Summary of Key Points
Puleiya’s revenue in the first half of 2026 increased slightly by 0.24%, but its net profit attributable to the parent company soared by 46.26%, mainly due to the investment income of 445 million yuan from its controlling stake in Huazhaozhi. Both its main brand and its former second growth driver, Caitang, saw declines. However, the high growth of its new brands (in the hygiene and beauty products sector and the trendy makeup category) helped to make up for this loss. Additionally, Puleiya entered the North American market through its main brand by partnering with Ulta Beauty (with 400 stores and an online presence), complementing Huazhaozhi’s existing overseas presence to establish a dual-category matrix of “makeup + skincare” in North America. Behind these moves lies Hou Yamen’s strategy to “reach the top 10 globally within ten years”: using acquisitions to enhance capabilities (such as Huazhaozhi’s target audience of young women and its overseas experience) and expanding into new markets to address the challenges of declining organic growth and soaring traffic costs. However, there are still challenges in terms of integration and future growth.
I. “Genuine vs. Fake Growth” in the Mid-Year Report: Surprising Net Profit, but Little Change in Revenue?
Puleiya’s net profit for the first half of the year looks impressive (1.168 billion yuan, up 46%), but upon closer inspection, this growth is largely due to a one-time gain from the investment in Huazhaozhi (445 million yuan, which was included in the consolidated financial statements). Excluding this, the net profit after deducting non-recurring items actually decreased by 13.8%.
The revenue situation is even more concerning: the total revenue of 5.375 billion yuan only increased by 0.24%, almost staying stagnant. The reason is that the main brand’s revenue decreased by 7.19%, and Caitang’s revenue fell by 21.93%. The growth of the new brands (such as Off&Relax in the hygiene and beauty products sector and Yuansè Botà in the trendy makeup category) just made up for the loss incurred by the main brand.
The decline of the main brand is not accidental. It grew by 36% in 2023, 19% in 2024, and then experienced negative growth of -10% in 2025, with another 7% decline in the first half of 2026. This indicates that the lifecycle of these popular products has reached its peak, and users’ interest in them is waning, leading to slower growth.
II. Why Spend 779 Million Yuan to Acquire Huazhaozhi?
The acquisition of Huazhaozhi was not a casual decision; it addresses several key areas for Puleiya:
1. Expanding the Customer Base: Huazhaozhi focuses on “girlhood makeup” with designs like bows and lace, and has a repeat purchase rate of over 40%. It targets a sweet and anime-inspired audience that Puleiya’s existing makeup brands (Caitang with its Chinese aesthetic and Yuansè Botà with its “self-expression” style) do not reach, thus broadening Puleiya’s customer base in the makeup category.
2. Enhancing Overseas Presence: Puleiya’s own overseas revenue accounts for less than 3%, while Huazhaozhi has already established a presence in Japan (Cosme, Loft) and Southeast Asia (Shopee, Lazada), and has launched its own websites in Europe and America. In 2025, it became the first Chinese makeup brand to be available on Ulta Beauty’s online platform, with overseas revenue exceeding 200 million yuan. Acquiring Huazhaozhi gives Puleiya a ready-made framework for expanding its overseas business.
3. Saving Time and Resources: With rising traffic costs (53% of Puleiya’s sales expenses in the first half of the year), starting from scratch with a new brand would be very costly. Since Huazhaozhi has already been tested by the market, acquiring it allows Puleiya to achieve results more quickly.
III. Entering Ulta Beauty: Puleiya’s Ticket to North America
Ulta Beauty is the largest professional beauty retailer in the United States, with 1,500 stores and 44.6 million active members, comparable to the combined presence of Sephora and Watsons in China. By entering 400 core Ulta stores and expanding its online presence in November, Puleiya has simultaneously established a presence for both “skincare” (with its main brand) and “makeup” (with Huazhaozhi) in the North American market.
The significance of this move is:
- Breaking into the Mainstream Market: While many Chinese beauty brands have focused on online sales (Amazon, own websites), entering Ulta’s physical stores allows them to reach American consumers in their daily shopping routines, thereby building a real brand recognition beyond advertising efforts.
- Synergies: Since Huazhaozhi already has experience in the overseas market, Puleiya’s main brand can leverage its channel resources and localized strategies, avoiding unnecessary detours.
IV. The Question of Brand Identity After the Acquisition: Will Huazhaozhi Change?
After Puleiya acquired Huazhaozhi, users were concerned about whether the brand’s unique “girlhood” aesthetic would be lost due to corporate management. Puleiya has stated that it will maintain Huazhaozhi’s independent operations and respect the founder’s product development rights, providing support only in supply chain and financial aspects. However, the appointment of Hou Yamen as the chairman of Huazhaozhi and the departure of the founder Yang Zifeng from the board (while remaining a director) have raised concerns. The core competitiveness of Huazhaozhi lies in its distinct youthful style, and there is a risk that this could be diluted under corporate governance.
V. The “Coming of Age” of Chinese Beauty Brands: From Self-Reliance to Strategic Acquisitions
Puleiya’s transformation represents the shift of Chinese beauty brands from a domestic market focus to a global strategy:
- The Old Approach No Longer Works: The era of success through a few blockbuster products (such as Puleiya’s Ruby Essence) is over, as traffic costs are increasing and organic growth is slowing down.
- The New Approach: Using capital to accelerate growth by acquiring mature brands, gaining overseas experience and expanding into new markets. This is a trend being adopted by other Chinese beauty companies like Perfect Diary’s parent company, Yixian E-commerce, and Shuiyang Co., Ltd. However, this path is not without challenges: integrating acquired brands while maintaining their independence and adapting to local markets requires time and effort. Puleiya’s goal of reaching the top 10 globally within ten years is just beginning.
In summary, Puleiya’s performance in the first half of the year reflects the challenges faced by Chinese beauty brands as they transition from a domestic market leader to global players. The old growth drivers are fading, and new strategies (acquisitions, overseas expansion) are just starting to take effect. Whether these new approaches will be successful depends on how well they are integrated and implemented.
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