New stock preview | Hujia Technology: Dual pressure of single brand and online dependence Can high-tech profit margins continue?

HKEX recently welcomed another Chinese local skincare company's application for listing. On January 26, Shenzhen HuJia Technology (Group) Co., Ltd. officially submitted its prospectus to the main board of the Hong Kong Stock Exchange, with Morgan Stanley and CICC as joint sponsors. The company's core brand, HBN, with its first-mover advantage based on the "morning C evening A" skincare concept and solid research background, has secured an important position in the competitive skin care market in China and shown a clear growth trajectory and profitability. According to the Zhishi Consulting report, based on retail sales in 2024, HuJia Technology has entered the top ten list of Chinese skincare brands and is the youngest brand among them. Furthermore, the company has established its leading position as a dermatological grade domestic brand in the Chinese skincare market. In the core ingredient field, its A alcohol product sales have ranked first in the Chinese market for three consecutive years, and the star product -arbutin essence water has achieved three consecutive sales championships in the essence water category, demonstrating strong product power and market recognition. However, there are concerns about the sustainability and structural risks behind its growth. Despite some indicators showing growth in the financial performance of HuJia Technology from 2023 to 2025, there are several risks and pressures to be vigilant of on the sustainability and structural levels. In terms of revenue growth, the company's full-year revenue increased by 6.9% year-on-year in 2024 and by 10.2% year-on-year in the first nine months of 2025. While the growth rate is positive, the overall growth is relatively slow, which may reflect limited market space or increased competition leading to growth pressure. Behind the improvement in profitability, there are hidden structural concerns. Although the net profit margin has significantly increased from 1.9% in 2023 to 9.6% in the first nine months of 2025, this jump in profit margin is mainly due to expense compression or operational leverage release, rather than strong drivers on the revenue side or fundamental optimization of product structure. It is worth noting that the sales cost ratio increased from 23.4% in 2024 to 26.6%, indicating continued pressure on raw materials, labor, or manufacturing costs, making the sustainability of high gross profit margin uncertain. Additionally, the company's profit growth rate in 2024 (232.5%) far exceeded the revenue growth rate (6.9%), indicating a profit growth model highly dependent on cost control driven by expenses which may be difficult to sustain in the long term. If industry competition intensifies, prices come under pressure, or costs rise, the profit margin may face rapid decline risks. Moreover, the cash flow performance of HuJia Technology presents significant structural contradictions and potential risks, highlighting concerns about the quality of profitability and financial stability. In summary, HuJia Technology's financial improvement is more of a result of short-term cost reduction and efficiency improvement rather than a substantial enhancement in business model or competitive position. If the company cannot achieve stronger growth breakthroughs on the revenue side and effectively manage cost fluctuations, its high profit performance may be difficult to maintain in the future.