Pressure from a betting agreement looms! Parent company of Canhalf pushes for Hong Kong listing: High marketing spending erodes profits, Vmei's lesson not far behind

Reporter Zhong Kai from Sing Tao reports from Guangzhou.

The popular oral care brand 'Canhalf,' endorsed by singer Huachen Yu, has its parent company Shenzhen Xiaokuo Technology Co., Ltd. (hereinafter referred to as 'Xiaokuo Technology') recently submitting its application for listing on the Hong Kong Stock Exchange, aiming to become the 'first oral care stock' in Hong Kong. The listing is exclusively sponsored by CMB International with CICC serving as the exclusive financial advisor.

According to Frost & Sullivan, in terms of retail sales in 2025, Xiaokuo Technology ranks as the third-largest group in China's oral care products market and has achieved the highest online sales among all Chinese oral care product companies. Additionally, the company ranks first in the premium toothpaste market with a market share of 19.2%.

However, beneath the halo of high growth, Little Broad Technology's IPO journey has not been smooth sailing. Behind the rapid revenue growth, the company has invested over 3 billion yuan in marketing over three years, while research and development expenditure accounted for less than 1%. In 2025, the company shifted from profit to loss, compounded by the pressure of a 580 million yuan valuation adjustment mechanism agreement coming due. The traditional model of 'traffic for growth' in the new consumer sector will also face challenges.

The ** also sent a letter to Little Broad Technology to inquire about matters related to its listing, but no response had been received as of press time.

Profit turning into loss, departing director’s salary exceeding ten million

Little Broad Technology was founded by Yin Kuo in 2015. According to the milestones disclosed in the prospectus, the company did not launch its oral care product brand 'Canyan' until 2018. As understood by The **, Yin Kuo initially entered the market with electric toothbrushes as the core product. However, at that time, it was difficult to overcome barriers related to electric toothbrush technology and channels. Subsequently, the company pivoted towards fast-moving consumer goods such as toothpaste, mouthwash, and oral sprays under the 'Canyan' brand.

▲Xiaokuo Technology Product Distribution

Data shows that Little Broad Technology gradually opened up growth space thereafter. From 2023 to 2025, the company's revenue increased from 1.096 billion yuan to 2.499 billion yuan, with a compound annual growth rate of 51%. In 2025, revenue growth reached 82.5%.

By product mix, the contribution of revenue from basic oral care products under the 'Canyan' brand gradually increased, reaching 92.9% in 2025. Next were professional and beauty oral care products under the 'Canyan' brand, accounting for 6.8%. The newly launched personal care brand 'Little Arrow' is still in its incubation period, contributing only 0.3% of revenue. Thanks to the high gross margin of two major product categories under 'Canyan,' Little Broad Technology's overall gross margin remained stable at around 70%, reaching approximately 71.9% in 2025, an increase of 2.1 percentage points year-on-year.

▲ Revenue Breakdown by Product Portfolio at Xiaokuo Technology

However, in stark contrast to the high revenue and high gross margin, Little Broad Technology's profits for 2023-2025 were 41 million yuan, 34 million yuan, and -18 million yuan respectively, showing a trend of shifting from profit to loss. This was mainly due to significant equity-settled share-based payment expenses incurred by the company in 2025, amounting to approximately 115 million yuan. After adjustments, the annual profit was approximately 155 million yuan, representing a year-on-year increase of 133.55%.

According to The ** analysis, in 2025, among the share-based payments distributed by Little Broad Technology, Chairman and Director Yin Kuo received share-based payments of approximately 113 million yuan, accounting for over 98%. Among other executives, Executive Director Han Jindou received share-based payments of 566,000 yuan, Director Wang Chen received 512,000 yuan, and Executive Director and Chief Financial Officer Fan Chao received 402,000 yuan.

▲Little Broad Technology implements equity incentives before its IPO

Notably, the company's director Wang Chen received a discretionary bonus of 10.104 million yuan in 2025. Excluding the share-based payment portion, his compensation amounted to approximately 10.602 million yuan, making him the only executive at Little Broad Technology with an annual salary exceeding ten million yuan, about 4.87 times the salary level of Yin Kuo. Including the share-based payment portion, Wang Chen’s total compensation reached 11.114 million yuan, second only to Yin Kuo (115 million yuan).

However, just before Little Broad Technology officially submitted its IPO application, Wang Chen resigned as a director in March 2026 along with Wu Shiming, Li Fei, Zhang Ying, and Fang Dengdong. According to available information, Wang Chen currently serves as the head of the Business Development Center at Xiamen Little Broad Enterprise Management Consulting Partnership (Limited Partnership), an employee incentive platform of Little Broad Technology, and holds a 17.53% stake in this platform.

High marketing, low R&D dilemma

Despite maintaining a gross margin above 70%, Little Broad Technology's profitability has been significantly eroded by high sales expenses. From the cost structure, sales expenses for 2023-2025 were 685 million yuan, 835 million yuan, and 1.534 billion yuan respectively, accumulating to 3.055 billion yuan over three years, corresponding to sales expense ratios of 62.5%, 60.99%, and 61.41%. This implies that for every 10-yuan toothpaste sold, more than 6 yuan is spent on marketing-related expenditures.

Moreover, Little Broad Technology’s R&D expenditure over the past three years accounted for less than 1% of revenue, with 2025 showing R&D expenses of 19 million yuan, representing an R&D expense ratio of about 0.78%, displaying clear characteristics of 'high marketing, low R&D.'

In fact, the core engine behind Little Broad Technology’s rapid growth in recent years has been online traffic-driven sales, boosted by blockbuster products, while relying on a light-asset OEM model to cut costs.

Data indicates that Little Broad Technology’s online channel revenue was approximately 2.006 billion yuan in 2025, accounting for 80.3%, with 71.1% coming from direct sales channels on e-commerce platforms. The company also warned of risks, stating that if third-party e-commerce platform services or operations are interrupted, or if cooperation with these platforms terminates, deteriorates, or becomes more costly, then the company’s business, financial condition, and operating results could be materially adversely affected.

▲Little Broad Technology revenue breakdown by sales channel

The Frost & Sullivan report highlights that despite rapid growth in online sales, offline channels are still expected to remain the primary distribution channel for oral care products due to ongoing consumer preference for in-store purchases and product experiences. By 2030, offline channels are projected to account for 51.0% of the market retail scale. In contrast, although Little Broad Technology has increased its investment in offline channels in recent years, offline revenue accounted for less than 20% in 2025, indicating that sales channel risks remain significant.

On the product side, Little Broad Technology's offerings are heavily reliant on the 'Canyon' brand, particularly its core products like probiotic mouthwash and toothpaste, with market prices ranging between 9.9 and 39 yuan. For instance, on JD.com, one of its toothpaste products ranked at the top of the list with a discounted price of approximately 11.1 yuan. Market analysis indicates that competition in the affordable segment is fierce, and Little Broad Technology not only faces the risk of over-reliance on a single product but also needs to address challenges from homogenized competition among similar products. The company still needs to build a competitive edge through product differentiation.

▲ Ranking of the Canban brand toothpaste and toothbrush, data source: JD.com

On the production side, Little Broad Technology adopts an OEM (outsourced manufacturing) model, with limited proprietary production capacity. From 2023 to 2025, it employed 15, 14, and 10 OEM suppliers respectively to produce its main products. The company openly admits that its reliance on several OEM suppliers may expose it to additional risks due to this dependence on external parties.

Under the pressure of valuation guarantees, the company distributed dividends of 130 million yuan before its IPO.

During its rapid growth phase, Little Broad Technology underwent 10 rounds of capital increases from 2018 to 2021, with its post-investment valuation skyrocketing from 50 million yuan to 1.872 billion yuan, marking an increase of nearly 47 times over three years. Institutions such as ByteDance, Huaxing New Economy Fund, Innovation Works, and Clearvue Capital participated in these investments.

▲ Xiaokuo Technology's Capital Increase Situation

In January 2026, Little Broad Technology conducted a share transfer, raising its valuation to 2.526 billion yuan. Based on an adjusted net profit of 155 million yuan in 2025, the company's static price-to-earnings ratio was approximately 16.3 times. In contrast, other listed companies in the same sector, such as the parent company of 'Cold Acid Spirit,' Dengkang Oral Care (001328.SZ), have a static P/E ratio of about 34.7 times, while Yunnan Baiyao (000538.SZ) stands at 19.02 times. The capital market remains relatively conservative in valuing Little Broad Technology.

Now, Little Broad Technology has chosen to push for a listing on the Hong Kong stock exchange, which many believe is closely tied to the impending expiration of valuation guarantee agreements. Even taking the 2021 capital increase as a reference point, investors retain the right to exercise redemption within 60 months, meaning the company could face significant redemption pressures by 2026. From 2023 to 2025, Little Broad Technology's redemption liabilities amounted to approximately 582 million yuan, accounting for 61% of current liabilities.

Against this backdrop, Little Broad Technology did not distribute any dividends in 2023 or 2024 but opted to declare and pay out dividends of 130 million yuan in 2025, of which about 54 million yuan was used to settle redemption liabilities via dividends. This move was interpreted externally as a gesture to appease investors. Correspondingly, on March 19, 2026, related redemption rights and other terms were terminated, clearing obstacles for its IPO.

Currently, Little Broad Technology has begun its push to become the 'first oral care stock' on the Hong Kong stock exchange, though whether it will succeed remains to be seen. Referring to previous cases, the parent company of the 'Shuke' brand, Weimeizi, submitted an IPO application to the Hong Kong Stock Exchange in February 2022 but did not succeed. It later faced challenges including a 630 million yuan redemption and the freezing and auctioning of its equity, eventually being acquired by Beijiajie (603059.SH).

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