Second-highest gross margin in beauty, worst marketing intensity in beauty — and FY25 didn't fix it.

• 78% gross margin, -4% operating margin. Cost of goods is 22% of revenue. Selling & marketing eats 66.3%. Every 200 bps off the S&M line on a ¥4.3B base is ~¥85M to operating profit.
• The S&M ratio moved 60 bps in the best year possible. Revenue grew 26.7%, gross margin hit an all-time high, skincare mix passed 53% — and S&M as % of revenue dropped only from 66.9% to 66.3%. The operating loss compression came almost entirely from the absence of a ¥403M Eve Lom goodwill hit plus 600 bps of G&A cuts.
• Peers run S&M at 25–45%. e.l.f. 24.7%, Mao Geping 35%, Proya 45%. Yatsen's gross margin (78%) beats all of them. Its marketing intensity (66%) is more than twice e.l.f.'s.

Revenue back to growth, operating loss compressed 77% — and operating cash flow still negative.

Revenue peaked at ¥5.84B in FY2021 then fell to ¥3.39B by FY2024 as Perfect Diary's color-cosmetics flywheel cooled. FY2025 is the first credible turn — skincare 53% of mix and growing 64% YoY, gross margin at an all-time 78.2%, and Q4 2025 the first quarter to pair positive net income with revenue growth since IPO. The cash statement hasn't caught the income statement: OCF was -¥95M in the most operating-leverage-favorable year of the cycle. Cash and short-term investments drained from ¥5.73B at end-FY20 to ¥1.01B (¥1.05B including restricted cash) — which is why the founder took a US$120M convertible in March.

Founder-CEO holds 90.7% of votes on 34.3% of the economics — and the dilution lever is half-pulled.

• Class B super-voting shares. Jinfeng Huang founded Yatsen in 2016 at age 32 after stints as a Guangzhou P&G market research manager (2007-10) and VP at Hunan Yujiahui Cosmetics (2011-16); he later completed a Harvard MBA in 2017. His Class B shares carry 20 votes each. Board, audit committee, comp plan, and related-party approvals serve at his discretion; minorities cannot block any vote.
• US$120M founder-affiliated convertible, March 11, 2026. Trustar Capital plus Huang personally co-invest at a US$4.63 conversion price — a 20% premium to the announcement, and ~60% above today's ¥19.64 (US$2.89) spot. Warrants struck at US$10/ADS. The stock fell roughly 27% in the three weeks after disclosure (¥28.68 on Mar 11 → ¥20.93 by end-March). NDRC certificate to unlock the 5-year tenor and the second tranche is still pending.
• Related-party purchases climbing. FY25 inventory and services bought from companies under common control: ¥372M, ~9% of revenue, up 76% over two years (FY23-FY25) while group revenue grew 26% across the same span. Counterparties unnamed. Audit committee chair Sidney Xuande Huang resigned February 28, 2026 for 'personal reasons' — roughly two months before the 20-F filing.

Three dated prints test whether FY25 was the turn or arithmetic.

• May 14, 2026 — Q1 results. Management guide: revenue ¥959M–¥1.08B (+15–30% YoY). Watchpoints: revenue at the high end, S&M below 65%, and cash flat at ¥1.0B. Three of three would meaningfully challenge the 0.20× EV/Sales discount; one of three would leave it intact.
• Mid-June 2026 — 618 shopping festival. No Yatsen brand has appeared on a Tmall or JD top-10 list since 2023; C-beauty momentum has migrated to Douyin. A first top-10 placement for DR.WU or Galenic during 618 would be independent verification that the skincare pivot is pulling external share, not just internal mix.
• Mid-August 2026 — Q2 and the cash read. The first clean post-618 quarter with the convertible's first tranche in the cash and share count. Bull thesis specifies S&M below 62% and trailing-four-quarter OCF approaching positive.