China make-up mogul becomes billionaire on hot Hong Kong IPO

BEIJING – One of China’s best-known make-up artists, Mr Mao Geping, has become a billionaire as shares of his beauty company soared as much as 87 per cent after beginning trading in Hong Kong.

It caps a remarkable run that has seen the former opera performer’s premium powders and lotions defy the nation’s consumer slowdown.

His skincare and cosmetics firm Mao Geping Cosmetics, which listed on Dec 10, raised HK$2.3 billion, or about US$300 million (S$402 million), in its initial public offering (IPO) after upsizing the deal, according to a filing to the Hong Kong stock exchange. The first Chinese cosmetics brand to list in the city, it is set for the biggest first-day increase among companies that listed in Hong Kong after IPOs of at least US$300 million over the past three years.

This has given the 60-year-old make-up wizard and his wife Wang Liqun, the company’s vice-chairwoman, a fortune of about US$1.4 billion based on the opening price of HK$47.65, according to the Bloomberg Billionaires Index. Two of Mr Mao’s sisters and several other relatives also each hold a smaller stake that could be worth another US$800 million in total, the company’s prospectus shows.

While most Chinese beauty brands have focused on offering affordable prices as consumers cut back on spending amid the economic slowdown, Mao Geping Cosmetics keeps prices closer to those of premium international labels. Its top-selling pressed powder costs 380 yuan (S$70) versus 390 yuan for a similar product from Shiseido’s Nars, even as most local brands sell it for less than 200 yuan.

The company’s revenue jumped more than 40 per cent in the first half of 2024, building on a 35 per cent average annual surge between 2021 and 2023. Its growth defies a slump that is seeing foreign beauty giants, from L’Oreal to Shiseido, struggle with disappointing sales in China as increasingly frugal shoppers turn to cheaper local upstarts. 

Sales have taken off since 2018, when the company buckled down on e-commerce. A strong physical presence of more than 300 department store counters also helps its premium positioning by providing on-site make-up experiences to consumers, Zheshang Securities said in a research note. 

Still, the listing will be a fresh test of market sentiment towards China’s beauty segment, which has seen some domestic brands slump in recent years as competition surges, and mainland shoppers’ appetite for rarer high-end Chinese brands like Mr Mao’s. The label’s marketing push ahead of the listing included a partnership with the Chinese national team at the Paris Olympics, a bid to tap into national pride.

Factors including cultural relevance and the founder’s star power make “a good recipe for continued growth in a competitive category”, said Ms Olivia Plotnick, founder of Shanghai social media marketing agency Wai Social. 

Mr Mao started his career as a performer with the Zhejiang Yue Opera Troupe in 1983, pivoting to cosmetics. He later found fame as the make-up artist for Liu Xiaoqing, one of the country’s best-known actresses, on a hit 1990s TV drama chronicling the life of China’s one female emperor. His make-up helped the 40-something actress play ages from teenager to octogenarian.

Mr Mao launched his namesake brand and make-up school in 2000 in Hangzhou, expanding to Shanghai three years later by setting up a cosmetic counter at one of the city’s premium department stores. BLOOMBERG