Can The "Online Version" Of Watsons Beauty Makeup Two Degrees IPO Get Rid Of "Ali Dependence"?

On Thursday, the eighteenth Commission of the securities and Futures Commission of the SFC will convene the eighty-fifth working conference in 2020 to examine the first application of Shanghai beauty makeup cosmetics Limited by Share Ltd (hereinafter referred to as "beauty beauty makeup").

The Shanghai based company, founded in 2010, is the leading cosmetics network retailer in China. It is mainly commissioned by the brand side to open and operate the official flagship store online to achieve online product sales.

The latest prospectus shows that as of the end of June 2019, beauty beauty makeup and Maybelline, Shi Hua Ke, Laneige, Avene, snowflake show, suitable herbs, snow essence, and more than 60 brands reached cooperation, can be described as the international and domestic front-line brand "near the body".

However, the beauty of Li makeup's IPO road is a bit bumpy.

As early as four years ago, in March 2016, Li Li completed the shareholding system transformation. In August of the same year, the prospectus was disclosed on the official website of the securities and Futures Commission, which opened the prelude to sprint A shares. It was also in that year that the beauty of Li Li made a hit for the first patch advertisement of Papi sauce with 22 million yuan high profile.

However, in January 26, 2018, the first application of beauty beauty makeup was unmercilessly denied. At that time, the issuance examination committee focused on the "Alibaba dependence" of beauty beauty makeup. "Beauty beauty makeup business performance is a major dependence on Tmall / Taobao platform, business stability and future business growth space" and other issues. In addition, "beauty beauty makeup report period, the amount of rebate of the brand side is larger, and the rebate policy implemented by the brand side has an important impact on the operating performance of the issuer".

By May 2019, beauty decided to fight A shares again, and the guidance broker was changed from CITIC Securities to GF Securities. The first round would be no more than 40 million 100 thousand shares, raising 586 million yuan. Can the second IPO be successful?

Hidden worries behind brilliant achievements

Deep plough cosmetics network retail service for more than ten years, beauty beauty makeup performance eye-catching.

From 2016 to 2019 1-6, the sales revenue of beauty cosmetics reached 2 billion 16 million yuan, 3 billion 420 million yuan, 3 billion 615 million yuan and 1 billion 657 million yuan respectively, with net profit of 80 million 705 thousand yuan, 225 million 676 thousand and 200 yuan, 251 million 688 thousand and 800 yuan and 149 million 629 thousand and 200 yuan respectively, of which the average compound growth rate reached 2016-2018 in 2016-2018 years.

From the specific business point of view, the beauty of Li makeup mainly includes two major businesses: retail business and brand marketing. The retail business is the core of its business. In the first half of 2016 -2019, its electricity retail business accounted for 94.86%, 92.21%, 92.55% and 94.5% of its revenue respectively.

Prospectus disclosure, in 2016 -2019 1-6 months, beauty beauty makeup retail business, the top ten brands involved 13 brands.

However, with the rapid expansion of the number of cooperative brands, the brand of the earlier cooperation with the beauty dressing has also changed.

As L'OREAL group adopted its own online retail operation team to take charge of its online operation, the Paris L'OREAL and Lancome of the top ten brands of beauty cosmetics were terminated in May 2018 and August after the expiration of the contract.

Besides, In 2018, after the expiration of the contract between beauty makeup and NIVEA, the two sides terminated their cooperation on Tmall platform. Although the beauty of Li Li said that NIVEA and NIVEA had reached a new cooperation in offering more "NIVEA" flagship stores, however, in the first half of 2019, when the revenue of Tmall platform business accounted for 99.95% of its total revenue, beauty beauty would inevitably accept the influence of the change of the cooperation platform.

Coincidentally, in August 2019, the way of cooperation between beauty makeup and Maybelline brand also changed: the Maybelline official brand flagship store was changed by the authorized beauty beauty makeup to sell Maybelline products through the beauty flagship store.

In addition, prospectus shows that in 2016 -2019 1-6 months, respectively, 3, 4, 5 and 6 brands, to terminate cooperation with beauty makeup.

In this regard, a cosmetics industry to the twenty-first Century economic analysis reporter pointed out that "beauty beauty makeup is the biggest competitiveness of its brand resources and mature operation, the disadvantage is that it is mainly Tmall platform, big dependence on Ali, and many brands are agents, there is no greater control."

Ali dependence

On the road to IPO, beauty beauty makeup and "Ali" "deep binding" become the focus of attention.

At the previous IPO, the issuance examination committee focused on the question of whether "beauty beauty makeup is a major dependence on Tmall / Taobao platform".

In fact, on the one hand, from the perspective of ownership structure, Huang Tao, the founder of beauty makeup, owns 37.22% of the company's largest shareholder directly, holding 0.13% shares indirectly through Shanghai Liren and holding 37.35% shares altogether, while the second largest shareholder is Ali Ali's network, holding 19.55%.

Specifically, in July 2012, Ali's Venture Capital Limited invested in 45 million yuan for the first time, and invested 560 yuan in the limited amount of newly registered capital. The capital increase was limited to fourth times. In 2015, Ali made the transfer of its limited 20% stake to Ali network. In the same year, Ali network participated in the fifth increase in the limited amount of beauty, invested 115 million yuan, subscribed 2 million 100 thousand and 900 yuan for new registered capital.

In order to carry out overseas financing and plan for overseas listing, beauty beauty makeup built an overseas framework in 2014. However, taking into account the company's actual business activities and the main customers are in the territory, the beauty of Li makeup again at the end of 2015 lifted the VIE offshore architecture, and equity translation. Ali invested 115 million yuan in the Internet and got 5.3% of the company's capital after increasing capital.

On the other hand, the beauty of beauty makeup and Tmall platform in depth cooperation, its operation "suitable herbal materia flagship store" is the first Tmall platform authorized beauty makeup brand official flagship store.

From January 2019 to June, the retail sales of the beauty business on the Tmall platform amounted to 1 billion 565 million yuan, accounting for 99.95% of the total business volume of the first half of the year, while others such as Amazon, mogujie.com, spelt, little red book, and the company's own APP only got 0.05%.

Extending the scope to the first half of 2016 to 2019, the sales volume of the retail business of the beauty make-up on Tmall platform accounted for more than 99% of the total amount of the year.

So, is the price fair between beauty and Ali?

The prospectus reveals that the platform operation fee paid by beauty beauty includes platform commissions, integral deduction fees, Juhuasuan Commission and so on. The beauty beauty makeup platform pays the platform operation cost on the Tmall platform, according to the Tmall service agreement and other related agreements, according to the sales amount, the service fee ratio, the bottom line turnover, whether to adopt the ladder rate and other provisions to determine.

From 2016 to 2019 1-6, the platform operation expenses paid by the beauty makeup to Alibaba group were 87 million 980 thousand yuan, 143 million 52 thousand and 500 yuan, 196 million 765 thousand and 100 yuan and 102 million 177 thousand and 900 yuan respectively.

In the prospectus, beauty pointed out that the operating expenses of the company's regular transactions with Alibaba group are indeed the needs of business operation. The Alibaba group receives the platform operation cost from the company according to the unified pricing mechanism of the industry. The mode of cooperation has not changed before and after the Alibaba's share subscription, and there is no case of damage to the interests of the company and shareholders through the transmission of interests.

In addition, it is worth noting that in 2016, when the IPO was first, the beauty of Li Li was going to use 180 million yuan IPO to raise funds to acquire the remaining 51% stake of Shanghai Equity Trading Development Co., Ltd.

Shanghai Lian en is a beauty company in the same industry. Its business is highly similar. Prior to the declaration of IPO, in November 2015, the Shanghai polar beam asset management partnership (limited partnership), with its 49% stake in Shanghai United (valued at about 180 million yuan), was deducted from the 60 million yuan equity payment paid in cash, and the newly registered capital of Li Li makeup was subscribed for 2 million 131 thousand and 600 yuan.

However, according to the latest prospectus, by August 2018, the beauty of Li makeup was sold to Shanghai polar beam with a 49% stake in Shanghai united in 288 million yuan. After the equity transfer, beauty beauty makeup no longer holds equity in Shanghai.

In response to the change in the way of dealing with Shanghai en en, in June 1st, the economic report reporters sent an interview outline to the beauty makeup in twenty-first Century, but as of press release, no reply was received.

?