Analysis Report on Shareholding Reduction and Cash Out by Mao Geping's Family and R&D Investment

Based on the collected information, I will provide you with a systematic and comprehensive analysis.

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On the evening of January 6, 2026, Mao Geping Cosmetics Co., Ltd. (HK01318) issued an announcement stating that its controlling shareholders and executive directors Mao Geping, Wang Liqun (spouse), Mao Niping (elder sister), Mao Huiping (elder sister), Wang Lihua (brother-in-law), and Song Hongquan (Executive Director and President) plan to collectively reduce their holdings by no more than 17.2 million shares via block trading in the next 6 months due to their own financial needs, accounting for 3.51% of the company’s total issued share capital. Based on the closing price of HK$82 per share on the day the announcement was released, the planned cash-out amount is approximately HK$1.41 billion (equivalent to about RMB 1.3 billion). [1][2]

This shareholding reduction plan comes at a time when the company has just been listed for one year (the company was listed in Hong Kong on December 10, 2024). Notably, before its listing, the company distributed large dividends: it paid out RMB 500 million in February and April 2024 respectively, totaling RMB 1 billion. Based on the founding family’s nearly 90% shareholding at that time, the vast majority of the dividends went to the family. [3]

Looking at the stock price trend, after listing, Mao Geping’s stock price once surged to HK$130.6 per share, with a market value exceeding HK$60 billion, earning it the reputation of ‘Moutai of the Beauty Industry’; however, it has since entered a downward channel. As of the close on January 8, 2026, the stock price was HK$86.65 per share, having fallen by approximately 33% from its peak, with a market value evaporation of nearly HK$20 billion. [2]

According to public financial data, Mao Geping’s R&D investment level has long been at a low level in the industry:

Year	R&D Cost (RMB 10,000)	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 the R&D expense ratio in the first half of 2025 was only

, and it slightly decreased compared to RMB 15.267 million in the same period of 2024. This indicator has remained below 1% for many years, showing a significant gap compared to the . [3][4]

Company	R&D Expense Ratio (H1 2025)
Mao Geping	0.58%
Industry Average	2%-3%
International Beauty Groups	Typically 3%-5%

This gap is particularly prominent in the premium beauty sector. The core of the premium positioning narrative lies in product strength and technological innovation, and R&D investment is a key element supporting product differentiation.

1. Strong Brand Premium Capability
   : Mao Geping maintains a high gross profit margin of over 80%, significantly higher than most domestic beauty companies, indicating that the brand has a certain premium capability in the minds of consumers. [2]

2. Value of Founder’s IP
   : Mao Geping’s personal IP is highly integrated with the brand. As an iconic figure in the makeup industry with over 30 years of experience, the founder brings unique professional endorsement and traffic support to the brand. [1]

3. Sustained Performance Growth
   : In the first half of 2025, it achieved operating revenue of RMB 2.588 billion, a year-on-year increase of 31.3%; net profit reached RMB 670 million, a year-on-year increase of 36.1%. [3]

4. Well-Developed Channel Layout
   : As of the end of June 2025, it has 405 self-operated counters and 32 dealer counters in 120 cities across the country, with over 3,100 professional beauty consultants; the revenue from online channels has reached 51.4% of total revenue. [1]

1. R&D Shortcomings Restrict Long-Term Competitiveness
   : A research report from Aijian Securities points out that compared with international beauty groups with decades of brand history and complete R&D and channel systems, domestic beauty brands are still in the catching-up stage in terms of technological accumulation and consumer mindshare. ‘High quality cannot support high pricing’ has become the core bottleneck for domestic brands to break into the premium market. [2]

2. Signal of Slowing Growth
   : In the first half of 2025, revenue increased by 31.3% year-on-year, but there has been a noticeable slowdown compared to the growth rate of over 40% in the same period of 2024. [2][3]

3. Risk of Reliance on the Founder
   : The company clearly states that Mao Geping has a significant impact on the company’s operations. If Mao Geping reduces or transfers his shares or ceases to participate in the company’s operation and management in the future, it may have an adverse impact on the company’s business development. [2]

4. Market Signal of Family Shareholding Reduction
   : Against the backdrop of the company having just been listed for one year and the stock price having fallen sharply from its peak, the large-scale collective shareholding reduction by the family may send a signal of caution to the market regarding the company’s long-term development prospects.

Mao Geping’s current R&D investment level (0.59%) is

.

The core competitiveness of premium beauty products is built on product strength, which requires continuous R&D investment and technological accumulation to enhance. Although Mao Geping has achieved rapid growth and a high gross profit margin relying on the founder’s professional IP, brand operation capabilities, and channel advantages, its “light R&D” model exposes it to challenges in long-term competition with international beauty groups and domestic competitors.

The company has realized this issue and stated that it is building a R&D center in Hangzhou, which is expected to be completed and put into operation by the end of 2026; it also plans to establish a headquarters R&D base and an overseas R&D center. [2] However, building R&D capabilities takes time. Whether it can effectively increase the proportion of R&D investment and form technological barriers in the future will be the key to the success of its premiumization strategy.

Although the family’s shareholding reduction and cash-out behavior itself is not illegal, against the backdrop of slowing performance growth and low R&D investment, the large-scale reduction may reflect the founding family’s phased judgment on the company’s valuation. Investors need to pay attention to the actual progress of subsequent R&D investment and whether the company can break away from excessive reliance on the founder’s personal IP.

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[1] Sina Finance - “Mao Geping’s Family to Cash Out Over RMB 1.3 Billion for ‘Improving Lives’!” (https://finance.sina.com.cn/jjxw/2026-01-08/doc-inhfreqp1172310.shtml)

[2] National Business Daily - “Mao Geping Discloses Shareholding Reduction Plan One Year After Listing; Mao Geping’s Family Plans to Cash Out Approximately HK$1.41 Billion” (https://www.nbd.com.cn/articles/2026-01-08/4212801.html)

[3] Lanjing News - “Cashing Out HK$1.41 Billion! Mao Geping’s Family Reduces Holdings in Mao Geping for Investment and Personal Life Improvement” (https://www.lanjinger.com/d/1767788180199206366)

[4] The Paper - “Cashing Out HK$1.41 Billion, Mao Geping’s Family Reduces Holdings in Mao Geping for Investment” (https://m.thepaper.cn/newsDetail_forward_32338366)