Following the wave of beauty brands like Lin Qingxuan and Chando launching Hong Kong IPO plans, industry heavyweight Proya Cosmetics Co., Ltd. (Proya) has also filed for a Hong Kong IPO. The Hong Kong Stock Exchange website shows that Proya submitted its listing application, with China International Capital Corporation (CICC) and UBS as joint sponsors.
Having debuted on the Shanghai Stock Exchange in November 2017 as the "first domestic beauty stock," Proya now aims to become the first "A+H" dual-listed beauty company. However, despite its leading position, Proya faces challenges—slowing growth and a shrinking market cap. From its 2023 peak of CNY 135.65 per share, its stock has plunged to below CNY 74, wiping out over CNY 20 billion in market value.
Undeterred, Proya plans to use IPO proceeds to: 1. Strengthen R&D, including AI-driven cosmetic innovation. 2. Expand branding and sales channels. 3. Upgrade smart manufacturing and digital operations. 4. Pursue strategic M&A and partnerships.
**Hero Products: Boon and Bane?** Proya ranks fifth in China’s beauty market by 2024 retail sales and leads among domestic players, with the highest CAGR from 2022–2024. Its success stems from two key strategies launched in 2019: - **Hero Product Strategy**: Shifting from gift sets to high-margin, high-repurchase items like Ruby Serum and Dual-Anti Serum. - **Platform Strategy**: Building a multi-brand portfolio via in-house development and investments.
Capitalizing on skincare trends like "ingredient-focused routines" and "AM Vitamin C + PM Retinol," Proya leveraged social media and livestreaming to turn hero products into viral hits, driving rapid growth. Its revived makeup brand, Caitang, became a second growth pillar. By 2024, Proya surpassed CNY 10 billion in revenue, the first domestic beauty firm to do so.
Financials show robust growth: - 2022–2024 revenue: CNY 6.39B → 8.91B → 10.78B - Net profit: CNY 831M → 1.23B → 1.59B
Yet, H1 2025 saw a slowdown: - Revenue: +7.2% YoY to CNY 5.36B - Net profit: +13.8% YoY to CNY 799M (lowest in 5 years)
The stagnation of its flagship brand, Proya (74.3% of revenue, -0.08% YoY), dragged overall performance. While sub-brands like Yuefuti and Caitang show promise, their contributions remain limited.
**Domestic Boom vs. Fierce Competition: Can R&D Catch Up?** China’s beauty market, the world’s second-largest (11.4% global share in 2024), is projected to grow at a 6.6% CAGR through 2029—double the global rate. Rising patriotism and Gen Z’s preference for local brands like Proya and Winona are key drivers.
However, competition is intense. International giants (L’Oréal, Estée Lauder) vie with emerging domestic players (Betaine, Bloomage BioTechnology). Proya’s heavy reliance on marketing (49.6% of H1 2025 revenue vs. R&D at just CNY 95M, 27x lower) highlights an industry-wide issue. For instance, Chando spent 55% of revenue on sales but only 1.7% on R&D.
While marketing is essential in beauty’s low-barrier, fast-changing landscape, Proya must balance it with R&D to sustain growth. Elevating R&D as a core strategy—and transparently communicating its scientific advances—could solidify its "tech-driven" brand image.
**Investment Takeaway** Proya benefits from both industry tailwinds ("domestic brand rise") and operational excellence. However, investors should monitor risks: flagship brand fatigue, unproven sub-brands, and high marketing costs. Long-term potential remains, but strategic pivots are critical for global competitiveness.
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