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IPOs

S.Korea's color cosmetics leader C&C to list in May

Apr 08, 2021 (Gmt+09:00)

Stylenanda's best-seller 3CE Velvet Lip Tint is manufactured by C&C International (Courtesy of Stylenanda)
Stylenanda's best-seller 3CE Velvet Lip Tint is manufactured by C&C International (Courtesy of Stylenanda)

South Korea’s leading color cosmetics manufacturer C&C International Co. will be listed on Kosdaq in May, with expected market capitalization around 250 billion won ($223 million).

C&C International’s key range of products include gel eyeliner pencils, lip liner pencils and lip tints, supplied to more than 100 clients worldwide including Amorepacific Corp., CLIO Cosmetics Co. and the L'Oréal affiliate Stylenanda.

The B2B company will conduct a demand forecast among institutional investors on Apr. 28-29 and set the offering price by May 3, expected within the range of 35,000 won ($31) to 47,500 ($42) per share. The subscription period is May 6-7.

C&C International IPO Information
Subscription period May 6 & May 7
Listing date Mid-May
Expected offering price 35,000 won ($31) – 47,500 won ($42)
Number of shares offered 1,480,000 shares
(25% of company’s total)
Total shares outstanding after IPO 5,916,571 shares 
Expected market capitalization 207 billion won ($185 million) –
281 billion won ($251 million)


40 YEARS OF MAKING COSMETIC PENCILS

The global market size for color cosmetics is $64 billion as of 2017. The market research firm Grand View Research projects the figure to grow to $86.9 billion by 2025.

Pencil-type products, mainly used for eyes and lips, only take up less than 10% of the total market.

Global cosmetics heavyweights have refrained from investing a large sum on the pencil products not only due to its small market size but also for several other reasons.

The pencils are difficult to premiumize as they are generally cheap in price, and are hard to differentiate as their shape and form are similar to each other.

Their replacement period is also longer than many other beauty products and they are offered in a limited range of colors, making it a less lucrative business for large global companies that would rather prefer to invest in other segments.

On the other hand, Bae Eun-chul, the founder and CEO of C&C International, believed at the age of 41 that he could create a niche market for pencil products after working at Amorepacific for 16 years.

When he was studying different products at Amorepacific’s factory in Suwon, South Korea, he saw that the future of color cosmetics lied in pencil-type gel products.

C&C CEO Bae Eun-chul (Courtesy of C&C International)
C&C CEO Bae Eun-chul (Courtesy of C&C International)

Bae started his own company with only a single gel eyeliner product in his portfolio, after having a conviction that he could become the top in the segment where he did not have to compete against global beauty giants.

The gel pencil, is a product that inserts cosmetic gel instead of graphite into the pencil body.

While it seems easier to produce than other color cosmetic products such as foundations, eyeshadows, powders and lipsticks, it requires an advanced level of technology despite being simpler in its form and shape.

First, the gel part of the pencil cannot be too firm, as it would irritate the skin. It cannot be too soft either, as it would smudge the makeup.

Moreover, as the gel uses less oil, wax and colorings compared to lipstick products but need to deliver the exact same color to consumers, it requires a relevant technical expertise in color implementation.  

Bae says his company also invested time and resources to develop a waterproof technology that allows the gel to stay longer without being smeared by water or sweat.

C&C International also launched new color variants to the cosmetic pencil market, where black and brown had been dominant as the consumers were using pencils primarily for eyebrows and eyeliner.  

The company’s brighter products quickly made inroads into the lipstick and eyeshadow markets, allowing C&C to form partnerships with major global firms including L'Oréal, Estée Lauder and LVMH.

C&C's range of eyeshadow products (Courtesy of C&C International)
C&C's range of eyeshadow products (Courtesy of C&C International)

NEW GROWTH DRIVERS

C&C International’s earnings began to take off from 2013, when the company diversified into lip products such as lipsticks, lip tints and lip glosses.

The company’s revenue grew from only 13.6 billion won ($12 million) in 2013 to 69.4 billion ($62 million) in 2018 and to 86.3 billion ($77 million) in 2020.

Its operating profit is also on a rising trend, from 8.3 billion won ($7.5 million) in 2018 to 15.4 billion won ($13.8 million) in 2020.

Its flagship product, 3CE Velvet Lip Tint supplied to Stylenanda, recorded a sales figure of more than 6 million units last year.

Industry analysts say C&C International’s sustained growth last year, when the whole cosmetics industry was hard-hit by the pandemic, demonstrates its globally competitive edge in the color cosmetics segment.

The B2B cosmetics company plans to generate further revenues this year by adding indie beauty brands as well as luxury brands to its list of clients. The company said it will also be launching a series of base makeup products.

C&C International’s main motives for the public offering are to expand the production capacity of its factory in Yongin city, right below Seoul, and to strengthen presence in China.

Total 1.48 million shares will be offered this time, of which 60% are newly issued and 40% are sales of the existing stocks.

The company’s market capitalization after the IPO will range between 207 billion won ($185 million) – 281 billion won ($251 million), given the expected offering price of 35,000 won ($31) – 47,500 won ($42) per share.

Write to Ye-Jin Jun at ace@hankyung.com

Daniel Cho edited this article.

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