Chando once again pushes for an IPO

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Source: Wall Street Insider

On April 2, Natural Hall Global Holding Co., Ltd. (hereinafter “Natural Hall”) updated its prospectus on the Hong Kong Stock Exchange. The joint sponsors are Huatai International and UBS Group.

After the initial public offering application was changed to “lapsed” for not completing listing hearing or listing procedures within six months on March 29, Natural Hall quickly completed an update of its financial data and reactivated the listing process.

Judging from the alignment between the newly updated prospectus and industry market benchmarks, the core question for Natural Hall to successfully clear the hurdles and achieve long-term development is how to incubate new growth drivers while maintaining the advantages of its main brand, and how to comply with the capital market’s drive toward standardization.

01 Solid performance, but the balanced structure still needs a breakthrough

The updated prospectus shows that Natural Hall’s 2025 financial performance demonstrates strong resilience. However, its revenue structure, channel evolution, and industry positioning also reflect the multi-dimensional challenges that a long-established domestic brand faces during its transformation period.

Natural Hall Group turned in a commendable set of results in 2025.

Data shows that in 2025, the Group’s revenue was approximately RMB 5.32B. The Group’s overall gross margin increased from 69.4% last year to 70.6%. Profit for the year was approximately RMB 351 million. Measured by 2024 retail sales, Natural Hall Group ranked tenth in China’s overall cosmetics market, with a market share of 0.8%. It is the third-largest domestic cosmetics group in China, with a market share of 1.7%.

By revenue scale alone, Natural Hall has already reached the RMB 5 billion threshold and ranks third among domestic beauty brands.

But when considered within the competitive landscape of the entire industry, its position is not stable. In 2024, the domestic beauty leader Proya had already crossed the RMB 10 billion revenue mark, and Shangmei Co., Ltd., with revenue of approximately RMB 6.8 billion, also surpassed Natural Hall.

In terms of revenue growth rate, from 2022 to 2024, Natural Hall’s revenue increased from RMB 4.6B to RMB 5.07B, with a compound annual growth rate of about 3.5%, which is significantly lower than the growth rates of Proya and Shangmei Co., Ltd. over the same period.

Net profit, however, showed relatively large fluctuations.

From 2022 to 2024, Natural Hall’s net profits were RMB 139 million, RMB 302 million, and RMB 190 million, respectively. In 2023, net profit surged 117% year over year, but it then fell 37.1% in 2024.

In the first half of 2025, net profit was RMB 191 million, already exceeding full-year 2024. Full-year profit rebounded to RMB 351 million, indicating that profitability is being restored.

From the brand matrix perspective, the prospectus further highlights Natural Hall’s heavy reliance on a single brand.

In 2025, the main brand Natural Hall recorded revenue of RMB 1.35B, accounting for as much as 95.3% of the Group’s total revenue. Although the company has also laid out sub-brands such as Misu and Profin Research to cover different sub-segments, the combined share remains small.

In a cosmetics market where consumer preferences iterate quickly, mature companies typically rely on multi-brand tiers to diversify risk and cover consumption needs across the entire lifecycle. Natural Hall urgently needs to prove to the capital market that it has a systemized capability to replicate the success experience of its main brand across its sub-brands.

On channels, Natural Hall also needs to complete a balance between its traditional offline advantages and online direct-to-consumer operations.

As a brand with more than 20 years of history, Natural Hall’s large offline distribution network was once the fortress moat behind its rise. But as consumer attention and business locations shift, refined operations on online channels become the key to winning.

In its prospectus, Natural Hall stated that in recent years, the company has been continuously increasing investment in e-commerce direct operations and emerging social e-commerce. How to properly handle the balance between online pricing systems and the interests of offline distributors, and to achieve a smooth transition from offline distribution as the main model to full-channel integration, is a major test for its internal operations.

Another financial characteristic drawing significant market attention is the large gap in Natural Hall’s spending between marketing and R&D.

According to earlier prospectus disclosures, Natural Hall’s selling and marketing expense ratio to revenue has remained above 55% for years. For example, in the first half of 2025, this spending reached RMB 1.347 billion, accounting for 55% of revenue.

Compared with peers in the industry, Natural Hall’s marketing investment ratio is still at a relatively high level. In the first half of 2025 as well, Proya and Shanghai Jahwa’s selling expense ratios were 49.59% and 43.8%, respectively.

Meanwhile, R&D investment has shown a trend of year-by-year contraction. From 2022 to the first half of 2025, Natural Hall’s cumulative R&D expenditures were RMB 348 million. Specifically, R&D expenditures were RMB 120 million in 2022, RMB 93.82 million in 2023, RMB 91.21 million in 2024, and RMB 42.38 million in the first half of this year. The R&D expense-to-revenue ratios were 2.8%, 2.1%, 2.0%, and 1.7%, respectively, with the R&D expense ratio declining year by year.

By comparison, in the first half of 2025, Hyalsee Biotech’s R&D investment was RMB 231 million, representing 10.22% of revenue. Betani’s R&D expenses were RMB 116 million, representing 4.91% of revenue. Shangmei, although relatively lower, also had R&D spending exceeding RMB 100 million, accounting for 2.5%.

Against the backdrop of changes in the competitive logic of the cosmetics industry, this “heavy marketing and light R&D” model is being scrutinized by more and more people.

As consumers’ requirements for product efficacy and ingredient science grow increasingly stringent, R&D reserves directly determine a brand’s speed of new product launches and its premium space. With the trend of platform promotion dividends reaching a peak, whether the path of high marketing spending in exchange for growth can be sustained has become a question the industry broadly faces.

02 A new cycle, new tests

Natural Hall submitted its first prospectus on September 29, 2025.

Under the rules of the Hong Kong Stock Exchange, if a proposed listed company fails to complete the listing hearing or listing procedures within six months after submitting its prospectus, the application status will automatically change to “lapsed.” March 29 was the date when the six-month period ended.

After the application status of the earlier prospectus turned to “lapsed,” outside observers speculated for a time.

But based on practical patterns of Hong Kong stock IPOs, this is more often a normal milestone during the listing advancement process. The company only needs to supplement the latest audited report to get back in line. In recent consumption-related IPOs in Hong Kong, due to factors such as audit cycles, cases of submitting an application again after a second filing are very common. This, by itself, does not mean that the company’s fundamentals have encountered major setbacks. Natural Hall also re-submitted its prospectus soon after.

However, Natural Hall’s story is not that simple. One deep-seated issue that the market generally focuses on is: why did Natural Hall fail to complete the hearing within the prescribed six-month deadline?

According to publicly available information, before this lapse, Natural Hall had already faced strict inquiries from the International Affairs Division of the China Securities Regulatory Commission.

Key issues the regulators focused on include the compliance of the company’s red-chip structure, the historical evolution of its equity, and differences in the subscription prices among different investors in Pre-IPO round financing—namely, the different entry prices of L’Oréal and Cathay Capital—as well as the structure of family trusts, among others.

For a company with long-cycle operations and a certain degree of family character, comprehensive sorting of complex historical equity and clarification of financing compliance details at the eve of listing is also a routine action by regulators to ensure transparency in the capital market and protect investors’ rights and interests.

From a macro perspective, Natural Hall’s planned listing in Hong Kong is not only an individual company’s push to go public and raise capital; it is also a microcosm of the domestic cosmetics industry entering a new development cycle. At present, the industry is undergoing a profound transformation from marketing-driven growth to growth driven by overall strength.

Over the past decade, the rise of domestic cosmetics brands relied heavily on traffic dividends from e-commerce platforms or short-video platforms. But as the costs of buying traffic have soared, pure marketing tactics can no longer be sustained. Consumers’ understanding of ingredients and efficacy has become increasingly mature, pushing the industry into a stage where it competes through technological R&D.

Looking ahead, how to further optimize the expense structure, and substantively shift the financial inertia of heavy marketing toward heavy R&D, will determine its chances of breaking through in the high-end segment.

In terms of industry competition, the domestic cosmetics market has moved from a period of incremental blowout to a period of stock-based rivalry. In this phase, foreign brands are accelerating downward penetration and increasing promotional efforts, and price wars as well as mindshare wars among domestic brands are also intensifying.

To break through in a highly competitive “involution” environment, companies cannot rely only on a single long-standing strength. Instead, they need to be comprehensive in R&D reserves, brand matrix building, full-channel operations, and supply-chain responsiveness.

Overall, Natural Hall’s updated prospectus comes with the confidence of more than RMB 5 billion in revenue, while also bringing exam questions related to single-brand reliance and upgrades to its governance structure. Listing in Hong Kong is not only to expand funding channels, but also to obtain the ammunition and platform needed for the next round of industry reshuffling.

In the second half of China’s domestic cosmetics industry—entering an era of “all-round competition”—what the capital market expects to see is Natural Hall evolving continuously beyond scale into new growth curves.

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Responsible editor: Yang Hongbo