The “perfume boss” behind Hermes and Van Cleef & Arpels is about to go public
The author is Shi Enze
Editor: Liang Zhongrong
The Chinese company that represents perfumes for Hermes is going public.
On July 18, Yingtong Holdings Limited (hereinafter referred to as “Yingtong Holdings”) submitted a prospectus to the Hong Kong Stock Exchange for listing on the Main Board, with BNP Paribas and CITIC Securities as joint sponsors.
As a B-end company, Yingtong Holdings does not face consumers directly. But it manages many luxury brands, including Hermes, Van Cleef & Arpels, Chopard and other 63 brands, the business involves perfume, skin care, makeup and eyewear four segments.
Among them, the fragrance brand portfolio has 48, which is its pillar business. From the perspective of business contribution, more than 80% of Yingtong’s revenue comes from perfume business. From fiscal year 2022 to fiscal year 2024, perfume revenue accounted for 89.3%, 88.5% and 81.7% of total revenue, respectively.

​ Therefore, Yingtong is also known as the “perfume hegemon” by the capital market.
So just how lucrative is it to help a giant sell perfume in China?
Profiteering lies in winning
According to the prospectus, from fiscal year 2022 to fiscal year 2024, Yingtong Holdings’ revenue was 1.675 billion yuan, 1.699 billion yuan and 1.864 billion yuan, respectively; In the same period, net profit was 171 million yuan, 173 million yuan and 206 million yuan, respectively. In terms of income and net profit, the compound growth rate in the past three years was 5.5% and 9.92%, respectively, and the gross profit margin level was stable at more than 50%.
In terms of business model, Yingtong Holdings mainly includes two key components, one is brand building and promotion, that is, the design and implementation of tailor-made market entry and expansion plans for the brand;
Especially in terms of channels, Yingtong Holdings has established the “four carriages” of department stores, e-commerce, duty-free and modern channel drivers.
​ If international brands settle in China and continue to rely heavily on agents, then the business model of more than 50% gross profit margin per year is undoubtedly a “lie and win” business.
Perfume love
However, all this changed quietly after the pandemic. NPD, a market research company, pointed out in a survey report that the “perfume effect” is replacing the “lipstick index” as a new reference to reflect economic development and social consumption trends. On the one hand, masks reduce the opportunity to make up, making people turn to choose “luxury goods that can get great happiness with a quick spray”; On the other hand, perfume can alleviate the loneliness of home isolation and suddenly become “an uplifting beauty product.”
Thanks to the “perfume effect” after the COVID-19 pandemic, perfume has become the fastest growing category for cosmetics companies in recent years. Specifically, in fiscal year 2023, LVMH’s perfume and cosmetics business increased by 11%, and L ‘Oreal’s perfume category sales increased by 17%; For the full year, Estee Lauder Group net sales fell 10 percent, but perfume performance rose 14 percent.
Potential crisis
There is no success, there is no failure.
While the perfume effect has brought rapid growth to the cosmetics international giants, it has also inspired their greed for profits, not only to invest heavily in the acquisition of perfume brands, but also to turn the agency to the self-management model.
Swiss luxury goods company Richemont Group, since the official establishment of the fine fragrance and beauty department in September last year, will be Cartier, Van Cleef & Arpels, Montblanc, Dunhill, Chloe and Alaya a total of six brands of perfume and beauty business back. Prior to this, the perfume licenses of the top five brands belonged to Inter Parfums.
It is worth noting that Inter Parfums, one of the world’s major perfume manufacturers and agents, has been working with Yingtong for more than 30 years and has consistently ranked among the top five suppliers of Yingtong Holdings. As of March 31, 2024, the annual transaction value was $225 million, accounting for 23.8% of the total purchase volume.
How will this affect Yingtong Holdings?
A similar case is disclosed in the prospectus: in December 2022, Yingtong Holdings’ distribution agreement with a major brand licensor of a major luxury brand expired, and this distribution agreement contributed 420 million yuan to Yingtong’s total revenue in the 2023 fiscal year, accounting for about 25.5% of the total revenue.
For Yingtong, the withdrawal of international brand authorization is undoubtedly a bomb that may be detonated at any time. It also exposed problems with Yingtong’s business model – as a middleman, there were no private brands to sell. This has forced Yingtong to accelerate its business transformation.
In 2022, Yingtong Holdings will launch five entry-level premium perfumes, extending its own eyewear brand Santa Monica. However, as of the fiscal year 2024, the total revenue of Santa Monica brand was 17 million yuan, accounting for only 0.9% of the annual revenue.
To this end, Yingtong Holdings is also considering acquiring or investing in external brands, or even setting up joint ventures with other brands. But Yingtong’s strategy coincides with that of international groups. In 2022, Spanish beauty group Puig won the niche brand Byredo with a valuation of 1 billion euros (about 7.897 billion yuan); In 2023, French luxury goods company Kering (Kering) Group acquired Creed for 3.5 billion euros (about 27.7 billion yuan). In addition, in recent years, three original high-end perfume brands developed in China (Guanxia, Wenxian and melt season) have been invested by international beauty giants.
It can be seen that the international giants will not only make the subject matter in the field become scarce, but also make the trading consideration rise. Yingtong also said in its prospectus that “we have not identified any suitable acquisition or investment targets”, adding that the acquisition or investment region would be “China or other local brands in Southeast Asia.”
It is worth mentioning that Kering Group was able to successfully acquire Creed thanks to the power of the capital market. To complete the all-cash acquisition of Creed, Kering issued four tranches of bonds totalling €3.8 billion. The number one use of funds disclosed in Yingtong’s prospectus is to further develop its own brands, and to acquire or invest in external brands.
In addition, over the years, Yingtong Holdings in the channel construction, about half of the retailer channels, self-operated channels accounted for 24%, of which the online store accounted for less, only 6.8%. According to Frost & Sullivan’s forecast, from 2023 to 2028, the compound annual growth rate of online channels will reach 22.2%, while the compound annual growth rate of offline channels will be 10.1%.
Combined with its current positioning to launch “entry level” fragrances, in the future, the blank online channel will not be conducive to its further penetration into the sinking market, which will eventually lead to the limited promotion of its own brand.
To this end, Yingtong Holdings plans to strengthen the construction of self-operated channels. At present, Yingtong Holdings has created a self-operated retailer brand “gas box”, and operates an offline gas box store in Shanghai K11, and has entered the three major e-commerce platforms of Tmall, wechat Mall and Xiaohong Mall.
But this is not enough. Yingtong Holdings plans to achieve online and offline linkage in the future, open 100 offline self-operated stores (counters) in China in the next four years, and upgrade the digital CRM system to support the construction of a full-cycle consumer membership management plan. These two plans are also a strong impetus for its listing. In its prospectus, these two plans are ranked second and third, respectively, for the purpose of raising funds.
Before the suppression of international giants, after the impact of e-commerce platforms, it is a huge question whether China’s largest perfume agent Yingtong Holdings can successfully transform with the help of listing.