Making a spectacle

Mingyue Optical Lens IPO surges 150%


700 million short-sighted in China

Danyang in Jiangsu province is China’s leading producer of reading glasses.

Yet until December last year none of the main eyewear companies in the county-level city – which is said to make 40% of the world’s lenses – had sold shares to the public. That changed in the middle of the month with the listing of Mingyue Optical Lens. And in a reflection of the excitement about the industry its share price surged 150% on its first day of trading in Shenzhen.

Mingyue was founded in 1997 by Xie Gongwan (the tycoon came from a farming family in Zhejiang province). His first foray into spectacle sales was at the age of 18 when he bought a sack of locally-made glasses and travelled to the northeast to sell them on the streets in the middle of winter.

Mingyue has since grown into a much larger company, specialising in spectacle lenses, lens resin materials, finished lenses and frames. It is widely known in China for its lightweight resin lenses (as well as its advertising campaigns featuring the actor Chen Daoming).

The company has grabbed about 11% of the domestic lens market, second only to Wanxin Opticals, according to market research platform Euromonitor. Retail sales in China of spectacles alone were nearly Rmb100 billion ($15.67 billion) in 2020, according to Euromonitor.

Driving much of the growth are two main factors: an aging population and soaring levels of myopia among the young. Indeed, the World Health Organisation estimates there are already more than 700 million short-sighted people in China. And an major report on children’s health from the Chinese government – released in December 2020 – also reckoned that 68% of school children already suffer from poor eyesight, with the proportion increasing to 85% in high-school students.

Chinese leader Xi Jinping has ordered officials to get student myopia levels down by reducing homework and mandating more time away from screens and smartphones (outdoor exercise is also seen as a remedy).

But the pandemic looks set to push the myopia numbers ever higher because children have been spending more time in front of screens – and less outdoors in natural daylight using their longer-distance vision. A separate survey by the Ministry of Health in August suggested that the myopia rate among primary and secondary school students had increased by 11.7% in the first half of 2020, for instance. That will push the overall numbers well beyond the targets set three years ago.

For the likes of Mingyue, this is rather better news. In fact, entrepreneurs see it a growth opportunity: more than 150,000 new eyesight-related enterprises were registered in China in the first half of last year, according to Tianyancha.

Mingyue has continued to be majority owned by its founder Xie and a couple of his relatives after its IPO.

With an IPO stock price of Rmb26.9, its shares soared to Rmb67 on their first day of trading – making the company worth Rmb9 billion. Yet despite the strong start, some analysts sounded a note of caution over the company’s heavy investment in sales and distribution, and its relatively weaker commitment to investment in R&D.

Moreover, Mingyue buys the resin for its lenses from overseas (mostly from Japan and South Korea), meaning that it lacks much of the IP that it would need to make standalone brands of its own.

Baidu News also pointed out that Mingyue spends around 3% of its revenues on R&D and has surprisingly few patents to its name. “Whether compared with similar companies in the same industry both internationally and domestically, the number of technology patents of Mingyue Lens is inferior to its competitors,” it warned.

Revenues also fell between 2019 and 2020 – coming in at Rmb552 million and Rmb529 million respectively. Some retailers have urged Mingyue to upgrade its product line to meet the demands of more modern, urban customers, or alternatively to reduce its prices in a bid to capture the lower end of the market in China.

Funds from the IPO will be used to expand production capacity of high-end resin lenses and conventional resin lenses, and to build an R&D centre, Mingyue said.

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