Analysis of the Mao Geping Family's HK$1.41 Billion Share Disposal Event and Strategic Analysis of High-end Cosmetics Enterprises

Based on the latest collected data and materials, I have prepared this in-depth analysis report on the Mao Geping family’s share disposal event and the development strategy of the high-end cosmetics industry.

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On the evening of January 6, 2026, Mao Geping Cosmetics Co., Ltd. (01318.HK) released a major share disposal announcement. The company’s controlling shareholders and executive directors Mao Geping, Wang Liqun (Mao Geping’s spouse), Mao Niping (Mao Geping’s elder sister), Mao Huiping (Mao Geping’s elder sister), Wang Lihua (Wang Liqun’s younger brother), and Song Hongquan, six family members and core executives, plan to dispose of no more than 17.2 million H shares of the company through block trading within the next 6 months based on their own financial needs, accounting for 3.51% of the company’s total issued shares. Calculated at the closing price of HK$82 per share on the day the announcement was released, the total amount of cash the above-mentioned shareholders plan to realize is as high as

[1][2][3].

It is worth noting that the announcement clearly discloses that the proceeds from the share disposal include but are not limited to

[1][2]. At the same time, the company emphasized that the implementation of this share disposal plan will not lead to a change in the company’s control rights, nor will it have a significant impact on the company’s governance structure and sustainable operations. The market reacted relatively rationally to this share disposal: on January 7, Mao Geping’s stock price rose instead of falling, with an intraday maximum increase of over 8%, closing at HK$87.95, a 7.26% increase from the previous trading day, and the market value reached HK$43.11 billion[1][2].

In fact, this is not the first time the Mao Geping family has obtained a large amount of funds from the company. Before the listing, in 2024, the company carried out two large-scale dividends: a dividend of RMB 500 million in February and another RMB 500 million in April, totaling RMB 1 billion in dividends. Based on the fact that founder Mao Geping and his family members held nearly 90% of the shares at that time, this means that

[1]. Combined with this HK$1.41 billion share disposal, the Mao Geping family has accumulated more than HK$2.4 billion in funds from the capital market since the company’s establishment.

Mao Geping successfully listed on the Hong Kong Stock Exchange on December 10, 2024, becoming the ‘first domestic cosmetics stock on the Hong Kong Stock Exchange’[1][2]. Since its listing, the company has been favored by capital, and its stock price has been rising all the way. Its market value doubled within three months of listing; in June 2025, Mao Geping’s stock price once surged to a high of HK$130 per share, with a total market value exceeding HK$60 billion, and it was once hailed as the ‘Moutai of Cosmetics’[1]. However, the stock price has since retreated. As of the release of this share disposal announcement, the company’s market value has fallen by about 30% from its peak, but it still maintains a relatively high level.

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From the perspective of financial data, Mao Geping has maintained strong growth momentum in recent years. The 2025 interim report shows that from January to June 2025, the company achieved

, a year-on-year increase of 31.28%; net profit was , a year-on-year increase of 36.11%[1][2]. Among them, color cosmetics, as Mao Geping’s core business, achieved revenue of RMB 1.422 billion, a year-on-year increase of 31.06%, accounting for 55% of total revenue[2].

From the perspective of channel distribution, in the first half of 2025, Mao Geping’s online channel revenue was RMB 1.297 billion, a year-on-year increase of 39.01%, accounting for 51.4% of total revenue; offline channel revenue was RMB 1.224 billion, a year-on-year increase of 26.58%, accounting for 48.6% of total revenue[1]. The company has achieved balanced development of online and offline channels, which is highly consistent with the omni-channel strategy it has always adhered to.

From historical data, Mao Geping’s revenue and net profit have shown rapid growth. In 2024, the company achieved operating revenue of RMB 3.885 billion, a year-on-year increase of 34.61%; net profit was RMB 881 million, a year-on-year increase of 32.8%[2]. From 2021 to 2023, the company’s revenue was RMB 1.577 billion, RMB 1.829 billion, and RMB 2.886 billion respectively, with a compound annual growth rate of 35.3%; net profit was RMB 331 million, RMB 352 million, and RMB 663 million respectively, with a compound annual growth rate of 41.6%[3].

However, it is worth noting that the company’s performance growth rate has slowed down compared to its peak period. From January to June 2024, the company’s total revenue increased by 41% year-on-year to RMB 1.972 billion, and net profit increased by 41% from RMB 349 million in the same period of 2023 to RMB 493 million[1]. The revenue growth rate and net profit growth rate in the first half of 2025 were 31.28% and 36.11% respectively, which have declined compared to the previous period[1][2].

Mao Geping’s gross margin has long maintained a high level of

, reaching 83.4%, 83.8%, 84.8%, 84.4%, and 84.2% from 2021 to 2024 and in the first half of 2025 respectively[2]. This gross margin level is leading in the cosmetics industry, even exceeding that of some international brands, reflecting the company’s strong premium capability and brand strength.

From an industry comparison, the average cost rate of leading domestic cosmetics companies is about 21.7%, while Mao Geping’s cost rate is 15.6%, which is at a low level[4]. On the one hand, this shows that the company has strong cost control capabilities; on the other hand, it also reflects the characteristics of the color cosmetics category—the proportion of active ingredients is relatively low, so it can support a relatively high gross profit margin.

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Insufficient R&D investment has always been the core issue that Mao Geping has been questioned by the market. According to data disclosed in the prospectus and financial reports, the company’s R&D investment shows the following trends[1][4]:

Year	R&D Cost (10,000 RMB)	R&D Expense Ratio (%)
2021	1,370.3	0.87
2022	1,454.8	0.80
2023	2,397.5	0.83
2024	3,231.1	0.83
H1 2025	1,525.7	0.58

Data shows that from 2021 to 2024, Mao Geping’s R&D expense ratio was all below 1%, and it even dropped to 0.58% in the first half of 2025[1]. This figure is significantly lower than the

of listed companies in the same industry[1]. Compared with the average R&D expense ratio of color cosmetics category (1%-3%), Mao Geping’s R&D investment is also at a low level[4].

In sharp contrast to the insufficient R&D investment, Mao Geping has spared no effort in marketing investment. In the first half of 2025, the company’s sales and distribution expenses increased by 24.8% year-on-year to

, accounting for as high as of revenue[3]. Among them, marketing and promotion expenses exceeded , accounting for about of revenue[3].

This means that for every 100 yuan of revenue Mao Geping achieves, it needs to invest about 45 yuan in sales and distribution, while the R&D investment is only 0.58 yuan.

, which is particularly eye-catching in the high-end cosmetics industry.

In addition, sales staff expenses in sales increased from RMB 280 million as of June 30, 2024 to RMB 357 million as of June 30, 2025[3]. This is closely related to the company’s continuous expansion of offline counter networks and large-scale employment of professional beauty consultants. As of the end of June 2025, Mao Geping has laid out 405 self-operated counters and 32 dealer counters in 120 cities across the country, with more than 3,100 professional beauty consultants[2].

The above chart clearly shows the huge imbalance between Mao Geping’s R&D investment and marketing expenses:

• Top left: Although the absolute amount of R&D investment is increasing year by year, the base is extremely low
• Top right: The R&D expense ratio has remained below 1%, far lower than the industry average
• Bottom left: In the expense structure of the first half of 2025, sales expenses account for as high as 45.2%
• Bottom right: Sales expenses (RMB 1.169 billion) are nearly 78 times the R&D expenses (RMB 15 million)

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Comparing Mao Geping with other domestic cosmetics companies can more clearly show its shortcomings in R&D investment[4]:

Company	R&D Expense Ratio	R&D Staff Ratio
C-beauty Co., Ltd. (Kans)	~2.7%	~10%
Proya	~8% (R&D staff)	8%
Bloomage Biotech	Relatively high	Relatively high
Botanee	Relatively high	Relatively high
Mao Geping	0.58%-0.87%	Not disclosed

The R&D staff investment ratio of leading domestic brands has entered the international echelon. Bloomage Biotech, Botanee, and Giant Biogene have significantly higher R&D staff ratios than other companies because a considerable part of their pipeline R&D and clinical trials are included. Excluding these three medical aesthetics companies, among domestic brands, C-beauty Co., Ltd. and Proya have the highest R&D staff ratios, reaching about 10% and 8% respectively, which are comparable to international brands such as Estée Lauder and L’Oréal[4].

Compared with international cosmetics giants, the gap in Mao Geping’s R&D investment is even more obvious. International giants such as L’Oréal, Estée Lauder, and Shiseido have maintained relatively high R&D investment for a long time[4]:

• L’Oréal
  : As the world’s largest cosmetics group, L’Oréal has maintained a relatively high level of R&D investment for years. Its R&D expense ratio is about 3%-4%, far higher than that of Mao Geping.
• Estée Lauder
  : The R&D expense ratio is also maintained at more than 3%, forming an obvious gap with domestic brands.
• Shiseido
  : Through the “2025-2026 Action Plan”, it has achieved cost reduction and structural reform, while maintaining continuous investment in R&D.

International brands not only far exceed Mao Geping in R&D expense ratio, but more importantly, have established deep technical barriers in

and other core fields. For example, L’Oréal has a huge R&D team and a global R&D network, and is in a leading position in the world in fields such as skin science and functional ingredients.

According to industry research, the R&D expense ratio of the cosmetics and skincare industry shows obvious track stratification characteristics[4]:

• Skincare category
  : R&D expense ratio ranges from 1.5%-5%
• Color cosmetics category
  : R&D expense ratio ranges from 1%-3%
• Medical aesthetics track
  : R&D expense ratio ranges from 2%-5%

As a color cosmetics company, Mao Geping’s R&D expense ratio of about 0.8% is lower than the average level of 1%-3% for the color cosmetics category, and it is in the downstream of the industry[4]. Industry analysts believe that Mao Geping’s low R&D expense ratio stems from its main focus on R&D at the application level such as makeup effect adaptation, while its investment in underlying technological innovation is limited.

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The Mao Geping family’s share disposal event reflects the common strategic dilemma faced by domestic cosmetics enterprises:

From the shareholders’ perspective, as the company’s founder and controlling shareholder, the Mao Geping family’s realization of certain gains through share disposal after the company’s listing is essentially a normal commercial behavior of venture capital exit and wealth realization. From the perspective of company law, as long as it does not affect the company’s control rights and does not violate relevant regulations, shareholders’ share disposal is their legitimate right. However, frequent large-scale dividends and executive share disposal may arouse market concerns about whether the company pays too much attention to short-term returns and ignores long-term development.

From the perspective of the company’s long-term development, R&D investment is the foundation for building product strength and brand moats. The core value of high-end cosmetics brands lies in product effects and user experience, which need to be supported by continuous technological innovation and quality improvement. Insufficient R&D investment may lead to the following risks:

1. Product homogenization
   : Lack of core technical barriers, easy to fall into price wars
2. Hindered high-end brand development
   : Consumers’ expectations for high-end brands include technological innovation and efficacy verification
3. Decline in long-term competitiveness
   : Under the squeeze of international brands, market share may be eroded

Mao Geping’s “light R&D, heavy marketing” model has indeed brought considerable performance growth in the short term, but it has also laid hidden dangers for long-term development. The drawbacks of this model are not unique to Mao Geping in the domestic cosmetics industry.

Taking Proya as an example, although its revenue exceeded RMB 10 billion in 2024, becoming the leading domestic cosmetics brand, high marketing investment is eroding profits[5]. The 2025 third-quarter financial report shows that Proya’s sales expenses in the first three quarters have reached as high as RMB 3.525 billion, accounting for 49.66% of operating revenue, a year-on-year increase of 9.08%, which is much higher than the 1.89% revenue growth[5]. At the same time, Proya only invested RMB 95 million in R&D in the first half of the year, which is only 3.6% of the sales expenses[5].

This “heavy marketing, light R&D” strategy has trapped brands in a traffic-dependent dilemma. When consumers’ skincare awareness continues to upgrade and they begin to actively analyze ingredient principles and verify efficacy data, the model of marketing first and product lagging will be difficult to sustain[5].

For domestic cosmetics brands aiming at the high-end market, balancing shareholder returns and R&D investment needs to start from the following aspects:

The R&D expense ratio of the color cosmetics category should reach at least the industry average of 1.5%-2%. This means that if Mao Geping wants to reach the industry average level, it needs to increase its R&D expenses from the current about RMB 15 million per year to more than RMB 50 million.

The competition in high-end cosmetics is not only a competition of brands and marketing, but also a competition of technology and efficacy. Enterprises need to establish differentiated advantages in raw material innovation, formula technology, efficacy verification and other aspects.

While maintaining brand exposure, it is necessary to improve the precision and conversion rate of marketing, and avoid unlimitedly pushing up the marketing expense ratio. Through digital marketing, private domain operation and other methods, reduce customer acquisition costs and improve marketing ROI.

Through equity incentives and other methods, bind the interests of the core management with the company’s long-term development, and avoid the impact of short-term share disposal behavior on the company’s strategic implementation.

Currently, domestic cosmetics are collectively facing the challenge of transforming from traffic-driven to dual-driven by technology and brand[5][6]. In the early stage, domestic brands represented by Proya and Kans achieved explosive growth by virtue of new channel dividends, cost-effective positioning and resonance with domestic product sentiment. However, when traffic costs rose and consumers returned to rationality, their deep-seated capability shortcomings were exposed:

• Lack of real core technical barriers and continuous product innovation, falling into the involution of big brand alternatives and homogenization
• Insufficient brand building capabilities, failing to build deep brand culture and truly enter consumers’ hearts
• Long-term mismatch between price and value; besides cost-effective advantages, failing to establish mid-to-high-end consumer perception and ultimate experience that support premium pricing

Industry research believes that domestic brands need to build hard-core product strength and unique brand narratives, as well as systematic capabilities to achieve global supply chain, R&D and brand operations. Only in this way can they gain a firm foothold in the industry reshuffle and gradually become world-class cosmetics brands[5].

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Based on the above analysis, we can draw the following core conclusions:

1. The share disposal behavior itself conforms to commercial logic
   , but frequent large-scale dividends and executive share disposal may affect the market’s confidence in the company’s long-term development.
2. Severely insufficient R&D investment
   is Mao Geping’s most prominent shortcoming. The R&D expense ratio of 0.58%-0.87% is far lower than the industry average of 2%-3%, and the gap with the 3%-4% level of international brands is even larger.
3. Marketing expenses account for too high a proportion
   , with a sales expense ratio of 45.2% and a marketing and promotion expense ratio of about 20.9%, showing that the company relies excessively on a marketing-driven growth model.
4. Signs of slowdown in performance growth
   have emerged, falling from 41% in the first half of 2024 to 31.28% in the first half of 2025, and the high-growth model may face a ceiling.
5. The high-end transformation has a long way to go
   . As the “first domestic cosmetics stock on the Hong Kong Stock Exchange”, Mao Geping needs to increase investment in technological innovation to truly match its “high-end cosmetics” positioning.

For investors, the following risk points need to be paid attention to:

• Persistent low R&D investment may affect product competitiveness
• High marketing expenses may erode profit margins
• Family share disposal may arouse market concerns about corporate governance
• Slowdown in performance growth may affect valuation

At the same time, the company’s positive factors should also be seen:

• Gross margin remains at a high level
  , reflecting strong brand premium capability
• Balanced development of online and offline channels
  , with a complete omni-channel strategic layout
• Obvious offline experience advantages
  , with a professional beauty consultant team
• Stable industry status
  , still having first-mover advantages as a leading domestic high-end cosmetics brand

Looking forward to the future, the domestic cosmetics industry is in a critical transformation period. On the one hand, under the trend of consumption upgrading, the high-end cosmetics market still has broad space; on the other hand, international giants are accelerating their sinking, and emerging brands continue to emerge, making industry competition increasingly fierce.

Against this background, whether Mao Geping can shift from “marketing-driven” to “R&D-driven” and establish real technical barriers and product moats will determine whether it can gain a firm foothold in the high-end cosmetics market and achieve a leap from the “first domestic cosmetics stock on the Hong Kong Stock Exchange” to a “world-class cosmetics brand”.

Whether the title of “Moutai of Cosmetics” can last will ultimately depend on

[1].

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[1] China.com Finance - “Cashing out HK$1.4 Billion! Mao Geping Family Reduces Holdings in ‘Mao Geping’ for Investments and Personal Life Improvement” (https://finance.china.com/xiaofei/13004691/20260108/49145367.html)

[2] Securities Times Network