With efforts in three key areas - improving profitability, accelerating production expansion, and upgrading the brand - Higold Group is breaking through to a new ceiling for long-term growth.

Source: Times Business Research Institute Author: Lu Shuoyi

On April 27, Higold Group (001221.SZ) released its first annual report since going public. The company demonstrated robust growth with high increases in revenue, net profit, and operating cash flow in 2025, fully validating its stable growth foundation.

Entering 2026, Higold Group continues to maintain strong momentum, with both revenue and net profit in the first quarter sustaining double-digit steady growth. Meanwhile, the pace of the company's production capacity expansion has significantly accelerated, with capital expenditures surging 178% year-over-year, reinforcing the foundation for medium- to long-term growth through scaled production capacity deployment.

With continuous advancements in technology development and product capabilities, Hagao Group has launched its new international luxury brand 'Tourbillon,' accelerating the localization of domestic hardware and breaking away from the traditional low-price competition model. The company has completed a strategic leap from cost-performance to quality-performance ratio, continuously expanding the boundaries of revenue growth.

Triple high growth in performance, with optimized product structure reinforcing the foundation of profitability.

After more than two decades of focus on the home hardware industry, Hagao Group has built long-term comprehensive competitive advantages through branding, R&D, manufacturing, and channel development, becoming a leading enterprise in China's home functional hardware sector. In addition, it went public on the Shenzhen Main Board in July 2025, making it the 'first functional hardware stock in China.'

From the core financial report data, Hagao Group’s business quality improved comprehensively in 2025, with significant growth in revenue, net profit attributable to shareholders, and operating cash flow. Annual revenue reached 3.595 billion yuan, up 25.83% year-over-year; net profit attributable to shareholders hit 704 million yuan, increasing by 32.39%; operating cash flow reached 1.04 billion yuan, surging 54.42% year-over-year.

Notably, the scale of operating cash flow for the period significantly exceeded net profit, highlighting the company’s robust 'cash generation capability.' Its profits are backed by solid cash support, indicating high-quality earnings.

In Q1 2026, Hagao Group's revenue and net profit continued to grow steadily. According to the Q1 report, revenue and net profit attributable to shareholders were 705 million yuan and 129 million yuan respectively, with growth rates of 12.54% and 11.19%. This demonstrates strong growth resilience. Meanwhile, its sales collection ability strengthened further, with cash received from sales of goods and services reaching 832 million yuan, a 26.44% year-over-year increase, maintaining healthy and stable cash flow operations.

On the profitability front, Hagao Group’s gross margin continued to rise steadily, expanding the scope for profit growth. In 2025 and Q1 2026, the company's gross margins were 37.20% and 36.23%, representing year-over-year increases of 1.36 percentage points and 1.08 percentage points respectively.

The core logic behind the steady increase in gross margin lies in the continuous optimization of internal product structures. High-margin, high-growth basic hardware served as the core growth driver, improving both category revenue share and profitability, while all categories developed synergistically, jointly strengthening the company’s long-term profitability foundation.

By product category, basic hardware is undoubtedly the 'core engine.' In 2025, revenue from this category grew 37.18% year-over-year to 1.679 billion yuan, accounting for 46.7% of total revenue, up from 43.69%. More importantly, its gross margin increased by 4.96 percentage points year-over-year to 40.37%, making it Hagao Group’s fastest-growing and highest-margin category.

Storage hardware and kitchen & bathroom hardware played the roles of 'performance stabilizer' and 'new growth driver' respectively. In 2025, revenue from these two categories reached 1.042 billion yuan and 448 million yuan, growing by 21.59% and 23.92% respectively. The combined efforts of these three categories led to triple resonance in economies of scale, smart manufacturing cost reductions, and product premium pricing power.

In addition, the Higold Group has also expanded into new categories such as smart home, integrated bathrooms, and cabinet lighting. Although these segments are currently small in scale, they have already established a tiered product matrix with 'basic hardware as the core, storage and kitchen & bath as wings, and smart home as the long-term vision,' laying the groundwork for future growth.

Capital expenditure surged by 178%, accelerating capacity expansion

A solid performance foundation has provided robust support for Higold Group's production expansion and upgrades. Based on strong market demand, Higold Group has significantly increased its investment in long-term assets, with capital expenditure in the first quarter of 2026 showing a substantial increase, clearly outlining a development blueprint focused on expanding production capacity to secure future growth.

The Q1 2026 report shows that Higold Group’s cash outflows for purchasing fixed assets, intangible assets, and other long-term assets reached 148 million yuan, a year-on-year increase of 178.35%. The sharp rise in capital expenditures has been primarily directed towards key areas like capacity construction, intelligent equipment upgrades, and production line automation, continuously enhancing its manufacturing capabilities.

At the production base level, Higold Group has successfully implemented two core intelligent manufacturing carriers: the Starship Headquarters Base and the Hexagon Building Base. The Unicorn Base is under steady progress, while the Hyperspace Fortress Base has entered the planning stage. In the future, this will form a modern manufacturing cluster with multi-base coordination and full-scenario coverage. Simultaneously, the company has fully implemented digital management systems such as ERP, MES, and WMS, achieving end-to-end visibility and refined control over production processes, maintaining a leading position in smart manufacturing within the industry.

Continued recovery in demand has become the core driver of capacity expansion. In 2025, Higold Group’s overall sales volume of home hardware grew by 38.62% year-on-year, while production increased by 43.79% year-on-year. Inventory rose slightly year-on-year, mainly due to strong order volumes for core products and proactive stockpiling. Notably, sales of basic hardware, a core product, grew by 38.96% year-on-year. To quickly meet market demand, the company proactively increased production, with output rising by 44.15% simultaneously. By the end of Q1 2026, the company's inventory reached 232 million yuan, up 40.85% year-on-year, driven by sufficient order backlogs and strategic stockpiling to ensure timely delivery.

Capacity utilization data further confirms the tight supply-demand balance. According to the prospectus, in 2024, Higold Group’s capacity utilization rates for basic hardware, storage hardware, and kitchen & bath hardware were as high as 103%, 97.20%, and 98.86%, respectively, with core capacities remaining consistently saturated. If capacity supply cannot keep pace, it will directly constrain large order acceptance capabilities and market expansion speed.

As newly built bases gradually come online, Higold Group’s production model will transition from traditional automation to a new phase of large-scale, intensive smart manufacturing.

On one hand, large-scale production will further reduce unit manufacturing costs, strengthening cost control advantages and driving overall profitability. On the other hand, sufficient capacity reserves will enable quick responses to bulk orders from leading custom home furnishing companies, deepening cooperation with core clients. In the long term, full release of capacity will further consolidate the company’s leadership barriers in the industry and enhance revenue elasticity.

Accelerated localization is shifting the focus from cost-performance to quality-performance, opening up new growth opportunities.

Currently, the localization process of China's whole-house hardware industry has entered a critical phase, with profound changes occurring in the competitive landscape. The industry is gradually moving away from cutthroat price wars and shifting towards healthy competition centered on quality, design, and value.

In the past, domestic hardware brands primarily relied on cost-performance advantages to capture market share, quickly achieving localization. However, the low-price model continuously compressed industry profit margins, limiting development quality. With the upgrading of consumer spending and the increasing concentration in the custom home furnishing industry, high-quality, original, and highly stable products have become the core market demand. The industry is now officially transitioning from cost-performance competition to quality-to-price ratio competition.

Looking at the broader industry, the home hardware sector shows vast growth potential. According to statistics from the China Hardware Products Association, by 2025, the domestic furniture hardware industry is projected to reach a market size of 269.11 billion yuan, and it is expected to exceed 320 billion yuan by 2028. This vast market capacity provides fertile ground for leading companies to pursue high-quality development.

As an industry benchmark company, Higold Group has accurately grasped the trend of industry transformation. It has comprehensively implemented a quality-to-price strategy across four dimensions: original design, quality control, brand upgrading, and channel deepening.

In the fields of original design and technology R&D, Higold Group, as a national high-tech enterprise and provincial-level industrial design center, adheres to independent innovation as its core driving force. Leveraging an international R&D team and collaborating with domestic and overseas design schools and professional institutions, the company has achieved technological breakthroughs in key areas such as smart hardware, hidden integrated systems, premium storage solutions, and precision surface treatment.

By the end of 2025, Higold Group will have accumulated 1,235 patents domestically and internationally. Its products have won 13 Red Dot Design Awards and 17 iF Design Awards in Germany, solidifying its position in the top tier of the industry in terms of design capabilities. Additionally, the company has been deeply involved in establishing industry standards, participating in the formulation of national and industry regulations and contributing to professional textbooks for the kitchen cabinet industry, continuously leading the industry toward standardization and premium development.

On the production quality front, Higold Group relies on mature manufacturing techniques and incorporates product characteristics from multiple categories and specifications. By separating standardized production from customized processing workflows, the company fully implements lean production and standardized operations. Through the implementation of 69 efficiency improvement plans and 66 quality enhancement initiatives, it continually optimizes production processes, resolves bottlenecks in operations, and achieves dual upgrades in production efficiency and product quality.

In terms of brand building and channel layout, the company focuses on its core self-owned brand 'HIGOLD,' combining industrial design aesthetics with practical functionality to establish itself as a leader in premium domestic hardware. Supported by a global distribution network, online e-commerce platforms, and offline retail stores, along with deep strategic cooperation with leading home furnishing enterprises, it comprehensively covers diverse scenarios such as home decoration, premium finishing, and renovation of existing housing. The brand's influence and market recognition continue to grow. The company is accelerating its transformation from a single-product supplier to a comprehensive home space value service provider, strengthening its foundation for premium and international development.

To enhance its brand portfolio and compete in the global premium market, Higold Group has introduced a new international luxury brand, 'Tourbillon.' This new brand integrates global design resources and aligns with top-tier international manufacturing processes, forming a complementary high-low synergy with the main brand. This further strengthens its global competitiveness, supporting the creation of a world-class home hardware industry cluster.

Amidst the wave of quality-to-price upgrades, the export model of the home hardware industry has also evolved, gradually shifting from traditional product exports to branded and value-driven globalization. The global home hardware market shows clear structural differentiation: mature markets exhibit steady replacement demand, while emerging markets are experiencing rapid growth in functional and branded consumption needs. This presents new opportunities for leading companies with advantages in R&D, manufacturing, and branding. The logic of global expansion no longer centers solely on goods export but involves building overseas channels, implementing localized operations, and reinforcing global brand promotion to construct long-term core barriers.

Leveraging its solid leading position, continuously upgraded product strength, and a well-established brand strategy, Hangao Group is fully capitalizing on the dual benefits of domestic substitution and overseas brand expansion. With coordinated efforts in both domestic and international markets, the company’s competitive moat will continue to strengthen, unlocking its full growth potential and further highlighting its long-term development value.

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