After collecting $617 million in a U.S. original public offering priced at the top of a marketed range, Chinese cosmetics firm Yatsen Holding Ltd. increased 75 percent in its trading debut.
58.75 million American depositary shares were sold for $10.50 each by the corporation behind the fast-growing Perfect Diary brand. The stock closed Thursday in New York trade at $18.40, giving the firm a $7.82 billion market cap. You can do a China company search for more details.
The IPO comes as U.S. regulators press ahead with a proposal that could lead to the delisting of Chinese companies from the stock markets of the country if they do not comply with the auditing rules of the regulators. The step is an expansion of a problem that has remained unresolved for over a decade.
Beginning in 2016, the founders of Yatsen called the business after their alma mater, which according to its prospectus, commemorates China's first president, Sun Yatsen. Three beauty and skincare brands have been introduced by the company: Perfect Diary, Little Ondine and Abby's Preference. In the nine months ended Sept. 30, the three brands represented 23.5 million clients, the prospectus reveals. The prospectus shows that about 91 percent of gross sales in that period were generated through online channels such as WeChat and Tmall. Yatsen has a network of over 200 offline retail stores as well.
LOCKDOWN IMPACT
In the first nine months of 2020, Yatsen swung from net profits of 29.1 million yuan a year earlier to a net loss of 1.2 billion yuan ($170.4 million). Its sales rose from 1,89 billion yuan over the same period to 3,27 billion yuan. In the early part of the year as China went into lockdown, the coronavirus pandemic impacted its market, triggering store closures and slower-than-expected growth in online sales volume.
A number of investors expressed an interest in buying up to $300 million in the IPO, Yatsen said in the prospectus. They include established Hillhouse Capital and Tiger Global shareholders, as well as new investors, including Tencent Holdings Ltd. unit.
In a phone interview without sharing further information, founder and Chief Executive Officer David Huang said Yatsen plans to acquire a skincare brand soon. In October, the cosmetic manufacturer revealed that it had bought the skincare brand Galenic for an undisclosed amount from the French company Pierre Fabre.
Operations, Procurements
The company plans to use the IPO proceeds for business activities, future strategic investments and acquisitions, data analytics technology creation, product development and expansion of the offline store network. 4 ordinary shares reflect one ADS.
Goldman Sachs Group Inc., Morgan Stanley and China International Capital Corp. led the bid. The shares of Yatsen are listed on the New York Stock Exchange under the YSG symbol.
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