Core Viewpoint - The long-anticipated IPO of Chando has finally materialized, with the company filing its prospectus with the Hong Kong Stock Exchange on September 29, 2023, after previous rumors in 2023 regarding its parent company, Jala Group, planning to raise up to $500 million [1]. Company Overview - Chando was founded in Shanghai by Zheng Chunying, who transitioned from a government job to entrepreneurship in the 1990s, establishing Jala Group and launching the Chando brand [4]. - The company has developed five major brands, including Chando, with a total of 522 SKUs priced between 49 yuan and 680 yuan [4]. Financial Performance - Revenue from Chando's brands for the years 2022 to 2024 is projected to be 4.292 billion yuan, 4.442 billion yuan, and 4.6 billion yuan, respectively [5]. - In 2024, Chando is expected to rank as the third-largest domestic cosmetics group in China, holding approximately 10.1% of the market share among the top five domestic brands [5]. Ownership Structure - The ownership of Chando is highly concentrated, with the founding family holding approximately 87.82% of the voting rights [6]. - Prior to the IPO, Chando secured investments from two investors, including 300 million yuan from JiaHua Capital for a 4.2% stake and approximately 443 million yuan from L'Oréal for a 6.67% stake, leading to a pre-IPO valuation of about 7.14 billion yuan [6]. Revenue Composition - Chando's revenue is heavily reliant on its flagship brand, with approximately 95% of total revenue coming from Chando itself during 2022 to 2024, indicating a significant imbalance in income sources [9]. - In the first half of 2025, Chando reported revenue of 2.448 billion yuan, with 94.9% derived from the Chando brand, while the other four brands contributed only 5% [9]. Marketing and Sales Costs - Chando's sales and marketing expenses have increased, reaching 2.717 billion yuan in 2024, which constitutes 59% of total revenue, marking a new high [9]. - In the first half of 2025, sales and marketing costs were 1.347 billion yuan, maintaining a similar proportion of 55% of total revenue [11]. Online Sales Dependency - Chando's online sales accounted for 68.8% of total revenue in the first half of 2025, with direct online sales exceeding 54.3%, indicating a strong reliance on online traffic [12]. - The company faces challenges in developing proprietary patented materials, which could hinder long-term growth and lead to a cycle of reliance on promotions and price reductions [12]. Inventory Management - As of the first half of 2025, Chando's inventory turnover days were 103.1, an improvement from 146.6 days in 2022 but still lagging behind competitors like Pechoin, which reported 81.35 days [12].