CHANDO makes another attempt at IPO

``` On April 2, CHANDO Global Holdings Limited (hereinafter referred to as "CHANDO") updated its prospectus on the Hong Kong Stock Exchange, with joint sponsors Huatai International and UBS Group. After its initial application filed on March 29 was marked as “lapsed” because it passed the 6-month deadline, CHANDO quickly updated its financial data and reactivated its listing process. Judging from the latest prospectus and the overall industry trends, the core issue for CHANDO to successfully go public and ensure long-term development lies in how to cultivate new growth drivers while maintaining the main brand's advantages, and at the same time, meet the regulatory requirements of the capital market. ## 01 Stable Performance, But Structural Balance Still Awaits Breakthrough The updated prospectus reveals that CHANDO demonstrated resilience in its 2025 financial performance, but its revenue structure, channel transformation, and industry positioning also reflect the multifaceted challenges faced by legacy domestic brands during transformation. In 2025, CHANDO Group delivered a commendable report card. Data shows that in 2025, the group’s revenue was around 5.318 billion yuan, with gross profit margin rising from 69.4% to 70.6% year-on-year, and net profit for the year was about 351 million yuan. Based on 2024 retail sales, CHANDO Group ranked tenth in China’s overall cosmetics market with a 0.8% share, and is the third largest domestic cosmetics group in China with a 1.7% market share. In terms of revenue scale, CHANDO has reached the 5 billion yuan threshold and ranks third among domestic beauty brands. However, in the overall industry competition, its position is not entirely secure. In 2024, Proya, the leading domestic beauty brand, surpassed the 10 billion yuan revenue mark, and Shanghai Jahwa’s revenue of about 6.8 billion yuan also exceeded CHANDO’s. Regarding revenue growth rate, from 2022 to 2024, CHANDO’s revenue grew from 4.292 billion yuan to 4.601 billion yuan, with a compound annual growth rate of about 3.5%, which lags behind Proya and Shanghai Jahwa in the same period. The net profit showed considerable volatility. From 2022 to 2024, CHANDO’s net profit was 139 million yuan, 302 million yuan, and 190 million yuan, respectively. In 2023, net profit surged 117% year-on-year, but in 2024, it dropped 37.1%. In the first half of 2025, net profit was 191 million yuan, already exceeding the full year of 2024, and the annual profit rebounded to 351 million yuan, indicating a recovery in profitability. From a brand matrix perspective, the prospectus further highlights CHANDO’s heavy reliance on a single brand. In 2025, the main brand CHANDO generated 5.07 billion yuan in revenue, accounting for as much as 95.3% of the group's total revenue. Although the company has also developed sub-brands targeting different segments, like MAYSU and PROYA-Lab, their combined share remains extremely small. In the rapidly changing beauty market, mature companies usually diversify risks and satisfy the entire product lifecycle demand through a multi-brand portfolio. CHANDO urgently needs to prove to the capital market that it can systemically replicate the main brand’s success to its sub-brands. In terms of channels, CHANDO must also balance its traditional offline strength with online direct-sales. As a brand with more than 20 years of history, CHANDO’s extensive offline distribution network was once its moat. However, as consumer attention shifts, refined operations in online channels have become the key to victory. According to the prospectus, the company has been increasing investment in e-commerce direct-sales and emerging social commerce channels in recent years. Effectively balancing online pricing systems with offline distributor interests and ensuring a smooth transition from offline-focused to omni-channel integration are challenges for its internal operations. Another financial feature of great market concern is the huge gap between CHANDO’s investment in marketing and R&D. According to previous prospectus disclosures, CHANDO’s sales and marketing expenses have remained above 55% of revenue for many years. For example, in the first half of 2025, such expenses amounted to 1.347 billion yuan, accounting for 55% of income. Compared with industry peers, CHANDO’s marketing expenditure is still on the high side. In the first half of 2025, Proya and Shanghai Jahwa’s sales expense rates were 49.59% and 43.8%, respectively. Meanwhile, R&D investment has shown a year-on-year decline. From 2022 to the first half of 2025, CHANDO’s cumulative R&D expenditure was 348 million yuan. Specifically, it was 120 million yuan in 2022, 93.82 million yuan in 2023, 91.21 million yuan in 2024, and 42.38 million yuan in the first half of this year; R&D expenses as a percentage of revenue were 2.8%, 2.1%, 2.0%, and 1.7%, respectively, with the R&D ratio decreasing year by year. By contrast, in the first half of 2025, Bloomage Biotech invested 231 million yuan in R&D, accounting for 10.22% of revenue; Betta Pharmaceuticals’ R&D expenses were 116 million yuan, accounting for 4.91%; Shanghai Jahwa, although relatively lower, still had over 100 million yuan in R&D expenses, taking up 2.5%. This “heavy marketing, light R&D” model is increasingly being scrutinized as the competitive logic of the beauty industry evolves. As consumers demand more on efficacy and technology, R&D reserves directly determine a brand’s product velocity and pricing power. With traffic dividends in platform marketing peaking, whether high marketing expenditure can continue to drive growth is now a universal question facing the industry. ## 02 A New Cycle, New Challenges CHANDO submitted its first prospectus on September 29, 2025. According to HKEx rules, if an applicant fails to complete a listing hearing or process within 6 months after submitting the prospectus, the status will automatically become "lapsed". March 29 was the 6-month deadline. There was some speculation among the public about the prospectus status change to "lapsed". However, from the practical operation of Hong Kong IPOs, this is more of a routine business process. Companies only need to supplement the latest audited reports to re-enter the queue. In recent consumer IPO cases in Hong Kong, re-filing due to audit cycle delays is quite common and does not indicate any major issues with the company's fundamentals. CHANDO also promptly resubmitted its prospectus. However, CHANDO’s story is not so simple. A deeper concern in the market is: Why did CHANDO fail to complete its hearing within the 6-month deadline? Public information shows that before this lapse, CHANDO was already facing strict inquiry from the International Department of the China Securities Regulatory Commission. The authorities focused on issues including compliance of the red-chip structure, history of equity evolution, differences in entry prices of different investors in the pre-IPO round (i.e., L'Oréal versus Cathay Capital), and family trust structure. For a long-operating, somewhat family-run company, sorting out complicated historical equity structures and clarifying compliance details of financing before listing are routine regulatory actions to ensure capital market transparency and protect investors. From a macro perspective, CHANDO’s listing in Hong Kong is not just a company’s pursuit of capital, but a microcosm of the new evolutionary cycle in China’s beauty industry. The sector is undergoing a profound shift from marketing-driven to overall strength-driven growth. In the past decade, the rise of domestic beauty was largely fuelled by online platform traffic. But with rising customer acquisition costs, pure marketing models are no longer sustainable. As consumer awareness of ingredients and efficacy increases, the industry is entering a stage of competition in R&D and technology. Looking ahead, further optimizing its cost structure and substantively shifting from heavy marketing to greater investment in R&D will determine its chances of success in the push for premiumization. From a competitive standpoint, the domestic beauty market has shifted from expansion to stock competition. In this phase, foreign brands are accelerating their market penetration and increasing promotions, while the price and brand positioning battles among domestic brands are becoming more intense. To break out of this intense competition, companies cannot rely solely on a single strength; they must be competent in R&D, brand matrix, omni-channel operation, and supply chain agility. Overall, with this updated prospectus, CHANDO comes with the confidence of over 5 billion yuan in revenue, but also faces the questions of single-brand dependence and governance upgrade. Listing in Hong Kong is not just to broaden funding sources, but also to secure the ammunition and platform needed in the next industry reshuffle. Facing the new "all-round competition" stage of domestic beauty, the capital market expects to see a CHANDO that can continuously evolve new growth curves on top of its scale. Risk Warning and Disclaimer There are risks in the market, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether the opinions, views or conclusions in this article fit their particular circumstances. Investing based on this is at your own risk. ```