YSGNYSEThe short version
Yatsen Holding Limited
A Guangzhou beauty group behind Perfect Diary, listed in New York and selling mostly online; after a 93% fall since its 2020 IPO it has rebuilt around skincare and returned to growth, still holding net cash.
Over four months the ADS ran from $3.89 in March down to a $2.19 low around May's insider financing, then back to $3.43 — still roughly 93% below the 2020 IPO price.
Mkt cap $319.4M
$3.43
Share price (ADS)
¥4.30bn
2025 revenue
78.2%
Gross margin
90.4%
Founder voting power
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Snapshot
Yatsen Holding Limited in numbers
Price
$3.43as of 2026-07-28
Mkt cap
$319.4M
| Year to Dec (CNY) | 2023 | 2024 | 2025 | 2026E | 2027E |
|---|---|---|---|---|---|
| Sales | 3.4B | 3.4B | 4.3B | 5.2B | 5.7B |
| EBITDA | −355.9M | −201.8M | −39.7M | 80.0M | 282.0M |
| EBIT | −559.3M | −421.8M | −185.8M | −37.0M | 130.0M |
| EBIT margin | −16.4% | −12.4% | −4.3% | −0.7% | 2.3% |
| EPS | −6.80 | −7.00 | −0.80 | 1.56 | 3.01 |
Consensus: S&P Capital IQ (CapIQ) · as of 2026-07-29Derived from run data; ratios use the latest price.
IThe business
The business
Yatsen sells beauty direct to Chinese shoppers, now led by skincare
FY2025 net revenue by segment
Skincare¥m2,27753%
Color cosmetics¥m2,00647%
Other¥m150%
Skincare passed color cosmetics for the first time in 2025.
- Owned brands, sold online. Perfect Diary, Little Ondine and Pink Bear in color cosmetics; Galénic, DR.WU and Eve Lom in skincare. Sales direct to end customers were 85% of revenue in 2025.
- Skincare now leads. Skincare reached ¥2,277m and, growing 63% in 2025, overtook color cosmetics (¥2,006m) as the larger segment for the first time.
- A rebuilt company. The mix shift is deliberate: the color-cosmetics business Yatsen was built on collapsed after 2021, and skincare is what has been rebuilt in its place.
The market
It fishes in a large, growing pond — against much bigger rivals
US$68.7bn
China beauty market (2024 est.)
~10%
Annual market growth
+27%
Yatsen revenue, 2025
Market size and growth as cited at the 2020 IPO — roughly three times the US pace.
- Real tailwind. China's beauty market was put on a path to about US$68.7bn by 2024 at a 10% compound rate, with domestic brands taking share from multinationals among younger buyers.
- Sub-scale challenger. Yatsen competes with far deeper-pocketed players — L'Oréal and Estée Lauder among the multinationals, Proya among domestic peers — which keeps online traffic expensive.
- A rising tide reaches everyone. The market's growth lets a small, loss-making company still grow 27%; the harder question is whether it captures that demand cheaply enough to keep it.
The model
The engine is marketing, not product — by about twenty to one
Where the money goes (% of revenue, FY2025)
FY2025 operating-expense lines as a share of revenue.
- Twenty to one. For every ¥1 spent on research in 2025 Yatsen spent about ¥20.80 on marketing — a ratio near 20x for three straight years.
- Brand is the moat. The company says its most valuable intellectual property is its brand names; its patent book is mostly packaging design, and formulas are often co-developed with the same contract labs rivals use.
- Research lifts margin, not reach. A ¥137m research budget, flat since 2021, is enough to support 78% gross margins — not the kind of product edge that lets a brand spend less to win each sale.
IIThe record
The record
Revenue halved after the 2021 boom, then turned back up in 2025
Total net revenue (¥m)
2025 was the first growth year since the boom broke.
- The boom broke. Revenue peaked at ¥5.84bn in 2021 as Perfect Diary's traffic-bought growth reversed, then fell to about ¥3.4bn across 2023–24.
- Back to growth, on skincare. 2025 revenue rose 26.7% to ¥4,298m (US$614.6m) — still a quarter below the peak, but the first real growth year, driven by skincare up 63%.
- Momentum held early in 2026. First-quarter 2026 revenue grew 22.5%, with skincare up 58.5% again.
Profitability
Losses are nearly erased, but a rich gross margin still isn't enough
Gross margin vs selling & marketing (% of revenue)
The gap between the two lines is what has to become profit — and it has stayed thin.
- The loss line narrowed fast. Reported operating loss fell from ¥929m in 2022 to ¥186m in 2025; net loss to shareholders fell from ¥815m to ¥81m.
- Gross margin climbed to 78.2%. A richer skincare mix lifted it from about 68% in 2022, and 2025 delivered the first non-GAAP net profit — ¥8.4m.
- Still not covering the marketing bill. Selling and marketing has stayed near two-thirds of revenue throughout, so an 80% gross margin still doesn't reach an operating profit.
Cash and capital
The cash cushion is real, and it has been shrinking
Liquid assets: cash + short-term investments (¥m)
Down from ¥2.6bn to ¥1.05bn in three years — part buybacks, part operating burn.
- Net cash, no debt. Yatsen ended 2025 with roughly ¥1.0bn (about US$145m) of cash and short-term investments and no bank borrowings.
- Returned faster than earned. It bought back US$202m of stock through early 2026 — on the order of two-thirds of today's market value — while operations kept consuming cash (−¥94.7m in 2025).
- Recent restraint. The newest buyback program is capped at just US$30m, a fraction of its predecessors.
IIIThe story now
The marketing question
The whole gap to a profitable peer sits in one line: marketing
Yatsen vs Proya, FY2025
| Company | Gross margin | Selling + admin | Operating margin |
|---|---|---|---|
| Yatsen | 78.2% | 73.4% | −4.3% |
| Proya | 73.3% | 45.8% | +17.6% |
Same market, similar gross margins; the difference is operating spend.
- Key finding. The marketing line is the whole story: at 66.3% of revenue it is both the ~22-point operating-margin gap to profitable peer Proya and the ~¥900m swing between value trap and re-rating on ~¥5.5bn of sales, while Yatsen spends about 21 times as much on marketing as on R&D — so the step-down the upside depends on has no product moat visibly behind it.
- The counter, in the same figures. Gross margin is already 78.2% and research runs about 3% of revenue, in line with L'Oréal, so a richer skincare mix could pull the marketing-to-research ratio down with a lag rather than leave it fixed.
The moment
The moment it paid to grow, the loss reopened
Quarterly operating margin
Profitability tracks the calendar: near breakeven at the Q4 peak, then Q1 2026 relapsed to −9.7%.
- Grew, then bled. Q1 2026 revenue rose 22.5%, but the operating loss more than doubled and operating margin fell to −9.7% — its worst in five quarters, as marketing jumped to 72.2% of revenue.
- Seasonality does the work. Profitability leans on the Double 11 fourth quarter; away from it, marketing runs in the low-70s and a near-80% gross margin can't cover it.
- Cash still leaves. Operating cash flow was negative in the peak fourth quarter and again in Q1 2026, and liquid assets fell to ¥934m by March.
The other side
The constructive case is real: a genuine skincare-led inflection
¥8.4m
First non-GAAP net profit (2025)
+58.5%
Skincare growth, Q1 2026
78.2%
Gross margin, up from 77.1%
The same statements that carry the skeptical read also carry a real turn.
- First profit. 2025 brought the first full-year non-GAAP net income and the first quarterly GAAP profit, after years of deep losses.
- Premiumization is working on margin. Skincare is now the larger segment and still growing fast; gross margin has climbed three years running as the mix richens.
- What would confirm it. Selling and marketing stepping down while revenue still grows would be the clearest sign the mix is finally lowering the cost of a sale.
IVThe price
What you pay
You pay near cash for the brands — but the floor is thin and outranked
The cash floor and the claim that now ranks ahead ($m)
US$120m of insider convertible notes — close to the entire pre-deal net cash — rank ahead of equity.
- Key finding. The market pays almost nothing for Yatsen's brands — about 74% of its ~US$322m value is cash and securities, implying a 0.14-0.29x sales operating enterprise value — yet that floor is shrinking as operations burn ¥94.7m a year and is now outranked by US$120m of insider convertible notes whose year-three cash put can withdraw roughly the whole pre-deal net-cash pile.
- Not a solvency trigger. There is no bank debt, about 58% of the net cash sits offshore at the Cayman parent, the notes carry a 1.5% coupon, and the financing added cash — these are claims and locks on the floor, not a wind-down risk.
- What reaches the common. After the senior convertible and ¥721.5m of China-restricted net assets, the conservative residual balance-sheet claim is roughly US$15m — about $0.16 per ADS against the $3.43 price.
The valuation gap
Priced for a 2–3% margin, a fraction of what a working peer earns
Operating margin: where it sits, what the price implies, and the re-rating case
Q1 FY2026
−9.7%
FY2025 actual
−4.3%
Priced-in (base)
2.5%
Mix lowers marketing
12%
Proya (peer)
17.6%
Illustrative scenarios, not forecasts; peer figure as reported.
- A fifth of the peer multiple. Yatsen trades at about 0.29x sales stripped of cash, versus roughly 1.9x for profitable peer Proya — the discount is the margin gap, not a mystery.
- The maths needs no heroics. Today's enterprise value implies only a 2–3% operating margin, close to the thin breakeven Yatsen just touched and far below Proya's 17.6%.
- Two-sided. If margins travel even part way to the peer, the equity is worth a multiple of today; if marketing stays near two-thirds of revenue, the cash simply drains through the business.
The tape
Thinly covered and thinly traded, with a volatile surprise record
1
Sell-side analyst
$4.01
Lone price target~17% above $3.43
$2.19–3.89
52-week range
Coverage, target and range per market data, as reported.
- One modeller's view. Effectively a single analyst carries the consensus and a US$4.01 target, about 17% above the price — estimate revisions are one view, not a market signal.
- Volatile history. Reported results have missed the sparse estimates by wide margins in several past quarters, so one strong seasonal quarter should be weighed against that record.
- Where it trades. The ADS has ranged roughly $2.19 to $3.89 over the past year and sits at $3.43, valuing the equity near the cash and securities it owns.
What to watch
Cheap and cash-backed, or a marketing model spending its windfall — the next filings decide which.
- 01Selling and marketing sustained below its ~63% six-year floor while revenue still grows.
- 02Operating cash flow turning positive in a non-peak quarter, before the cash cushion erodes further.
- 03The convertible's second tranche priced pari passu for minorities, with the year-three cash put left untriggered.
- 04Q2 2026 results (due 20 Aug 2026) showing operating margin well above Q1's −9.7%.
This distills a guided study of Yatsen built chapter by chapter — the business, its record, what is happening now, and what the market asks you to pay.
Compiled from the full report · 2026-07-29 · For information, not investment advice.