HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Over 15 years' experience in both finance and healthcare, covering clinic operations, investment and equity research in both China and overseas.

Pre-IPO Eternal Beauty Holdings - The Perfume Business in China May Not Be as Good as Expected

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Equity Capital Markets

Eternal Beauty Holdings / Equity Capital Markets

<ul>
<li>Given that leading luxury groups are inclined to abandon agency and "get involved directly" in the beauty/fragrance category, such trend implies the risk of losing key suppliers in the future</li>
<li>Although there're "reusable aspects" in management, expenses spent on brand channel are big, which makes it impossible for profits to benefit from "scale effect".So, low profit margin is the norm.</li>
<li>Considering the risk of economic recession/sluggish consumption, Eternal Beauty's net profit may experience negative growth in FY2025. It would gradually recover in FY2026-2027. Valuation could be lower than peers.</li>
</ul>


Given that leading luxury groups are inclined to abandon agency and "get involved directly" in the beauty/fragrance category, such trend implies the risk of losing key suppliers in the future
Although there're "reusable aspects" in management, expenses spent on brand channel are big, which makes it impossible for profits to benefit from "scale effect".So, low profit margin is the norm.
Considering the risk of economic recession/sluggish consumption, Eternal Beauty's net profit may experience negative growth in FY2025. It would gradually recover in FY2026-2027. Valuation could be lower than peers.


Pre-IPO Eternal Beauty Holdings (PHIP Updates) - The Outlook Has Changed