Core Viewpoint - Ying Tong Holdings Limited is preparing for its IPO on the Hong Kong Stock Exchange, facing challenges in the evolving perfume market where international brands are increasingly opting for direct operations rather than relying on distributors like Ying Tong [1][2]. Company Overview - Ying Tong is one of the earliest companies to sell international perfumes in China, having established partnerships with over 72 brands, including high-end luxury names like Hermès and Van Cleef & Arpels [2][4]. - The company has a diverse product range, including perfumes, skincare, cosmetics, and eyewear, with a wide price range from entry-level to luxury products [4][23]. Market Position and Performance - As of March 31, 2023, Ying Tong's products are sold in over 400 cities across Hong Kong, Macau, and mainland China, through more than 100 directly operated points of sale and over 8,000 retail customer-operated points of sale [4]. - The Chinese perfume market is experiencing rapid growth, with a market size of RMB 20.7 billion in 2023, a year-on-year increase of 22.5%, and is expected to reach RMB 51.5 billion by 2029 [9][11]. Financial Performance - Ying Tong's revenue from perfumes for the fiscal years ending March 31, 2023, 2024, and 2025 is projected to be RMB 1.504 billion, RMB 1.524 billion, and RMB 1.688 billion, respectively, indicating a steady growth trajectory [5]. - The company has been generous in dividend payouts, distributing a total of RMB 631 million over three years, which has significantly impacted its cash flow [28]. Challenges and Risks - The company faces increasing competition as many luxury brands are choosing to manage their own perfume lines, leading to a decline in the operational power of distributors like Ying Tong [12][21]. - Ying Tong has a significant number of contracts expiring soon, with 22 brands' contracts set to expire within a year, raising concerns about potential revenue loss [18][19]. - The operational model of relying on brand partnerships is under pressure, as many brands are moving towards direct management, which could lead to a loss of key clients for Ying Tong [17][21].