Yatsen IPO: What Investors Should Know About Chinese Beauty E-Com Company

A leading Chinses beauty e-commerce company will hit the public market Thursday.

The Offering: Yatsen YSG plans on selling 58.75 million ADS at a price point of $8.50 to $10.50.

The company says it has the no. 1 online color cosmetics brand in China with Perfect Diary. Little Ondine is the top eyeliner/mascara on Tmall, the online retailer from Alibaba Group BABA.

Perfect Diary was the only brand of color cosmetics to have GMV of 100 million RMB on Tmall for each month in 2019 and the first nine months of 2020, the company says. Yatsen also owns the Abby’s Choice moisturizer brand.

The company has a fan base of 48 million people and had 23.5 million direct to consumer customers in the first nine months of 2020.

IPO Outlook For The Week: Yatsen, COVID Vaccine Company Maravai

Acquisition of Galenic: Yatsen recently announced the acquisition of iconic French skincare brand Galenic. Yatsen will buy the brand from Pierre Fabre, with the original owner maintaining a 10% minority stake.

The brand has “acquired iconic status in France.” Yatsen will support the brand in Europe and will launch the brand into China and other Asian markets.

Growing Market: The Chinese beauty market was worth an estimated $38.8 billion in 2019, according to the filing. The country has 231.5 million millennials and 171.4 million GenZers, which are increasing the sale of online beauty products.

China has the largest percentage of e-commerce penetration for the beauty market. The country’s 31.4% share in 2019 was higher than the U.S. total of 21.9% and the world average of 15.9%.

Of the top five largest color companies in China, the top four are international companies. Yatsen ranked fifth in 2019 and was the only domestic company in the top five. Yatsen posted the largest growth of the top ten companies with a 327% year-over-year increase in the color cosmetics market from 2018 to 2019.

Financials: Yatsen reported a year-over-year revenue increase of 377% to $446.4 million for fiscal 2019. Net income was $11.1 million for fiscal 2019.

The company had revenue of $481.9 million for the first nine months of 2020.