In-depth Investment Research on Forest Cabin's Business Model: A Long-Term Value Review of the High-Marketing, Low-R&D Model

In-depth Investment Research on Forest Cabin’s Business Model: A Long-Term Value Review of the High-Marketing, Low-R&D Model

1. Core Problem Definition

Forest Cabin (02657.HK), as “the first domestic high-end skincare stock”, has core business model features summarized as:

High gross margin (82.4%) + high sales expense ratio (55.2%) + low R&D investment ratio (1.71%) + founder IP-driven

. Whether this model can support long-term value creation requires systematic review from three dimensions: industry rules, business logic, and valuation system.

2. Business Model Dissection: Structural Characteristics of High-Marketing, Low-R&D

2.1 Imbalanced Investment Structure Analysis

From financial data, Forest Cabin shows typical characteristics of “heavy marketing, light R&D”:

Indicator	Forest Cabin	Industry Average	International Brands	Gap Multiple
Sales Expense Ratio	55.2%	40-45%	30-40%	1.3-1.8x
R&D Expense Ratio	1.71%	3-5%	5-10%	0.3-0.5x
Marketing/R&D Ratio	32x	8-15x	3-8x	2-10x

According to prospectus data, from 2022 to H1 2025, Forest Cabin’s

cumulative marketing expenses reached RMB 1.121 billion, which is 12.55 times its R&D investment of RMB 89.3 million over the same period

[1][2]. This investment structure is at an extreme level in the domestic beauty industry—even Proya, known for its marketing-driven model, recorded cumulative marketing expenses of RMB 11.9 billion over three years with R&D investment of RMB 712 million, a ratio of approximately 17x[3].

2.2 Short-Term Effectiveness of High-Marketing Model

Forest Cabin’s marketing investment has indeed produced significant results:

H1 2025 revenue reached RMB 1.052 billion,
a 98% year-on-year surge
[4]
Online revenue share increased from 45.2% in 2022 to 65.4%
Camellia Essence Oil has ranked first in category sales for 11 consecutive years
Member scale reaches millions, with a maintained high repurchase rate

During the pandemic, Forest Cabin achieved a performance turnaround through the “full staff IP” strategy, where founder Sun Laichun personally conducted live stream sales and 2000 employees transitioned to online sales—its performance recovered to 145% of the same period in 2019 within 15 days[5]. This “founder IP + family traffic” model (Sun Laichun, Sun Fuchun and their family members operate an account matrix on platforms like Douyin) has shown strong traffic acquisition capability in the short term.

2.3 Long-Term Risks of Low-R&D Model

However, low R&D investment has laid multiple hidden dangers for the brand’s long-term development:

1. Weak Technical Barriers

International beauty giants generally maintain an R&D expense ratio of 3-10%; L’Oréal’s 2024 R&D investment reached as high as €1.14 billion[6]
Among Forest Cabin’s more than 600 patents, only 46 are invention patents, and the core technology “Qingxuancui” camellia ingredient extraction technology is difficult to form a moat
There is a huge gap compared with Bloomage Biotechnology (8.7% R&D expense ratio, 867 R&D personnel) and Botanee (5.87% R&D expense ratio, 435 R&D personnel)[7]

2. Limited Product Iteration Capability

The core product Camellia Essence Oil accounts for as high as 45.5% of revenue, with concentrated single-product risk[8]
Category expansion progresses slowly, with other product lines (cream 14.6%, lotion 9.3%, sunscreen 4%) contributing little
New brand incubation (Xiaoxinxuan, Huarongzhuang) has not yet formed a second growth curve

3. High-End Position Lacks Technical Endorsement

The premium of high-end skincare products relies on profound scientific research barriers for a long time, while Forest Cabin’s technical narrative is relatively weak
It has been fined multiple times for false advertising: a RMB 50,000 fine by the Shanghai Pudong Market Supervision Bureau in 2021, and a RMB 21,200 fine by the Beijing Chaoyang Market Supervision Bureau in 2025[9]
There are 176 complaints about Forest Cabin on the Black Cat Complaint Platform, mainly focusing on allergic reactions, false advertising, and goods not matching descriptions

3. Hong Kong Stock Market Valuation Logic: Sustainability Review of Founder IP Model

3.1 Valuation System Comparison of Hong Kong Stock “Domestic Four”

As members of the Hong Kong stock “Domestic Four”, there are essential differences in valuation logic between Forest Cabin and the other three:

Company	Market Cap (HKD 100 million)	Trailing PE	Core Barriers	Valuation Support
Pop Mart	~4200	~25x	IP design capability + globalization narrative	Emotional consumption + high growth + overseas expansion
Laopu Gold	~300	~35x	Ancient craft + brand scarcity	High gross margin + consumption upgrade + emotional value
Mao Geping	~1200	~36x	Makeup technology + aesthetic pricing power	Founder IP + professional endorsement + service premium
Forest Cabin	~119	42.4x	Category positioning + marketing capability	High growth + high-end domestic skincare narrative

Forest Cabin’s

42x trailing PE is significantly higher than the peer average of 20-30x

[10]. This valuation premium is based on the scarcity narrative of “the first domestic high-end skincare stock”, but its valuation support is obviously weak compared with the other three:

Pop Mart
: Global expansion + IP matrix operation, with clear growth logic
Laopu Gold
: Ancient gold jewelry craft + differentiated competition, with barriers on both supply and demand sides
Mao Geping
: Founder Mao Geping has the scarce IP endorsement of a national-level makeup artist, with 40 years of professional accumulation, R&D investment of about 3%, and 20 years of in-depth department store channel cultivation[11]

In contrast, Forest Cabin’s founder IP barrier is relatively low—although Sun Laichun is the founder, his personal professional influence is far less than Mao Geping’s authoritative status in the makeup field.

3.2 Systemic Risks of Founder IP Model

The “founder IP + family traffic” model is facing systemic testing in the global beauty industry:

1. Overseas Case Warnings

Anastasia Beverly Hills (ABH): After being acquired by private equity firm TPG with high leverage, growth slowdown led to surging debt pressure, and eventually exited at a substantial discount[12]
Morphe: After its deep cooperation with top KOL Jeffree Star was interrupted, parent company Forma Brands filed for bankruptcy in 2023
Pat McGrath Labs: Even with a top makeup artist IP, its early investors quietly sold their shares in 2021

2. Dilution of Traffic Dividends

Social platforms have shifted from incremental markets to highly competitive stock markets[13]
Even if a single brand has tens of millions of fans, it is difficult to replicate the exponential growth path of 2015-2018
The traffic ceiling of Forest Cabin’s founder and family IP is emerging

3. Shift in Investment Logic

In a low-interest rate environment, private equity is willing to pay a premium for “high growth expectations”; in a rate-hiking period, investors begin to pay more attention to cash flow, debt structure and anti-cycle capabilities[14]
The Hong Kong stock market is shifting from “story-telling” to “performance-focused”, with greater emphasis on profit quality and core competitiveness[15]

3.3 Signal Significance of Founder’s Share Sale

It is worth noting that just one year after Mao Geping’s IPO, its founding family planned to reduce holdings and cash out HK$1.4 billion[16]. This sounds an alarm for Forest Cabin, which also adopts the “founder IP model”:

When the founder starts to reduce holdings, the market needs to consider: how can the brand transition from “personal halo-driven” to “systematic brand strength-driven”?
Forest Cabin’s founder Sun Laichun cashed out over RMB 77 million before IPO through dividends of RMB 55.7 million and equity transfer of RMB 22 million[17]

4. Long-Term Value Judgment: Sustainability of High-Marketing, Low-R&D Model

4.1 Short-Term Growth vs Long-Term Value

Dimension	Short-Term (1-2 Years)	Mid-Term (3-5 Years)	Long-Term (5+ Years)
Growth Driver	Marketing-driven + channel expansion	Facing bottlenecks	Doubtful
Competitive Barrier	Category positioning advantage	Gradually weakened	Risk exposed
Valuation Support	High growth narrative	Needs validation	Needs reconstruction
Risk Factor	Compliance issues	Growth slowdown	Model failure

4.2 Core Conclusions

The business model of high marketing investment and low R&D ratio cannot support the long-term value of a domestic high-end skincare brand, for the following reasons:

High-End Position Lacks Technical Moat
- The premium of high-end skincare products is based on scientific research barriers, and Forest Cabin’s 1.71% R&D investment is far below the industry benchmark
- There is a huge gap in technical accumulation compared with international giants (L’Oréal, Estée Lauder) and domestic leaders (Bloomage Biotechnology, Botanee)
Over-Reliance on Founder IP
- The “founder IP + family traffic” model faces growth bottlenecks as traffic dividends fade
- The family-based traffic strategy is difficult to replicate and cannot form sustained growth momentum
Concentration of Single Product Risk
- Camellia Essence Oil accounts for 45.5% of revenue; once the product fluctuates, operations will face severe challenges
- New brand/category expansion has not yet formed an effective second growth curve
Compliance Issues Continuously Erode Brand Reputation
- Multiple fines for false advertising expose systemic compliance loopholes
- A sharp contradiction exists between the high-end brand positioning and compliance issues

The “founder IP + family traffic” model cannot gain sustained valuation recognition in the Hong Kong stock market:

Valuation Premium Lacks Support
- The 42x PE is significantly higher than the industry average, and relying purely on the “high-end domestic” narrative is unsustainable
- It is necessary to prove the improvement of R&D capabilities and the strengthening of brand barriers
Shift in Hong Kong Stock Market Valuation Logic
- From “story-telling” to “performance-focused”, with greater emphasis on profit quality and core competitiveness
- Enterprises without technical barriers have limited valuation space
Essential Gap Compared with Mao Geping
- Mao Geping has 40 years of professional accumulation and a makeup school system, with deep technical barriers
- The professional endorsement of Forest Cabin’s founder IP is relatively weak

5. Investment Recommendations and Risk Warnings

5.1 Key Monitoring Indicators

If investors still pay attention to Forest Cabin, it is recommended to focus on the following indicators:

Monitoring Dimension	Core Indicator	Focus Direction
R&D Investment	R&D expense ratio	Whether it increases to more than 3%
Product Structure	Core product share	Whether it drops to below 35%
Brand Expansion	New brand contribution	Revenue share of Xiaoxinxuan and Huarongzhuang
Compliance Risk	Penalty records	Whether new regulatory penalties occur
Growth Quality	Growth sustainability	Whether the growth rate slows down significantly

5.2 Risk Warnings

R&D Investment Below Expectation
: If the R&D expense ratio continues to be below 2%, the brand’s long-term competitiveness is questionable
Growth Slowdown Risk
: Under the high base effect, the growth rate in 2026 may drop sharply
Compliance Risk
: Penalties for false advertising may escalate further
Valuation Correction Risk
: The current 42x PE is significantly higher than that of peers, leaving room for valuation correction
Founder IP Reliance Risk
: After traffic dividends fade, performance growth may stall

5.3 Valuation Judgment

The current valuation of Forest Cabin has fully reflected the scarcity premium of “the first domestic high-end skincare stock”, but the sustainability of its business model is doubtful. It is recommended that investors remain prudent and wait for the following verifications: