Core Insights - The skincare concept of "oil-based skincare" is gaining significant popularity, with 1.75 billion views on Xiaohongshu as of July 15, 2025, and the "essence oil" topic receiving 820 million views [1][2] - Lin Qingxuan, a brand leveraging this trend with its camellia oil essence, has recently submitted its IPO application to the Hong Kong Stock Exchange, boasting a valuation of 3.8 billion [2][6] Company Overview - Lin Qingxuan was founded in 2003 by Sun Laichun, who initially focused on selling aloe vera gel and handmade soap, targeting students without a core competitive advantage [3] - The brand's turning point came in 2012 when Sun discovered the benefits of camellia seed oil, leading to the launch of its first camellia oil essence in 2014, which opened a new market segment [4][5] Financial Performance - Since 2014, Lin Qingxuan's camellia oil essence has been the top-selling product in China for 11 consecutive years, with over 30 million bottles sold and generating 447 million yuan in revenue in 2024, accounting for 37% of total revenue [6] - The company's revenue grew from 691 million yuan in 2022 to 1.21 billion yuan in 2024, nearly doubling in three years, while profits shifted from a loss of 5.93 million yuan in 2022 to a profit of 187 million yuan in 2024, reflecting a compound annual growth rate of approximately 32% [7] Market Positioning - Lin Qingxuan positions itself as a high-end domestic skincare brand, with product prices ranging from 200 to 800 yuan, and has expanded its offline presence from 366 stores in 2022 to 506 stores in 2024, with 95% located in premium shopping centers [7][8] - The brand's pricing strategy has led to a gross margin of 82.5%, surpassing competitors like Up Beauty and Beitaini, as well as international brands such as L'Oréal and Estée Lauder [12] Controversies and Challenges - The brand has faced criticism regarding its high pricing, with social media discussions questioning why its products are so expensive [8][12] - Lin Qingxuan's marketing strategies have also drawn scrutiny, with significant spending on promotions (7.6 billion yuan over three years) compared to its R&D investment of less than 1 billion yuan, raising concerns about its long-term sustainability [15][16] R&D and Innovation - Lin Qingxuan claims to be a "brand grown in the laboratory," emphasizing its research capabilities, including partnerships with Shanghai Jiao Tong University and proprietary formulations [15] - However, its R&D spending as a percentage of revenue is relatively low compared to industry leaders, indicating a potential gap in innovation investment [16] Brand Image and Marketing - The brand has attempted to establish a high-end image, but its marketing claims have led to regulatory scrutiny and fines for misleading advertising [17][18] - Lin Qingxuan's founder has engaged in public disputes with competitors, notably with Chanel, which has increased brand visibility but also raised questions about its marketing tactics [14][18]

Core Viewpoint - Lin Qingxuan is preparing for an IPO, aiming to become the leading high-end domestic skincare brand in China, with significant revenue growth and profitability improvements over the past three years [5][9][10]. Financial Performance - Lin Qingxuan's revenue for the past three years (2022-2024) was 691 million, 805 million, and 1.21 billion RMB, respectively, with a compound annual growth rate of approximately 32% [9][10]. - The company transitioned from a net loss of 5.93 million RMB in 2022 to a profit of 187 million RMB in 2024, indicating a strong recovery [9][10]. - Gross margin improved from 78% in 2022 to 82.5% in 2024, showcasing effective cost management and pricing strategies [9][10]. Market Position - Lin Qingxuan ranks first among domestic high-end skincare brands in China by retail sales, and is the only domestic brand among the top 15 high-end skincare brands [10][11]. - The brand's pricing strategy positions it competitively against international brands, with flagship products priced similarly to those of Clarins and Chanel [17][18][22]. Brand Strategy - The brand emphasizes its high-end positioning, with the term "high-end" appearing 156 times in its prospectus, and aims to establish itself as a leader in the domestic high-end skincare market [15][10]. - Lin Qingxuan has focused on a single product strategy, particularly with its Camellia Oil, which has become a star product, contributing significantly to its revenue [27][29]. Research and Development - R&D expenditures from 2022 to 2024 were 21.1 million, 19.7 million, and 30.4 million RMB, representing 3.0%, 2.4%, and 2.5% of annual revenue, respectively [30]. - Compared to international peers, Lin Qingxuan's R&D investment is considered moderate, highlighting a potential area for improvement [30]. Marketing and Consumer Perception - Marketing expenses from 2022 to 2024 were 208 million, 187 million, and 365 million RMB, indicating a significant investment in brand promotion [42]. - Despite high marketing expenditures, consumer recognition of Lin Qingxuan as a high-end brand remains low, with some consumers questioning its brand value [44][46]. Regulatory Challenges - The company faced regulatory scrutiny for misleading advertising claims regarding product efficacy, resulting in fines and negative consumer sentiment [33][12]. - Lin Qingxuan's marketing strategies have drawn criticism, with some consumers perceiving the brand as relying too heavily on nationalistic sentiments rather than product quality [47][49].

Core Viewpoint - Lin Qingxuan's high growth in performance relies heavily on massive marketing expenditures, with marketing costs reaching 365 million yuan in 2024, accounting for 30% of revenue, and growing by 95% year-on-year, far exceeding the revenue growth rate of 50.3% [1][19] Group 1: Financial Performance - Lin Qingxuan's revenue for 2022, 2023, and 2024 was 691 million yuan, 805 million yuan, and 1.21 billion yuan respectively, with net profits turning from a loss of 5.9 million yuan in 2022 to 84.5 million yuan in 2023 and projected at 187 million yuan in 2024 [5][17] - The gross profit margins for the same years were 78%, 81.2%, and 82.5% respectively, indicating a positive trend in profitability [8][18] - Despite the revenue doubling over three years, the heavy reliance on marketing and the two instances of regulatory penalties have impacted the foundation of its premium positioning and consumer trust [6][19] Group 2: Marketing and Compliance Risks - The company has faced compliance risks due to aggressive marketing strategies, including a fine of 21,000 yuan for misleading advertising in early 2023 and a previous fine of 50,000 yuan in 2021 for inaccurate efficacy claims [2][24] - Marketing expenditures have significantly outpaced revenue growth, with 2024 marketing costs representing 30% of total revenue, indicating a potential erosion of profit margins [19][20] Group 3: Product Strategy and Market Positioning - Lin Qingxuan's high-end product strategy has faced criticism, with luxury items like a 1,700 yuan perfume and a 2,600 yuan essence drawing consumer backlash, challenging its vision of becoming one of the "world's top five cosmetics families" [3][30] - The company has shifted its sales strategy towards online channels, with online sales contributing 59.1% of total revenue in 2024, up from 45.2% in 2022 [11][12] - The product mix shows a growing contribution from essence oils, which accounted for 37% of total revenue in 2024, while other categories like lotions and serums have seen a decline in their revenue share [8][9] Group 4: Organizational Structure and R&D Investment - The company has a workforce of 2,043 employees, with 85.2% in sales and marketing, while only 3.1% are in research and development, reflecting a heavy focus on marketing over product innovation [21][22] - R&D expenditures were only 3% of annual revenue, with total R&D spending over three years being less than 20% of the 2024 marketing budget [20][21]