Fubei seeks Hong Kong IPO after profit falls 40%
Fubei (Shanghai) Co. Ltd. filed for a Hong Kong IPO after reporting a 40% profit drop in 2025 due to declining own-brand sales. The company approved a 100 million yuan dividend despite shrinking cash reserves. Fubei faces stiff competition in a growing market, lagging behind larger listed peers.
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Fubei (Shanghai) Co. Ltd. has filed to list in Hong Kong, aiming to attract investors despite a 40% decline in profit last year driven by a contraction in its own-brand business. The pet food maker's profit fell to 96.5 million yuan in 2025 from approximately 162 million yuan in the previous two years, while revenue remained stable at around 1 billion yuan. To bolster investor appeal, the company approved a 100 million yuan dividend payout at its latest annual general meeting, scheduled for distribution this month.
Business Performance and Strategy
Fubei operates through two primary segments: Original Design Manufacturing (ODM) and Original Brand Manufacturing (OBM). The ODM business, which produces goods for other brands, generates lower margins but higher sales volume, accounting for 61.7% of revenue in 2025. In contrast, the OBM segment, which includes the company's Bi Le brand, offers higher profitability with a gross margin of 49.1% compared to 23.1% for ODM. However, OBM revenue has declined steadily, dropping from 432 million yuan in 2023 to 350 million yuan in 2025. Consequently, the OBM segment's contribution to total revenue fell from 41.3% in 2023 to 34.3% in 2025.
Financial Metrics
The following table outlines Fubei's key financial figures over the past three years:
| Metric (in million yuan) | 2023 | 2024 | 2025 |
|---|---|---|---|
| OBM Revenue | 432 | 404 | 350 |
| Distributor Sales (OBM) | Not specified | 227 | 166 |
| Sales and Marketing Expenses | 106 | Not specified | 133 |
| R&D Expenses | 24.06 | Not specified | 11.51 |
| Gross Margin | 35.7% | Not specified | 31.6% |
| Profit | 162 | 162 | 96.5 |
| Cash Reserves | 626 | Not specified | 309 |
Market Context and Competition
China's pet food market was valued at 108.4 billion yuan last year and is projected to grow 10.4% annually over the next five years. Despite this potential, competition remains intense, with the top 10 brands holding only 22.1% market share. Fubei's Bi Le brand ranks ninth nationally with a 0.9% market share. The company trails listed peers such as Gambol Pet and China Pet Foods, which have larger revenues and market capitalizations. Fubei previously attempted a Shanghai IPO in 2021 but withdrew the application in 2023 due to strategic adjustments.
Can Fubei successfully reverse the decline in its high-margin OBM segment to restore profitability levels?
Will the 100 million yuan dividend payout be sufficient to sustain investor interest given the 50% drop in cash reserves?
How will the significant reduction in R&D expenses impact the company's ability to innovate in a competitive market?
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