Core Viewpoint - The China Securities Regulatory Commission (CSRC) has requested Shanghai Linqingxuan Biotechnology Co., Ltd. to provide supplementary materials regarding administrative penalties for false advertising and the transfer of shares involving new shareholders as the company prepares for its overseas listing [1][12]. Financial Performance - Linqingxuan achieved revenues of 691.5 million RMB, 805 million RMB, and 1.21 billion RMB for the years 2022, 2023, and 2024 respectively, with net profits of -5.93 million RMB, 84.5 million RMB, and 186.8 million RMB during the same period [5][6]. - The company reported a significant increase in sales, with a notable rise in gross profit from 539.1 million RMB in 2022 to 997.7 million RMB in 2024 [6]. Product Dependency - The company has a growing reliance on a single product category, with sales of essence oil products accounting for 31.5%, 35.3%, and 37.0% of total sales from 2022 to 2024 [6][8]. - Linqingxuan's primary brand contributes to 99.1%, 99.0%, and 99.0% of total revenue during the same period, indicating a significant dependency on its flagship brand [8]. Marketing and R&D Expenditure - Marketing expenses have been significantly higher than R&D costs, with sales and distribution expenses amounting to 5.09 billion RMB, 4.86 billion RMB, and 6.88 billion RMB, representing 73.66%, 60.37%, and 56.86% of revenues respectively [11]. - In 2024, marketing and promotional expenses reached approximately 365 million RMB, which is 12 times the R&D expenditure of 30.4 million RMB [11]. Regulatory and Compliance Issues - Linqingxuan faced penalties for false advertising, specifically for claims regarding anti-aging effects that did not align with actual product capabilities, leading to a fine of over 21,000 RMB [12]. - The CSRC has requested clarification on the company's compliance with regulations following these penalties and the implications for its upcoming listing [12][15]. Shareholder Changes - Recently, the company welcomed a new shareholder, Youngor Fashion Technology Co., Ltd., which acquired a 4.491% stake, becoming the fourth largest shareholder [14]. - The CSRC has also requested details regarding the pricing and rationale behind recent share transfers involving new shareholders [15].

Core Viewpoint - Lin Qingxuan, a leading high-end domestic skincare brand in China, is attempting to enter the capital market with an IPO, but there are concerns about its high-end positioning and reliance on marketing expenditures [2][3][4]. Financial Overview - Lin Qingxuan's sales and distribution expenses for 2022 to 2024 are projected to be 509 million, 486 million, and 688 million RMB, respectively, accounting for 73.66%, 60.37%, and 56.86% of revenue [11]. - The company reported revenues of 691.15 million, 805.004 million, and 1.209641 billion RMB for the years 2022, 2023, and 2024, respectively [14]. Marketing and Sales Strategy - The company has heavily invested in marketing, with 1,739 out of 2,043 employees (85.2%) dedicated to sales and marketing roles [15]. - Lin Qingxuan's pricing strategy aligns with its high-end branding, with products priced at 599 RMB for 30ml of camellia oil and 730 RMB for 50g of anti-wrinkle cream [11]. Consumer Concerns - There have been numerous consumer complaints regarding product safety, including allergic reactions and misleading advertising claims [6][10]. - The brand faced regulatory scrutiny for advertising claims that did not match the actual efficacy of its products, resulting in a fine of 21,000 RMB [6]. Research and Development - Lin Qingxuan's R&D expenditures for 2022 to 2024 are 21.12 million, 19.74 million, and 30.40 million RMB, which are significantly lower compared to its marketing expenses [13]. - The R&D expense ratio is relatively low, with rates of 3.06%, 2.45%, and 2.51% for the respective years, indicating a lack of investment in foundational research compared to international competitors [13][15]. IPO and Future Outlook - The upcoming IPO could provide funding for R&D and supply chain upgrades, but there are doubts about whether the company will prioritize these areas over continued marketing expenditures [18]. - Concerns arise from the founder's pre-IPO cash-out of approximately 22 million RMB, raising questions about the long-term vision of the brand [16][18].

Core Viewpoint - Lin Qingxuan Biotechnology Co., Ltd. has submitted an application for listing on the Hong Kong Stock Exchange, focusing on the anti-wrinkle and firming skincare market with a strong emphasis on high-end skincare solutions based on natural camellia ingredients [1][2]. Financial Performance - From 2022 to 2024, Lin Qingxuan's revenue grew from 691 million RMB to 1.21 billion RMB, while the net profit attributable to the parent company improved from a loss of 5.87 million RMB to a profit of 187 million RMB [7][9]. - The gross profit margin increased from 78% to 82.5% during the same period [8]. Sales and Distribution - Sales and distribution expenses reached 688 million RMB in 2024, exceeding 50% of the total revenue [1][9]. - The revenue from offline channels decreased from 54.7% in 2022 to 40.8% in 2024, while online channel revenue increased from 45.2% to 59.1% [4][6]. Product Portfolio - As of December 31, 2024, Lin Qingxuan offered 188 SKUs, with significant revenue contributions from essence oils, creams, lotions, and masks, each accounting for over 10% of total revenue [3][4]. Market Position - In 2024, Lin Qingxuan ranked first among all high-end domestic skincare brands in China by retail sales and was the only domestic brand among the top 15 high-end skincare brands, which included both domestic and international brands [2][3]. Use of Proceeds - The funds raised from the listing will be used for brand value enhancement, deepening the multi-channel sales network, and strengthening production and supply chain capabilities [10].

Core Viewpoint - Lin Qingxuan is poised to become the first high-end domestic skincare stock in Hong Kong, having submitted its prospectus to the Hong Kong Stock Exchange, highlighting its leadership in the high-end domestic skincare market in China [1] Industry Overview - The Chinese cosmetics market is expanding, driven by increased consumer focus on health and appearance, digital transformation in shopping behavior, and innovation in cosmetics [1] - The skincare segment holds the largest market share, with the market size growing from RMB 332.9 billion in 2019 to RMB 461.9 billion in 2024, reflecting a compound annual growth rate (CAGR) of 6.8% [1] Company Performance - Lin Qingxuan's total revenue is projected to grow from RMB 691 million in 2022 to RMB 1.21 billion in 2024, achieving a CAGR of 32.3% [2] - The company's net profit is expected to reach RMB 187 million in 2024 [2] Market Trends - The market for high-end anti-wrinkle and firming skincare products is anticipated to increase from RMB 59.4 billion in 2024 to RMB 155.5 billion by 2029, with a CAGR of 21.2% [2] - The overall high-end skincare market in China is expected to reach RMB 218.5 billion by 2029, with a CAGR of 13.8% from 2024 to 2029 [2] Strategic Outlook - As a leading brand in the high-end domestic skincare sector, Lin Qingxuan is expected to benefit from its strong R&D capabilities and existing product leadership [2] - The company aims to align its product strategy with evolving consumer demands, focusing on core products and expanding its product matrix to offer customized skincare solutions [2]