Chinese beauty giant Proya Cosmetics Co., Ltd.
Proya has struggled in the A-share market in recent years. From February 2023 to the present, the company's stock price has fallen from 133.86 yuan to 76.39 yuan, a decline of 42.93%, resulting in a market value loss of 22.8 billion yuan. The core brand of Proya, which focuses on scientific skincare and emphasizes anti-aging and repair effects, has lost momentum, contributing significantly to its performance slowdown. According to the mid-year report for 2025 disclosed on August 26, the company saw a revenue of 5.362 billion yuan in the first half of the year, a mere increase of 7.21% year-on-year, a sharp drop from the previous year's growth rate of 37.9%, marking the lowest mid-year revenue growth rate in nearly five years. Meanwhile, net profit reached 799 million yuan, a year-on-year increase of 13.8%, also the lowest mid-year profit growth rate in five years.
The core brand “Proya” contributes over 70% of the company’s revenue, but its weak performance has been the main driver of the overall slowdown. The financial report indicated that in the first half of 2025, revenue from the core brand “Proya” was 3.979 billion yuan, a slight decrease of 0.08% year-on-year, representing its first negative growth in five years. Media reports pointed out that the number of customers in Proya's official flagship store on Tmall decreased by 11.78% year-on-year, and the customer count on Vipshop fell by 15.63%, highlighting the user loss in core channels. This suggests that the previously successful "big product strategy" is now showing signs of bottlenecks. Despite the launch of new products including a whitening special edition and medical-grade repair products, the company has not been able to reverse the downward trend.
Proya has been advancing a multi-brand strategy, with its secondary tier brands showing strong growth in the first half of 2025. The color cosmetics brand Caitang grew by 21.11%, and the personal care brand Off&Relax saw a revenue increase of 102.52%. However, combined, these brands contribute less than 25% of total revenue, insufficient to cover the gap in growth from the main brand. The company's dependence on online channels has further increased profitability pressure, with online revenue accounting for as much as 95.39% in the first half of 2025. To maintain its traffic advantage, sales expenses grew by 13.64% year-on-year to 2.659 billion yuan, outpacing revenue growth; the sales expense ratio climbed to a record high of 49.59%. In stark contrast, research and development expenditure was negligible compared to sales expenses. In the first half of 2025, research and development expenses were only 95 million yuan, accounting for 1.77% of revenue, less than 1/20 of sales expenses.
The necessity of the IPO is questionable, especially as executives engage in significant share selling. The announcement indicated that the funds raised from the IPO will be used for various purposes, including research and product innovation, brand development and category expansion, smart manufacturing and supply chain enhancement, digital transformation and AI capability construction, global expansion, strategically seeking potential investment and acquisition opportunities, working capital, and general corporate purposes. However, reports suggest that Proya is not short on cash. As of mid-2025, the company's debt ratio stood at only 29.55%. Proya boasts cash and equivalents amounting to 4.633 billion yuan, with interest-bearing liabilities totaling only 481,000 yuan in non-current liabilities due within one year and 798 million yuan in bond payable, leaving a net cash position of approximately 3.83 billion yuan. Additionally, the company generated strong cash flows from its core business, with net operating cash flows of 1.107 billion yuan and 1.293 billion yuan for 2024 and the first half of 2025, respectively. Thus, the necessity for Proya to raise funds through its Hong Kong IPO comes into question.
Moreover, it is noteworthy that Proya has just announced a generous dividend plan: it plans to distribute 315 million yuan in dividends for the first half of 2025, accounting for nearly 40% of its net profit. In contrast, the company did not issue any dividends in the mid-2024 period. The dividend payout ratio for mid-2025 is also higher than the 30.21% for the entirety of 2024. Since its listing on the A-share market in 2017, Proya has accumulated over 1.8 billion yuan in dividends, which stands in stark contrast to its current Hong Kong listing fundraising plans. The simultaneous pursuit of substantial dividends alongside fundraising efforts raises logical inconsistencies.
Attention is also drawn to the share-selling actions of Proya's executives behind the capital operations. According to Wind data, executives and shareholders have cumulatively cashed out over 5 billion yuan through reductions over several years—an amount equivalent to the total net profit attributable to shareholders from 2016 through the first three quarters of 2024. Most notably, the founder and former general manager Fang Yu-you has conducted over 60 reductions since the end of 2020, cashing out more than 3.5 billion yuan, with his shareholding percentage decreasing from 24% to 15%. Executives' share reductions have intensified in 2025. In March, company director and vice president Jin Yan-hua and vice president Wang Li simultaneously maximized their holdings by selling 25% of their shares, totaling over 10 million yuan in cash. Accompanying the share reductions are changes in the core management team. The announcement indicated that Wang Li, vice president, board secretary, and financial head, resigned in May, shortly after selling 59,000 shares for about 5.44 million yuan in April. As the first financial head after the company went public, Wang Li personally witnessed the transformation from 2 billion to 10 billion yuan in revenue, and her early departure has sparked speculation from various parties. At the same time, Proya is bringing in executives with international backgrounds. On October 11, the company appointed Jin Chang, the former financial director of L'Oréal China, as its financial head, along with the appointment of Xue Xia as board secretary and Guo Xiao as CMO.
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