Huijie Co., Ltd. 2025 Annual Report Analysis: Net profit down 30.66% year-over-year, operating cash flow up 17.03%

Operating Revenue: Structural Differentiation Behind a Marginal Increase

In 2025, Huijie Co., Ltd. generated operating revenue of RMB 3B, up only 1.61% year over year, indicating weak growth momentum. Judging by business structure, the underwear business, as the core revenue source, recorded revenue of RMB 1.24B, up slightly by 1.72% year over year; however, the cosmetics business saw a sharp decline of 38.69% to RMB 5.1391 million, becoming a lagging segment.

By product line, the bra business revenue was RMB 1.3B, down 9.75% year over year, the largest decline among all categories; meanwhile, camisole revenue was RMB 588 million, up 36.51% year over year, becoming the only high-growth category, offsetting the decline in the bra business to some extent.

From a channel perspective, the online channel performed strongly, delivering revenue of RMB 1.74B, up 5.27% year over year, and its share of total revenue rose to 43.39%. By contrast, distributor channel revenue was RMB 330 million, down 5.16% year over year, while direct-operated channel revenue remained basically flat.

Profitability Indicators: Net Profit Drops Sharply

Net Profit: Down More Than 30% Year Over Year

In 2025, the net profit attributable to shareholders of listed companies was RMB 54.8165 million, down significantly by 30.66% year over year; non-GAAP net profit was RMB 54.6757 million, down 19.35% year over year. Judging from quarterly data, the company’s profitability shows a pattern of stronger performance earlier and weaker later: in the fourth quarter, net profit attributable to shareholders of listed companies was -RMB 67.1895 million, and non-GAAP net profit was -RMB 60.2267 million. The quarterly loss directly dragged down the full-year profitability level.

Earnings per Share: Also Down in Tandem

Basic earnings per share were RMB 0.13 per share, and non-GAAP earnings per share were likewise RMB 0.13 per share; both decreased by 30.66% year over year, consistent with the decline in net profit, reflecting an overall deterioration in the company’s profitability.

Expenses: Administrative Expenses Surge Sharply

In 2025, total period expenses were RMB 173.72441 million, up 4.13% year over year, and the sharp increase in administrative expenses was the main driver.

Selling Expenses: Slight Decline, Still High

Selling expenses were RMB 142.57435 million, down slightly by 2.35% year over year, but still accounted for 47.51% of total operating revenue. Among them, expenses for direct-operated terminals increased 12.46% year over year to RMB 1.43B. Advertising and online sales expenses were basically flat, while renovation and decoration costs fell 17.50% year over year to RMB 225.6M. House rental expenses decreased 38.83% year over year to RMB 9.9345 million due to adjustments to the reporting scope and a decline in office rent in the Shenzhen region.

Administrative Expenses: Up More Than 25% Sharply

Administrative expenses were RMB 24.41252 million, up significantly by 25.72% year over year. Among them, wage and welfare expenses increased from RMB 244.13M to RMB 16.90284 million, up 35.65%, which was the main reason behind the growth in administrative expenses.

Finance Costs: Pressure Becomes Evident After Turning From Negative to Positive

Finance costs were -RMB 0.9741 million, narrower than -RMB 1.4103 million in 2024. Interest expense increased from RMB 4.4645 million to RMB 6.4541 million, up 44.56%; interest income increased from RMB 8.7916 million to RMB 9.3503 million, up 6.36%.

R&D Expenses: Down 7.79% Year Over Year

R&D expenses were RMB 68.3246 million, down 7.79% year over year, and their share of total operating revenue decreased from 2.51% to 2.28%. R&D expenditure is mainly expensed rather than capitalized; there is no capitalized R&D investment.

R&D Personnel: Headcount Reduced, Structural Adjustment

In 2025, the number of company R&D personnel was 323, down 27 year over year, a decrease of 7.71%. However, the share of R&D personnel in total employees rose from 4.71% to 4.95%. By education level, the number of R&D personnel with a bachelor’s degree or above decreased. The number of master’s-level R&D personnel fell from 3 to 2. By age structure, R&D personnel under age 30 and those aged 30–40 decreased by 9 and 28 respectively, while R&D personnel aged 40 and above increased by 10, indicating a certain trend of aging within the R&D team.

Cash Flow: Operating Cash Flow Grows; Financing Cash Flow Drains Sharply

Net Cash Flow From Operating Activities: Up 17.03% YoY

In 2025, net cash flow from operating activities was RMB 250.72M, up 17.03% year over year. Sub-total cash inflow from operating activities was RMB 3.36B, up 0.77% year over year; sub-total cash outflow from operating activities was RMB 3.11B, down slightly by 0.35% year over year, mainly benefiting from reduced cash payments for procurement, payroll compensation, and others.

Net Cash Flow From Investing Activities: Narrower Deficit

Net cash flow from investing activities was -RMB 17.5767 million, narrower than -RMB 27.6544 million in 2024. This was mainly because disposals of fixed assets increased during the reporting period, while purchases of fixed assets and investment in factory park renovations decreased. Cash inflow from investing activities surged 156.80% year over year to RMB 697.4k, while cash outflow fell 34.56% year over year to RMB 7.51M.

Net Cash Flow From Financing Activities: Net Outflow Widened

Net cash flow from financing activities was -RMB 295.3949 million, with an additional net outflow of RMB 45.0098 million year over year. This was mainly due to an increase in dividends, profits, and other financing-related expenditures. Cash inflow from financing activities jumped 190.99% year over year to RMB 2.15M, mainly because a newly established non-wholly-owned subsidiary received minority shareholders’ investment. Cash outflow increased 19.74% year over year to RMB 302.9074 million.

Risk Warnings: Multiple Pressures Need Urgent Response

Risk of Market Competition and Changes in Demand

Competition in the underwear industry is fierce. New formats such as new retail and live-streaming e-commerce have emerged, and new internet-native brands are continually appearing. If the company misjudges market demand or if its products cannot meet consumers’ diversified needs, it will face risks of sluggish sales and declining performance. At the same time, the company’s core bra business has declined sharply, which also suggests that product iteration may not have kept pace with market changes.

Risk of Multi-Brand Operations

The company has multiple brands, including Manifen, Ivies, and Lanzhuli, etc. Multi-brand operations impose high requirements on capital, personnel, management, and more. If operations are not handled properly, it will have an adverse impact on the company’s operations.

Risk of Rising Operating Expenses

Advertising, direct-operated terminals, human resources, and other expenses are the company’s main operating costs. If future operating revenue cannot cover the growth in expenses, it will directly lead to a decline in performance. The sharp increase in administrative expenses in 2025 has already put pressure on profitability.

Inventory Risk

The company’s inventory accounts for a relatively high proportion of total assets. As of the end of the reporting period, the inventory book value of the understance brand is approximately 3.7 million Canadian dollars. If product sales become sluggish in the future or if inventory clearance for that brand is not handled effectively, it will adversely affect the company’s performance and financial condition. In 2025, the company accrued RMB 140 million in provision for inventory price declines, up 6.12% year over year, which also reflects the pressure in inventory management.

Compensation of Senior Executives and Directors/Supervisors: Compensation Differences Are Significant

In 2025, the total pre-tax remuneration received from the company by the Chairman and General Manager, Lü Xingping, was RMB 2.96M; the Executive Vice President, He Songchun, was RMB 2.9203 million; the Vice President, Zheng Weifang, was RMB 2.958 million; and the CFO, Deng Jingying, was RMB 0.15 million. It can be seen that compensation differences among core executives are substantial: the Vice President Zheng Weifang’s compensation is higher than that of Chairman Lü Xingping, while the newly appointed CFO Deng Jingying’s compensation is relatively lower. The pre-tax remuneration for independent directors is RMB 0.12 million per year each.

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