New stock outlook | Marketing business repair is difficult to hide transformation anxiety: Midodo, with high growth in performance, still needs to break through operational business

Driven by the common drivers of domestic demand pressure, external demand relay, policy support, and tariff pressure, going global has risen from being an "optional" choice for Chinese companies to a "strategic imperative." This is not just a single breakthrough, but a systematic resonance across the entire industry, all models, and all regions, signaling that Chinese companies going global have officially entered a critical turning point from scale expansion to quality enhancement. As Chinese companies enter a new stage of going global, the demand for overseas marketing services is growing rapidly. One of the beneficiaries of this industry trend is Mi Duo Duo, an overseas marketing service provider that has already begun to impact the capital market. It was learned that on June 12, Mi Duo Duo Group Limited (hereinafter referred to as "Mi Duo Duo") submitted an application to the Hong Kong Stock Exchange main board, with China International Capital Corporation Limited as its sole sponsor. It is worth noting that the company had previously submitted an initial public offering application on December 9, 2025. Following the second submission, Mi Duo Duo's latest performance was also revealed. According to the prospectus, in 2025, Mi Duo Duo's revenue was $138 million, a year-on-year increase of 94.21%, with an adjusted net profit of $2.378 million recorded during the period, compared to a loss of $87,000 in 2024. Looking at the financial data alone, Mi Duo Duo had indeed entered a fast-growing trajectory in 2025, with its fundamentals significantly improved. However, beneath the surface of growth, deep-seated concerns at the operational level of the company have not dissipated, and the core challenges remain strong. TikTok and Google channels drove high revenue growth, with marketing business revenue accounting for over 90% Founded in May 2014, Mi Duo Duo has been deeply cultivating the cross-border trade field. After more than ten years of accumulation, the company has now established three main business segments: overseas marketing services, overseas e-commerce operations, digital exhibition services, and others. Among these, overseas marketing services refer to helping advertisers promote their brands, services, and products on international digital media platforms; digital exhibition services involve co-hosting the China Cross-border E-commerce Fair with Huiliyuan International Exhibition and providing exhibition booths to exhibitors; and overseas e-commerce operations involve Mi Duo Duo ordering and purchasing goods from brand partners and selling them directly to overseas individual consumers through international digital media platforms. Other businesses mainly focus on wholesale. In 2025, Mi Duo Duo's revenue from overseas marketing services, overseas e-commerce operations, digital exhibition services, and other businesses accounted for 93.1%, 3.1%, 0.6%, and 3.2%, respectively. This shows a high concentration in the company's revenue structure, heavily reliant on a single business line, which poses a challenge to the balance of the business structure. With such a revenue structure, the high revenue growth in 2025 was directly related to the overseas marketing business. During the reporting period, the company's revenue from overseas marketing business was approximately $129 million, an 82.22% year-on-year increase and a key driver of the company's total revenue growth. The remarkable performance of the overseas marketing business can be attributed to two main reasons. Firstly, after becoming an official TikTok agent in July 2024, the company saw a double increase in the number of active customers and average revenue per customer: in 2025, the active customer count increased from 706 to 1209, and the average revenue per customer rose from $13,800 to $32,200, leading to an increase in revenue from TikTok business from $9.7 million to $38.9 million. Secondly, in 2025, Mi Duo Duo optimized its operations for Google business, leading to an increase in revenue per customer from $100,000 to $300,000. With additional factors such as incremental revenue from new customers and providing customized services to major clients driving growth, the revenue from Google business soared from $46.9 million to $82.4 million. Clearly, becoming an official TikTok agent injected strong incremental growth into Mi Duo Duo, combined with operational optimization in the Google channel, these factors jointly built a dual-drive for the company's overseas marketing business. It is worth noting that the launch of overseas e-commerce operations in May 2025, which recorded $4.209 million in revenue, also made a certain contribution to overall revenue growth, although it still accounted for a small percentage. The other business segment equivalent in scale to overseas e-commerce operations was an occasional occurrence during the reporting period and not a primary development direction. In addition to the surge in revenue from the overseas marketing business, the improvement in the company's overall gross profit margin played a key role in profit generation. According to the prospectus, from 2023 to 2025, Mi Duo Duo's gross profit margins were 4.1%, 4.4%, and 8.6%, with the gross profit margin in 2025 nearly doubling. However, a closer look reveals that the overseas marketing services, accounting for 93.1% of revenue, contributed only about half of the gross profit, as its gross profit margin was only 4.7%. In stark contrast, the overseas e-commerce operations, accounting for only 3.1% of revenue, contributed nearly half of the profit with an exceptionally high gross profit margin of 72.1%. While other business segments contributed up to 20% of gross profit, their occasional nature did not provide a logical basis for sustained growth. It is important to note that Mi Duo Duo's marketing and administrative expenses surged: from 3.8% in 2024 to 25.6% in 2025. However, this included a substantial portion of equity-settled share payments, which are non-cash expenses. After excluding this factor, the actual expense ratio in 2025 was only 8.1%, consistent with the high revenue growth. However, the company's ability to control expenses without the impact of share payments will remain crucial in determining its future profitability realization. Although becoming an official TikTok agent and optimizing operations for Google business boosted Mi Duo Duo's performance in 2025, it did not change the fact that the company faces significant operational challenges due to its heavy reliance on overseas marketing business. With a gross profit margin of only 4.7% in 2025, it is clear that the nature of Mi Duo Duo's overseas marketing business is that of a "low-margin carrier," and the key reason for this situation is the double squeeze on the company's bargaining power in the industrial chain. Upstream, Mi Duo Duo is highly dependent on media resources. In 2025, the company's purchases from the top five suppliers accounted for 95.4% of total sales costs, with Google and TikTok purchases accounting for 63.3% and 25.9%, respectively, totaling a staggering 89.2%. This high dependency on media resources means that platform policies, algorithms, payment cycles, etc. are all controlled by the media companies, leaving Mi Duo Duo passive and earning only the "purchase rebate gap." Any changes in platform rebate rates will have a significant impact on the company's gross profit. Downstream, although Mi Duo Duo's customer concentration from the top five customers decreased from 66.8% in 2023 to 27.2% in 2025, and the share of revenue from the largest customer decreased from 23.7% to 6.8% during the same period, the company's customers are mainly small and medium-sized cross-border sellers who are price-sensitive and have low switching costs. Consequently, Mi Duo Duo cannot easily shift the cost of "platform rebate reduction" to customers, leading to a dual squeeze on the margin in moments of reduced platform rebates. Looking ahead, the trend of disintermediation in upstream media channels poses another challenge for Mi Duo Duo. In the current industry landscape, Google has begun to promote self-service advertising, Amazon is further strengthening its own advertising, and TikTok Shop is accelerating the construction of a closed-loop ecosystem, bypassing the need for agents in the system. As platform demand for intermediaries weakens, the potential value of Mi Duo Duo's marketing business will be further diminished. To break free from the operational challenges brought by the marketing business and enhance the intrinsic value of the company, Mi Duo Duo launched its overseas e-commerce operations in May 2025, aiming to leverage the synergies of the marketing business to develop and grow the e-commerce operations. However, based on the current results, the overseas e-commerce operations are still in the incubation stage, with revenue accounting for only 3.1% in 2025. Furthermore, the serious lack of investment in research and development is also a notable concern for the market regarding Mi Duo Duo. According to the prospectus, from 2023 to 2025, the company's research and development expenses as a percentage of total revenue were 0.7%, 0.5%, and 0.3%, with research and development spending in 2025 totaling a mere $463,000. With such low levels of research and development investment, the lack of technological barriers hinders the company's long-term stable development in a highly competitive and diversified market of marketing and operations. In conclusion, while the significant improvement in overseas marketing business in 2025 alleviated short-term survival pressure, it did not fundamentally address the operational challenges facing the company. The key to reshaping the company's valuation logic and boosting its intrinsic value lies in whether the e-commerce operations can take over as the new growth engine. Undoubtedly, the repair of the marketing business has provided a valuable strategic buffer for the company's accelerated development towards operational business, but its success will ultimately depend on the harsh scrutiny of the market.