Beauty Community

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This Doctor Turned $15,000 Into a $1.6 Billion Beauty Empire

By Anuchit Nguyen  and Sterling Wong
November 2, 2017, 4:45 AM GMT+8 Updated on November 2, 2017, 9:20 AM GMT+8

Thai entrepreneur Suwin Kraibhubes set up Beauty Community Pcl with his last 500,000 baht ($15,000) after the Asian financial crisis. Two decades on, the company’s shares are the top-performers globally among cosmetics providers.

The Bangkok-based firm plans to tap China’s $4.3 billion beauty sector for the next leg of expansion, after building a network of more than 300 retail outlets in Thailand and other parts of Southeast Asia. Sales growth will be vital for a stock that Aberdeen Asset Management describes as expensive.

"Chinese customers like our products because of their quality and affordable prices," Suwin, 49, said in an interview Tuesday. "We’re focusing first on online sales through wholesalers to build brand awareness there."

Beauty Community has delivered a total return of over 1,100 percent since listing on the Thai exchange in December 2012, at least three times more than better-known rivals such as L’Oreal SA and Shiseido Co. The company’s sub-$10 lipsticks and creams are targeted at the middle class as well as tourist demand, including the nine million Chinese who visit Thailand each year.

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Specuvestor: Asset - Business - Structure.
Any insights/comments guys?

SET-listed cosmetics company Beauty Community's shares (BEAUTY) took a nosedive by 30% Wednesday as investors lost confidence in its sales and revenue growth going forward.

The delays will result in company's financial performance in the second quarter to be lower than previously expected, said Mr Suwin, noting that it may be the first ever occurrence where both a significant...

Apart from the product inspection issue, the decrease in shares held by Mr Suwin and his family from 70% to 20% is another factor prompting loss of confidence among investors as this could result in the...
1) The reason for Beauty's extraordinary margins and returns is that its COGS is very low relative to its retail price. So low that the quality/value of its products should be suspect. The above Bangkok Post article is one example of the inferior quality of its products. If you ask around your female friends -- as I have -- they will tell you the same thing. Another hint that their products are more generic than they appear to be is that the manufacturing is outsourced to undisclosed third parties. How can your products be above-average, if not unique, if they can be produced by just about anyone?

2) The success of Beauty, in pricing its products way above its cost, lies in their clever packaging and marketing. Most of the products give the impression that they are of Korean origin. The multiple iteration of shop name they had before Beauty is another hint of their rich marketing experience.

1998: Mona
2000: Manapolitan
2004: Cosmedia
2006: Beauty Buffet (jackpot!)

3) If you knew you were selling overpriced poor quality products to your customers, or if your products are being manufactured by just about anyone (and can therefore be duplicated and repacked by another cleverer marketer), you would be very worried about future sales. So it would come as no surprise that the founders have aggressively sold down their stake upon success in both the business and stock price.

Even after the correction, the share price still look massively overvalued.

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