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Ask AI · How does Chando respond to regulatory inquiries about red-chip structures?

This newspaper (chinatimes.net.cn) reporter Fang Fengjiao Shanghai photo report

On March 29, Chando Global Holdings Limited (hereinafter “Chando”)’s Hong Kong stock IPO application document status quietly changed to “Invalid.” Just two days later, on the 31st, a relevant person in charge of the Chando Group responded to a reporter from Huaxia Times: “This is a listing procedure issue. We will resubmit the listing application within the next day or two.”

From “Invalid” to “Rapid Restart,” behind this key leap of a leading domestic beauty brand with over 20 years of history in the capital market, what compliance questions and operational challenges does it face? After peers like Proya and Shangmei Group have leveraged capital to complete a new round of positioning battles, Chando’s IPO “re-examination” is no longer just a procedural step but a concentrated review of its long-term strategic vision. The success or failure of its IPO will also serve as an important reference model for the capitalization path of domestic beauty brands.

Compliance and Brand Strategy

The “Invalid” status of Chando’s IPO occurred at a common technical node in the Hong Kong Stock Exchange listing process. According to HKEX rules, if a company proposing to list fails to complete the listing within six months of submitting the prospectus, its status will be marked as “Invalid.” However, in the market, this procedural status is often interpreted as a sign that regulatory inquiries have not been passed.

In fact, prior to this invalidation, Chando had already faced strict inquiries from the China Securities Regulatory Commission’s International Department. According to publicly available information, regulators focused on five major compliance issues, including the history of equity ownership, differences in Pre-IPO financing valuation—such as the differing share prices of L’Oréal and Jiahua Capital—and family trust structures. These issues directly relate to the compliance of red-chip structures and are key hurdles that companies planning offshore listings have to overcome in recent years.

Regarding the progress of rectifying these regulatory inquiries, a relevant person from the Chando Group told Huaxia Times: “We have responded promptly to the inquiries from the CSRC’s International Department.” The person also emphasized that the company will resubmit the listing application within the next day or two. This statement indicates that within 72 hours after the procedural invalidation, Chando will quickly initiate a second submission, attempting to dispel market hesitation as swiftly as possible.

From the perspective of capital market rules, a second submission is not uncommon, but the key is whether the company can respond to core regulatory concerns in a short period. For Chando, clarity on offshore structure, compliance of backdoor mergers and acquisitions, and the commercial rationality of different investor entry prices in Pre-IPO rounds are all issues that must be addressed more explicitly in the second application materials.

If compliance issues are the first hurdle for Chando’s IPO, then the business fundamentals are the core determinant of whether it can gain long-term trust from the capital market. According to data disclosed in the previous prospectus, Chando’s main brand contributes over 95% of revenue. This highly concentrated brand structure indicates a shortcoming in risk resistance from a capital market perspective. Especially in the beauty industry, a multi-brand matrix is regarded as a key capability for companies to span product life cycles and diversify market risks.

In response to this market concern, the relevant person mentioned to the reporter that the group is not a single-brand model. It also has high-end scientific skincare brand Meso, sensitive skin-focused efficacy skincare brand Pofuren, professional sun protection skincare brand Chunxia, and baby skin care brand Jichu, forming a multi-brand matrix with coordinated development.

Shenzhen Sijisheng CEO Wu Daiji analyzed for Huaxia Times that listing of old brands usually lacks some advantages in the capital market, such as the growth potential of mature companies being weaker compared to some emerging ones; if a company overly relies on its main brand and lacks a product matrix with strong risk resistance, it may also face doubts. Therefore, even for high-margin industries like beauty, traditional companies may not always be favored by capital.

In the beauty industry, acquiring brands to enrich the brand matrix has become a common approach among leading companies. For example, Proya has successively acquired color makeup brand Caitang, Japanese bath and skincare brand Off&Relax, and invested in makeup brand Huazhi in 2025 to accelerate multi-brand layout; Shangmei Group, after fully acquiring Hanfen’s global shares, also incorporated French skincare brand EvidensdeBeaute and American brand ReVive, gradually building a brand matrix covering skincare, makeup, and bath products.

Unlike peers expanding through acquisitions, Chando insists on a path of independent R&D and incubation of multiple brands. A relevant person from Chando Group explicitly stated in the prospectus that the group “relies on independent R&D and self-production, cultivating a multi-brand and multi-category product portfolio that combines core ingredients with Eastern aesthetics.” Wu Daiji believes that the company needs to establish a strong internal mechanism and organization for multi-brand operations, and allocate resources and focus to new brands to help them grow quickly.

It is worth noting that the valuation logic for domestic beauty brands in the Hong Kong market has also changed somewhat. Wu Daiji pointed out that if the performance of some traditional Chinese or internet celebrity beauty brands listed previously does not meet expectations, and the actual operational ability cannot match the “story” told at listing, it could affect the attractiveness of subsequent listings. Meanwhile, operational metrics are becoming more scrutinized.

R&D Investment and Marketing Expenses

In terms of R&D strength, Chando attempts to build a differentiated technological narrative from traditional beauty brands. A relevant person from the group detailed their R&D system: the group has over 150 R&D personnel with expertise in life sciences, materials science, and applied chemistry, having developed more than 20 core ingredients with independent intellectual property rights, applied in over 75% of products.

The person specifically mentioned that the group draws inspiration from extreme environments such as space, the Arctic and Antarctic, and the Himalayas. For example, the recent discovery of the fine stem rose in the Himalayas, confirmed by authoritative botanists for its Tibetan medicinal background, was used in a space mutation experiment—carrying Shenzhou 10 spacecraft into space, screening high-activity seeds in microgravity and radiation environments, and after returning to Earth, extracting high-activity natural skincare ingredients through hundreds of trials, applied in the Chando粉钻玫瑰系列 and Meso玫瑰胶原系列 products. This “heaven and earth use” R&D approach creates a differentiated advantage.

Additionally, the group seeks inspiration and raw materials from the third pole of the Earth—the Himalayas—developing glacier water, snow plants, minerals, and microbes with protective measures. By maintaining long-term collaborations with universities, research institutions, and medical organizations, and partnering with China’s space program and polar exploration teams, Chando has built a unique R&D system.

Financially, the prospectus shows that in 2024, the company experienced “revenue growth but profit decline,” with net profit down 37.1%, and marketing expenses accounting for 59.0% of sales. This high marketing investment and low profit margin have sparked market discussions on sustainability.

In response, a relevant person from Chando provided updated financial data: sales revenue grew steadily from 4.3 billion yuan in 2022 to 4.6 billion yuan in 2024, with adjusted net profit increasing from 139 million yuan to 203 million yuan. In the first half of 2025, adjusted net profit reached 219 million yuan, an 18% increase. Marketing expenses in the first half of 2025 had fallen to 55.0%.

The person further explained that marketing and brand promotion are crucial for the group. After increasing sales and marketing costs and strengthening product and brand marketing efforts in 2024, positive results were seen in the first half of 2025. Meanwhile, marketing expenses remained relatively stable from 2022 to 2024, at 57.0%, 54.2%, and 59.0%, respectively.

From this data, Chando aims to signal to the market that increased short-term marketing investment is translating into positive profit feedback. Whether the market can accept a “marketing first, profit later” rhythm, and whether this model can sustain through multi-brand expansion, remains to be seen over time.

Today, competitors have already accelerated their land grab with capital. Peers like Proya and Shangmei, after listing, have achieved growth in scale and market value through acquisitions, incubation of new brands, and increased R&D. During the IPO delay, whether Chando has alternative funding plans has also become a focus of market attention.

A relevant person from Chando stated that the group’s long-term vision is reflected in product R&D, brand marketing, digital operations, and sustainable development. In digital operations, the group has established a full-domain digital operation model centered on a “one inventory” system, covering R&D, procurement, production, warehousing, logistics, marketing, delivery, membership services, and data analysis. Regarding sustainability, in early 2024, the group released a 2030 sustainability strategy based on the United Nations’ 17 Sustainable Development Goals.

From the Himalayas’ fine stem rose to space mutation experiments, from the “one inventory” system to public welfare botanical gardens, Chando aims to tell a brand story that combines technological innovation with Eastern aesthetics. But the narrative logic of the capital market is more straightforward: Is compliance clear? Is growth sustainable? Can multi-brand synergy truly form?

For Chando, resubmitting the listing application is just the first step. In the upcoming hearing, how to respond to regulatory inquiries about the red-chip structure, how to demonstrate improvements in reliance on a single brand, and how to balance R&D investment with marketing expenses will be the real tests determining whether this IPO “re-examination” passes.