Beauty industry leader Proya Cosmetics Co.,Ltd., with annual revenue exceeding 10 billion yuan, is pursuing a Hong Kong stock exchange listing. However, its 2025 interim report reveals multiple concerns: revenue growth fell below double digits for the first time, main brand revenue declined slightly, and subsidiary brands including cosmetics and personal care contribute less than 20% of total revenue, failing to fill the gap. Meanwhile, the company announced its highest mid-term dividend ratio since listing, proposing a 315 million yuan cash dividend (nearly 40% of net profit attributable to shareholders). Since going public, dividend payout ratio has exceeded 30%, with founders Hou Juncheng and Fang Yuyou pocketing over 1 billion yuan.
Notably, Proya Cosmetics relies heavily on marketing channels for growth, with sales expenses accounting for nearly 50% of revenue, while R&D expense ratio has remained below 2% for years. With second-generation succession underway and frequent management changes, whether the company can achieve new growth milestones through Hong Kong listing remains to be seen.
This year has witnessed sustained momentum in Hong Kong IPO activity, with fundraising scale returning to global leadership. Beauty companies are capitalizing on this trend, triggering a new wave of capitalization. From Lin Qingxuan expanding in domestic skincare to Yingtong Holdings breaking through with domestic fragrances, and Ruoyuchen following suit as parent company of Zhenjia Brand, numerous beauty and personal care enterprises are targeting Hong Kong listings.
As a benchmark, Mao Geping (01318.HK), which listed on Hong Kong stock exchange in late 2024, not only generated market excitement with over 800x oversubscription during IPO but has seen stock price surge 240% to date, with market capitalization exceeding 50 billion yuan, establishing a capitalization model for the industry.
In this wave, domestic beauty leader Proya Cosmetics (603605) has also attracted market attention with active planning for H-share listing to accelerate internationalization strategy and overseas business development. If successful, Proya Cosmetics could become the first "A+H" stock in the beauty industry.
On August 26, 2025, Proya Cosmetics simultaneously announced its 2025 interim results and Hong Kong listing plans. However, its stock price closed down 7.59% the following day, indicating lukewarm market response. Currently, the company faces multiple challenges including slowing performance growth, second-generation succession, frequent management changes, and declining R&D intensity, potentially pressuring its Hong Kong listing prospects.
**Performance Growth Slowdown with Main Brand Revenue Struggles**
Founded in 2003, Proya Cosmetics listed on Shanghai Stock Exchange main board in 2017. In 2024, revenue crossed the 10 billion yuan threshold with net profit reaching 1.55 billion yuan, making it the first domestic beauty company to achieve 10 billion yuan revenue scale.
In the first half of this year, Proya Cosmetics achieved revenue of 5.362 billion yuan, up 7.21% year-over-year; net profit attributable to shareholders of 799 million yuan, up 13.8% year-over-year; operating cash flow surged 95.34% to 1.293 billion yuan; net profit margin improved to 15.41% year-over-year, and gross margin increased 3.56 percentage points to 73.38% year-over-year.
Despite demonstrating strong profitability, Proya Cosmetics faces its biggest performance growth pressure since listing compared to previous years.
First, overall performance growth has significantly slowed. From 2022 to 2023, Proya Cosmetics maintained revenue and net profit growth rates above 35% year-over-year. In 2024, both indicators still grew over 20% year-over-year. However, entering the first half of 2025, revenue growth rate dropped to 7.2%.
Compared to other domestic beauty and skincare brands, Marubi Biotechnology (603983) and Mao Geping both achieved revenue growth rates above 30% in the first half of 2025, while Bloomage BioTechnology (02367.HK) reached 21.66% and Shanghai Chicmax (02145.HK) achieved 17.29%, all higher than Proya Cosmetics.
Second, the main Proya Cosmetics brand, serving as the "performance pillar," achieved revenue of 3.979 billion yuan in the first half of this year, down 0.08% year-over-year, marking its first revenue decline in five years. Previously, this brand maintained mid-year revenue growth rates exceeding 30% from 2021 to 2024, peaking at 43.12%.
Third, other brands contribute limited revenue. Proya Cosmetics has been pursuing a multi-brand strategy with some brands showing strong performance. In the first half of 2025, cosmetics brand Caitang achieved revenue growth of 21.1% to 705 million yuan, personal care brand Off & Relax saw revenue surge 102.52%, and cosmetics brand Yuanse Bota recorded revenue growth of 80.18%.
Caitang, founded by professional celebrity makeup artist Tang Yi in 2014, is a domestic cosmetics brand with strong Chinese cultural elements. In 2019, Proya Cosmetics acquired Caitang, completing its cosmetics portfolio beyond skincare. Post-acquisition, Caitang's revenue grew from 120 million yuan in 2020 to 1.19 billion yuan in 2024.
On September 1, 2025, Proya Cosmetics became the exclusive investor in Series B funding for domestic young women's cosmetics brand Huazhixiao, holding 38.45% stake and becoming the second-largest shareholder.
However, new brands remain relatively small in scale, with combined revenue contribution below 20%, insufficient to offset the impact of main brand revenue decline.
**Mid-term Dividend Rate Reaches 40% with Founding Family's 16.61 Billion Yuan Fortune**
China's cosmetics market was once dominated by international brands. In recent years, with the rise of domestic beauty products, a series of Chinese brands represented by Proya Cosmetics, Winona, and Fulemei have begun gaining market discourse power.
Proya Cosmetics' development origins trace back to early industry accumulation by two core founders. The company was jointly established in 2003 by Zhejiang-born post-1960s entrepreneur Hou Juncheng and his brother-in-law Fang Yuyou. Prior to this, both had been deeply involved in the daily chemicals sector since the 1990s, completing capital accumulation and industry resource reserves through agency work for multiple domestic and international daily chemical brands.
After establishment, Proya Cosmetics precisely captured industry opportunities at different stages, rapidly rising through clear strategic pathways: initially leveraging industry-wide sinking channels (such as CS beauty collection stores and regional supermarkets) to quickly penetrate third-tier cities and below, filling channel gaps in the mass skincare market at the time; as internet traffic dividends exploded, the company timely shifted online, breaking through in the competitive domestic skincare track through explosive marketing strategies and major single-product strategies, gradually growing into an industry leader.
In 2024, Proya Cosmetics topped Tmall's skincare brand sales rankings, locally defeating European brand L'Oréal with over 10 billion yuan revenue, surpassing century-old Shanghai Jahwa to claim the "top position" among domestic beauty brands.
According to Qingyan Intelligence data, in Tmall beauty and skincare brand GMV rankings from January to April 2025, Proya Cosmetics consistently maintained top-two positions, even defeating L'Oréal for the top spot in April as the only domestic brand in the top ten for multiple months.
By channel, China's cosmetics sales channels are primarily online, with 2024 online transaction scale reaching 691 billion yuan, up 5.9% year-over-year; offline transaction scale was 382.8 billion yuan, down 2.3% year-over-year. With rapid e-commerce development, leading beauty companies have heavily invested in online sales channel construction. Proya Cosmetics and Marubi Biotechnology have online sales revenue ratios of 95% and 86% respectively, while Botanee Bio-Technology and Bloomage BioTechnology have ratios of 75% and 72% respectively. The latter two maintain higher offline pharmacy channel shares due to product portfolios including medical dressings and dermatological products.
Besides significant revenue growth, Proya Cosmetics' profitability continues improving, with gross margin rising from 61.7% in 2017 to 73.4% in 2025 interim report, approaching Estée Lauder's 74.41% and L'Oréal's 74.67%.
Comparison shows domestic beauty brands' gross margins now match or exceed overseas renowned brands. For example, Fuerjia, Mao Geping, and Bloomage BioTechnology all exceed 80% gross margins, with Mao Geping reaching 84.19%, Marubi Biotechnology at 74.41%, and Botanee Bio-Technology at 75.75%.
Performance growth has driven founding family wealth appreciation. Currently, Hou Juncheng, as Proya Cosmetics' controlling shareholder, holds 34.5% stake, while co-founder Fang Yuyou holds 15.2%. Together, with total shareholding market value of 16.61 billion yuan, they ranked 201st on the 2025 New Fortune 500 Rich List.
Despite first-half performance growth slowdown, Proya Cosmetics announced its most substantial mid-term dividend plan since listing. The interim report declared cash dividends of 8 yuan per 10 shares, with expected total cash dividends of 315 million yuan, accounting for nearly 40% of net profit attributable to shareholders in the same period.
According to Wind data, Proya Cosmetics has accumulated 2.125 billion yuan in cash dividends since listing, with dividend payout ratio exceeding 30%. Based on founders Hou Juncheng and Fang Yuyou's shareholding ratios, they have received over 1 billion yuan in dividends.
**Second-Generation Succession, Dense Management Changes, Sales Expenses Nearly 50%**
Born in December 1964, 61-year-old Hou Juncheng has succession planning on the agenda. In September 2024, Fang Yuyou stepped down as director and general manager of Proya Cosmetics, with the position taken over by Hou Yaomeng, son of Hou Juncheng and Fang Aiqin, marking the beginning of "second-generation" leadership transition.
Born in 1988, Hou Yaomeng has worked in Proya Cosmetics' e-commerce department since 2014, serving as director and deputy general manager since September 2021. While the successor has undergone extensive training, the impact of management succession initiated during performance growth slowdown remains to be observed.
Notably, Proya Cosmetics' senior management has experienced frequent changes since 2024. On one hand, veterans have departed. Besides Fang Yuyou's resignation, in May 2025, former deputy general manager, board secretary, and CFO Wang Li resigned. Wang Li was Proya Cosmetics' first CFO post-listing, witnessing the company's complete journey from 2 billion to 10 billion yuan revenue. In 2024, Wang Li received total pre-tax compensation of 2.933 million yuan from Proya Cosmetics.
Since 2020, Fang Yuyou has repeatedly reduced Proya Cosmetics holdings, with shareholding declining from 24.43% at listing to 15.3%. To date, Fang Yuyou has cumulatively reduced holdings by over 20 million shares, cashing out billions of yuan.
After Wang Li's resignation, she also sold her stocks. Since March 2025, she has reduced holdings of over 100,000 shares (0.0298% of total share capital) through centralized bidding, totaling approximately 10 million yuan. After reduction, she still holds 177,651 shares (0.0448% of total share capital).
Additionally, Chief Marketing Officer Ye Wei was confirmed to have left in January 2024, having led the "early C, late A" concept that drove significant Proya Cosmetics revenue growth; Chief Scientist Wei Xiaolan also departed in July that year, having led Proya Cosmetics' global R&D system construction.
On the other hand, Proya Cosmetics has intensified efforts to recruit new talent, including newly appointed Chief R&D Innovation Officer Sun Peiwen, Chief Digital Officer Hu Ningbo, and Chief Scientist Huang Hu. Newly introduced senior management all have international work backgrounds, such as Huang Hu who previously served as Chief Scientist at Procter & Gamble's global R&D headquarters.
In September 2025, Proya Cosmetics welcomed new CMO Guo Xiao. With over 10 years of consumer sector experience, Guo Xiao previously served as market head at AFU Essential Oils and CMO at POP MART and Beneunder.
Besides frequent management changes, Proya Cosmetics faces market criticism for "emphasizing marketing over R&D." At the Beauty Industry Annual Conference in early 2024, Fang Yuyou delivered a speech titled "How Proya Cosmetics Breaks Through: Two Capability System Switches." He candidly admitted, "Proya Cosmetics indeed originated from channels, previously emerging from marketing. We haven't yet become the ideal technology-oriented enterprise we envision, but we're working hard toward that goal."
Channel expertise and marketing constitute Proya Cosmetics' DNA and key growth drivers. Reflected in financial data, sales expenses have consistently been Proya Cosmetics' largest expense item. From 2022-2024, Proya Cosmetics' sales expenses were 2.786 billion yuan (43.63% of revenue), 3.972 billion yuan (44.61% of revenue), and 5.161 billion yuan (47.88% of revenue) respectively, totaling 11.919 billion yuan. In the first half of 2025, sales expenses further climbed to 2.659 billion yuan, with sales expense ratio rising to 49.59%.
Proya Cosmetics explains this as increased image promotion and advertising expenses. In the first half of 2025, image promotion and advertising expenses soared to 44.05% of revenue.
Behind this data lies Proya Cosmetics' long-standing celebrity endorsement strategy. From Sun Li to Fan Chengcheng, Zhang Ruonan, then to Liu Yifei, Yi Yang Qianxi, Song Jia and other top-tier celebrities, Proya Cosmetics boasts a luxurious endorsement lineup.
Meanwhile, product quality and service complaints frequently appear across various platforms.
However, in contrast, Proya Cosmetics' R&D intensity has long remained below 2%. From 2022-2024 and first half of 2025, Proya Cosmetics' R&D expenses were 128 million yuan, 174 million yuan, 210 million yuan and 95 million yuan respectively, accounting for no more than 2% of total revenue.
In stark contrast, many beauty industry companies have increased R&D investment in recent years: In 2024, Huaxi Biological R&D investment reached 466 million yuan, accounting for 8.7% of revenue; Botanee Bio-Technology R&D investment reached 337 million yuan, accounting for 5.87% of revenue; Shanghai Chicmax R&D expenses were 180 million yuan, accounting for 2.65% of revenue.
In international markets, beauty giants like Estée Lauder and L'Oréal invest even more intensively in R&D. Fang Yuyou mentioned in his speech: "L'Oréal invests equivalent to over 8 billion yuan annually in long-term R&D, with over 4,000 people globally doing R&D, two-thirds in technical research and one-third in formulations, plus extensive collaboration with international institutions. These massive investments and collaborations support L'Oréal's multi-brand development."
Currently, L'Oréal stands as a 1.7 trillion yuan market cap industry leader, firmly holding the global beauty industry's top position. The combined market capitalization of all Chinese beauty and personal care listed companies totals only approximately 360 billion yuan.
While domestic beauty brands have shown strong momentum in recent years, the path to prominence remains long, particularly requiring continued efforts in R&D and product capabilities. Currently, Proya Cosmetics is actively planning Hong Kong listing to accelerate internationalization strategy and overseas business development, enhance overseas financing capabilities, and improve comprehensive competitiveness.
Proya Cosmetics' 2024 annual report disclosed Hong Kong and overseas revenue of 140 million yuan, up 69.12% year-over-year. While growth is rapid, the base remains small, accounting for only 1% of its 10 billion yuan revenue.
After listing on A-shares in 2017, Proya Cosmetics has crossed the 10 billion yuan revenue threshold. Now, with second-generation succession beginning and new management taking office, can the company planning Hong Kong listing overcome new growth challenges? In time, can domestic beauty brands produce trillion-yuan market cap beauty giants?
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