In the Chinese ingredient market, another leading polypeptide player has begun to impact NEEQ.
Yesterday (December 23), according to an announcement from the National Equities Exchange and Quotations (NEEQ), Winkey Technology has applied to list on the exchange, with Guosen Securities as the sponsor.
According to the public offering prospectus, in the first half of this year, Winkey Technology’s total operating income was 98.25 million yuan ($13.46 million), with a net profit of 23.82 million yuan ($3.23 million). It is the Chinese cosmetics ingredient company that has introduced the largest number of structural innovation polypeptides in the past two years. It can be said that if Winkey Technology successfully lists, it will certainly inject more confidence into the ingredient market.
Winkey Technology’s performance growth is stable, with annual revenue nearing nearly 170 million yuan ($23.3 million).
Public information shows that Winkey Technology was founded in 2011, initially focusing on the research and industrialization of polypeptide active substances, and subsequently delving deep into the cosmetics active ingredient track based on this foundation.
It is worth mentioning that Winkey Technology’s founder, chairman, and general manager, Ding Wenfeng, also has rich experience in ingredient research and development. According to the prospectus, he has worked at the Institute of Military Medical Sciences, Shenzhen Wanle Pharmaceutical Co., Ltd., and Concord Medical Research (Shenzhen) Co., Ltd., engaging in research and development.
Currently, according to information on Winkey Technology’s official website, it has established a complete service system integrating ingredient innovation research and development, customized skin solutions, and smart manufacturing of finished products, with the goal of creating a globally radiating, integrated sustainable development full-industry chain platform encompassing research, smart manufacturing, and incubation.
In fact, as early as the beginning of this year, Winkey Technology had already begun laying out plans for listing on the NEEQ. According to official announcements, on January 10, 2024, the Guosen Securities NEEQ Listing Committee reviewed and approved Winkey Technology’s listing project. In May of the same year, Winkey Technology held a board meeting to approve relevant proposals for applying to list on the NEEQ. As of today, Winkey Technology has formally applied to the National Equities Exchange and Quotations for listing.
According to the latest prospectus released by Winkey Technology, in 2022 and 2023, the company’s operating income was 135 million yuan ($18.5 million) and 165 million yuan ($22.6 million), respectively, with a year-on-year growth of 21.67%; net profits were 35 million yuan ($4.8 million) and 42 million yuan ($5.8 million), respectively, with a year-on-year growth of 21.08%.
In the first half of 2024, Winkey Technology’s operating income was 98 million yuan ($13 million), with a net profit of 24 million yuan ($3.3 million). Specifically, the revenue from cosmetics ingredient business was 49 million yuan ($6.7 million), a year-on-year increase of 24.59%; the revenue from ODM finished product business was 42 million yuan ($5.8 million), a year-on-year increase of 79.29%. These two main businesses accounted for 98.53% of Winkey Technology’s total revenue. It can be inferred that the overall growth of the two main businesses in the first half of this year exceeded 45%, far surpassing the 21% year-on-year growth in 2023.
In terms of gross profit margin, from 2022 to the first half of 2024, Winkey Technology’s comprehensive gross profit margin was 68.65%, 65.42%, and 64.12%, respectively. Although there was a slight decline, it remained relatively stable overall. Winkey Technology also stated that the decline in gross profit margin was mainly due to the steady increase in the proportion of ODM finished product business since 2023, while the gross profit margin of the cosmetics ingredient business, which had a relatively high proportion before, decreased, leading to a downward trend in its overall gross profit margin.
It is worth noting that in the ODM finished product business, as Winkey Technology currently only produces ODM finished products with polypeptides as the core active ingredient, and many of the polypeptide ingredients are self-produced by Winkey Technology at a lower cost. This has led to gross profit margins in the ODM finished product business consistently exceeding 40%, higher than comparable companies in the industry.
Winkey Technology’s customers are mainly well-known beauty brands.
As a company that started with peptide ingredients, peptides remain a key focus of Winkey Technology’s business development.
In the prospectus, Winkey Technology states that its peptide ingredient technology is currently industry-leading. Their transdermal carrier delivery technology has addressed issues such as low drug loading, low encapsulation rate (40%-50%), and poor stability of similar products, achieving stable, high drug loading, and high encapsulation rates (>70%).
In 2021, Winkey Technology was the first in China to launch a registered cosmetic active peptide ingredient. Additionally, Winkey Technology has been one of the Chinese cosmetics ingredient companies with the highest number of innovative structural peptides launched in the past two years.
Currently, Winkey Technology has obtained approvals for 10 registered cosmetic new materials, including Erasin0003, oligopeptide-215, snail peptide, bone marrow powder, among others. Seven of these are new peptide materials, one is a pseudo-peptide material, and two are non-peptide materials.
According to the prospectus, the new materials registered by Winkey Technology have been used in products of many well-known beauty brands such as AHC, OLAY, Marubi, Wild Animal Password, Xi Wuji, Avene, Fan Wenhua, Perfect Diary, Colorkey, Fuerjia, Lin Qingxuan, and others.
At the same time, Winkey Technology is continuously expanding into non-peptide materials such as NMN, camellia squalene, compound ceramides, idebenone, and mercaptoethanol. In the first half of 2024, Winkey Technology’s sales of non-peptide materials increased by 309.28% year-on-year.
According to the prospectus, Winkey Technology has entered the supply chain systems of international brands such as Procter & Gamble, Unilever, and Shiseido, providing them with various cosmetic ingredients including self-developed new materials.
Moreover, in the cosmetics finished product business, Winkey Technology, through Dongguan Yuzai, provides services to cosmetic brand customers including product design, formula development, large-scale production, efficacy testing, and registration, covering categories like masks/eye masks, freeze-dried powder, creams, and lotions.
According to the prospectus, Winkey Technology’s cosmetics finished product customers currently include Marubi, Dr. Plant, HAIROLOGY, PROF. Ling, DC EXPORT, Yves, YOU & PURE, among others, covering several Chinese domestic well-known and emerging brand customers.
In the first half of 2024, Winkey Technology’s top 5 sales customers accounted for 31.66% of total revenue, with the top 3 customers being Wuhu Yiweio Sheng Network Technology Co., Ltd., Guangdong Marubi Biotechnology Co., Ltd. (referred to as Marubi Biotechnology), and Guangzhou Feimei Network Technology Co., Ltd. It is worth noting that Marubi Biotechnology has been Winkey Technology’s largest customer for two consecutive years prior to this.
In the prospectus, Winkey Technology explicitly states that it will continue to implement a customer strategy centered around strategic customers and a product strategy led by advantageous single products, building on existing customers and sales models. They aim to deepen cooperation with customers centered around major clients, guided by major market trends.
Additionally, Winkey Technology mentions its strong focus on expanding into overseas markets. Currently, they are extending their self-developed ingredient intellectual property and channel layout to countries and regions including the United States, Europe, Russia, Asia-Pacific, and have established stable business relationships with some customers.
Winkey Technology aims to build a global Chinese ingredient brand.
According to data from BoYan Consulting, from 2014 to 2021, the consumption of cosmetic active ingredients has steadily increased. By 2026, the global market size for cosmetic active ingredients is expected to grow to $4.2 billion.
Additionally, according to Euromonitor data, from 2010 to 2023, the Chinese market for cosmetic active ingredients has experienced rapid growth. The annual compound growth rate of various active ingredients has generally been higher than the global average, with the annual compound growth rate of active peptide ingredients in China reaching 40.7%, nearly double the global rate.
In the current Chinese domestic market for active ingredients, competition has intensified, with more and more Chinese domestic ingredient companies entering the fray, attempting to carve out a share from international ingredient giants.
At the same time, price competition is no longer the most important reliance for Chinese domestic ingredient companies. Many industry insiders have expressed that building technological barriers and material innovation are the key directions.
Based on the data released by Winkey Technology, from 2022 to the first half of 2024, their research and development expenditure was 15.7471 million yuan ($2.16 million), 22.5265 million yuan ($3 million), and 14.4938 million yuan ($2 million), accounting for 11.62%, 13.67%, and 14.75% of total revenue respectively, showing an increasing trend. As of the prospectus release, Winkey Technology had a total of 83 research and development personnel, accounting for 21.01% of the total workforce.
Specifically, Winkey Technology’s research and development expenses are mainly used for the development and registration of “new materials with single molecular structures,” “exploratory research on new targets, mechanisms, and uses of active ingredients,” “development and application of transdermal technology for cosmetic active ingredients,” and “development and registration of natural green plant new materials.”
In addition, at the 2024 (10th) China Cosmetics Trends Conference hosted by CHAILEEDO, Ding Wenfeng revealed that Winkey Technology is currently focusing on researching and developing local characteristic resource materials. They have also developed many specialty resource products using recycling and circular economy methods, with over 30 projects involving botanical ingredients under research.
From this perspective, although peptide ingredients are still Winkey Technology’s main focus, they are expanding the breadth of material research and development, aiming to enhance market share through various dimensions such as the development of natural plant materials.
It is worth noting that Winkey Technology is not the only ingredient company entering the capital market this year. In the past year, several ingredient companies including Chicheng Biology have made moves towards the capital market. Chuangjian Medical has successfully listed on the NEEQ. However, companies like Green Biology, Chuanger Biology, and Xunkai Biology have had their IPOs terminated or withdrawn.
In a public speech, Ding Wenfeng mentioned that while Winkey Technology started with peptides, they are not limited to peptides alone. Their goal is to build a global Chinese ingredient brand.
Whether Winkey Technology can stand out among numerous enterprises remains uncertain. If they can successfully list on the NEEQ, it will undoubtedly provide significant momentum for their path towards establishing a global ingredient brand.
