By Scott Murdoch and Sophie Yu
(Reuters) -Mao Geping shares leapt 85% on Tuesday after the Chinese beauty company raised $300 million in a Hong Kong initial public offering, making it the best debut in the city in four years.
The shares opened at HK$47.65 each and steadily tracked higher during the day to reach HK$55.25 in the afternoon session.
Mao Geping sold 78.4 million shares at HK$29.80 each, which was the top of a price range flagged to investors when the deal launched last week.
The debut is the best trading performance for an IPO worth more than $100 million since September 2020, according to Dealogic data.
The cosmetics company, led by one of China’s most famous make-up artists, is listing as Hong Kong experiences an uplift in the number of IPOs heading into the end of the year.
Hong Kong’s Hang Seng Index opened up 3.2% after China’s leadership flagged on Monday that the country was heading into a looser monetary policy environment in 2025. The index lost some gains after November trade data was weaker than expected.
China’s authorities also vowed to stabilise the stock and housing markets and adopt counter-cyclical adjustments to expand domestic demand and boost consumption, state media said Monday.
Retail investor interest in Mao Geping’s share sale was strong with that tranche of the IPO oversubscribed nearly 920 times, while the institutional tranche was 30 times oversubscribed, regulatory filings showed.
“The performance of a new stock on its first day of trading is typically related to the level of enthusiasm reflected during the subscription process,” said Kenny Ng, an analyst at Everbright Securities International.
“Since Mao Geping’s IPO (bookbuilding) until now, the Hong Kong stock market has recorded significant gains, and stock has followed this upward trend.”
China’s premium beauty market is valued at around 195 billion yuan ($26.85 billion), according to Mao Geping’s prospectus.
It has 372 points of sale across department stores in China, while around half of its sales come from e-commerce platforms, including Tmall, Douyin, JD.com and Xiaohongshu.
“The brand is really one of the only domestic brands that is in a leadership position within the premium space,” Shanghai-based China Market Research Group Managing Director Ben Cavender said. “This differentiates it from a lot of Chinese beauty brands that have grown by focusing on value but that do not have very strong brand presence.”
Company founder Mao Geping’s expertise as a professional make-up artist, coupled with a focus on conducting offline classes, has also helped establish the brand’s credibility, Cavender added.
(Reporting by Scott Murdoch in Sydney; Additional reporting Samuel Shen in Shanghai; Editing by Jamie Freed, Christopher Cushing and Nicholas Yong)
