbing tide of IPOs in the cosmetics industry
Regarding Uniasia’s sudden withdrawal of its IPO application, industry insiders have expressed non-surprise. ‘Since the beginning of this year, the IPO policies for consumer-oriented enterprises, including cosmetics, have notably tightened, with increasing demands for companies’ technological innovation capabilities.’
Chaileedo’s analysis revealed that at least three companies have terminated their IPO applications this year. For instance, cosmetic brands Misifu and cosmetic operations manager Lalami both voluntarily withdrew their applications in July this year. Among them, Misifu stated in their announcement that the withdrawal was due to considerations regarding the company’s own development and current industry regulatory policies.
Moreover, Mao Geping, which initiated its IPO journey as early as 2016 and had its IPO application accepted in March this year, has once again encountered a halt in the IPO process. The seven-year-long IPO journey seems to have become ‘indefinite.’
Chaileedo noticed that in August this year, the China Securities Regulatory Commission (CSRC) explicitly stated its intention to stage-wise tighten the IPO pace, aiming to foster a dynamic balance between investment and financing amid recent market conditions. According to Wind data, since the proposal for the stage-wise tightening of IPOs, a total of 52 companies have terminated their IPOs.
Since November, at least 8 companies have withdrawn their IPOs solely from the Shenzhen Stock Exchange, apart from the aforementioned cosmetic industry enterprises.
Apart from policy tightening, recent national policies have leaned more towards industries with technological innovation and advanced manufacturing attributes. In light of this, industry insiders, analyzing recent financial meetings, stated that the recent Central Financial Work Conference emphasized optimizing the structure of capital supply, directing more financial resources toward promoting technological innovation, advanced manufacturing, green development, and small and medium-sized enterprises.
It’s evident that under the dual policy guidance of tightened IPOs and financial favor towards sectors emphasizing technological innovation, the consecutive withdrawals of IPO applications by cosmetic companies are comprehensible.
Regarding the current challenge of cosmetic companies in seeking IPOs, seasoned industry insiders point out that it’s not that there’s no opportunity for them to go public. Rather, there’s an increased demand for innovative capabilities. ‘Companies need to cultivate their internal strength, find their innovative path, enhance the research value of their products, and win market and capital selection by establishing their core technological competitiveness.’
With several cosmetic companies withdrawing their IPOs, some observers express that the Hong Kong Stock Exchange has become the best choice for domestic consumer brands, including cosmetics. It’s noted that another well-established domestic cosmetics enterprise, JALA, has recently been rumored to be heading for a Hong Kong IPO next year.
Going public isn’t the end; opportunities always await the prepared. For companies, proactively withdrawing their applications doesn’t signify a complete exit from the IPO path. Through internal optimization, skill development, or switching to different listing platforms, there will still be opportunities to make an impact on the capital market in the future.
