New stock preview | Crossing the capital market four times in ten years, performance fluctuations expose Kailan e-commerce's "weakness"

Shanghai Kaijie Electronic Commerce Co., Ltd. (hereinafter referred to as "Kaijie E-commerce") has had a "twisty" journey to going public. After voluntarily delisting in 2019, ending over three years on the New Third Board, Kaijie E-commerce attempted to break into the A-share Growth Enterprise Market in 2021, but withdrew half a year later. They then started tutoring for the main board of the Shanghai Stock Exchange in 2022, but terminated it over a year later. In May and November 2025, Kaijie E-commerce twice filed applications with the Hong Kong Stock Exchange, both of which automatically expired after six months. From "New Third Board Growth Enterprise Market Main Board of Shanghai Stock Exchange Hong Kong Stock Exchange," engaging in four capital market ventures over ten years, changing tracks three times, and failing twice in the A-share market, reflects the twists and turns of their journey to going public. Recently, there is news about Kaijie E-commerce's listing in Hong Kong. It is observed that on May 28, 2026, Kaijie E-commerce lodged its application for the Hong Kong Stock Exchange main board, with China Securities Co., Ltd. International as the exclusive sponsor. According to data from Zhoushi Consulting, based on the GMV in 2025, Kaijie E-commerce is the fifth largest digital retail solution provider in China (with a market share of 1%) and the largest O2O digital retail solution provider. However, their leading industry position has not translated into growth in performance. Their prospectus shows that from 2023 to 2025, Kaijie E-commerce's revenue fluctuated around 1.723 billion, 1.699 billion, and 1.757 billion Yuan respectively; while their adjusted net profit during the same period showed a trend of "first declining, then rising," at 67.59 million, 60.434 million, and 74.267 million Yuan respectively. Under this fluctuating performance, there are multiple potential challenges in Kaijie E-commerce's business operations. Revenue from pet and baby products continues to decline, with "efficiency" driving profit release. As a digital retail solution provider, Kaijie E-commerce provides comprehensive and customized services to brand owners, assisting them in efficiently building e-commerce infrastructure, driving online sales, enhancing operational efficiency, and accelerating business growth. Kaijie E-commerce's capabilities cover the entire value chain of the e-commerce ecosystem, including brand positioning, product development consulting, retail operations, channel management, marketing promotion, order fulfillment, and data and IT services. Based on the accumulations of capabilities covering the entire value chain, Kaijie E-commerce's business can be divided into two main segments financially: product sales and services provided. Product sales involve the company purchasing goods from brand owners and selling them to end consumers, e-commerce platforms, or distribution partners to generate income. In 2025, this segment contributed a high proportion of revenue at 91.1%, making it the "basic business foundation" of Kaijie E-commerce. Among them, To C-end (direct-to-consumer) accounted for 60.3% of the total group revenue, To B-end (including e-commerce platforms and distribution partners) accounted for 30.8%; within the To B-end category, revenue from e-commerce platforms accounted for 17.9%, while that from distribution partners accounted for 12.9%. On the other hand, the services provided refer to the service fees collected from brand owners, including traffic acquisition and brand marketing, e-commerce store operation, brand value enhancement, and data and IT services. In 2025, this segment accounted for 8.9% of the total company's revenue. It is noted that the fluctuation of Kaijie E-commerce's revenue mainly stems from the variability in product sales revenue, while the services provided have continued to grow. Due to the continuous expansion of their customer base, the revenue from services provided by Kaijie E-commerce has steadily increased from 135 million Yuan in 2023 to 156 million Yuan in 2025, with a compound annual growth rate of 7.49%. However, due to the relatively low proportion of this business, its contribution to overall revenue growth is not significant. The pressure on product sales comes primarily from the continual decline in revenue from pet and baby categories. Since 2023, the revenue from these two product categories has shown a downward trend: the pet category shrank due to the termination of a partnership with a major pet brand in 2023; the baby category weakened significantly in sales to the C-end due to intensified market competition. It is worth noting that in 2025, Kaijie E-commerce's revenue grew by only 3.41% compared to the previous year, but their adjusted net profit increased by 22.89% to 74.267 million Yuan, indicating a much faster growth rate than revenue. This is mainly due to the stabilization of their gross profit margin. In 2024, Kaijie E-commerce's gross profit margin declined by over 1 percentage point, mainly due to the increase in the proportion of low-margin snack product sales; entering 2025, driven by the recovery of the To B-end gross profit margin, the company's overall gross profit margin stabilized at 22.0%. Furthermore, the reduction in operating expenses under the "efficiency" strategy also contributed to the acceleration of profit growth. The data shows that from 2023 to 2025, Kaijie E-commerce's operating expenses as a percentage of total revenue decreased continuously from 18.4% to 17.3%, which drove the accelerated growth in profit in 2025. It is evident that the fluctuations in Kaijie E-commerce's performance are caused by multiple factors such as the loss of major clients in the pet sector, intensified competition in baby products, and the increase in low-margin snack product sales. However, these are just surface issues, and there are more challenging underlying operational challenges. High customer concentration brings a series of risks and low bargaining power suppresses valuation levels. In fact, the loss of pet clients putting pressure on product sales business is just one instance of the high customer concentration risk exposed by Kaijie E-commerce. The prospectus shows that from 2023 to 2025, the revenue from the top five brand owners accounted for 52.1%, 52.8%, and 48.9% respectively, nearing half, which is significantly high. For Kaijie E-commerce, the hazards of high customer concentration go beyond just the impact of customer loss on performance - it extends to the loss of bargaining power and other deeper negotiations. Brand owners can continue to squeeze Kaijie's profit margins by lowering commission rates, requiring the company to share marketing expenses, or even utilizing non-competition clauses. This squeezing effect is also evident in the data. In 2025, the top five brands accounted for a total GMV share of 74.2%, but their contribution to revenue was only 48.9%, a difference of over 25 percentage points. This significant gap reflects the weak bargaining power of Kaijie E-commerce with top brands. When Kaijie E-commerce's revenue heavily relies on a few brands, their growth potential is limited to the online growth of these brands themselves. If the online growth of these top brands slows down (e.g., due to a decline in birth rates affecting the baby product category), Kaijie E-commerce's revenue ceiling will also be capped. Additionally, if brand owners take back more business to build their in-house teams (de-intermediation), Kaijie E-commerce's existing business may face significant impact. Moreover, Kaijie E-commerce's operations are heavily reliant on downstream platforms, but these platforms have entered a period of stagnant growth, making customer acquisition more difficult and increasing the cost of traffic. In 2025, Kaijie E-commerce's platform costs accounted for 43.6% of sales and marketing expenses, second only to labor costs. Once platform traffic costs rise, in a situation of over-reliance on top brands, Kaijie E-commerce may find it challenging to effectively transfer cost pressures to upstream brand owners, which could strain the company's profitability. Additionally, the competition in the e-commerce operating industry is extremely fierce, with competitors adopting low-price customer acquisition strategies, further compressing the company's profit margins. The industry's pure service fees have contracted from 15%-20% in earlier years to 8%-12%. Against this backdrop, Kaijie E-commerce's "sales-heavy, service-light" model lacks a deep moat during the peak of the traffic dividendits lack of support from proprietary brands and the absence of heavy asset barriers. While O2O business is technically complex, it operates on a low-margin, high working capital model, and the quality of profitability and risk resistance need further verification. Clearly, to achieve long-term sustainable and steady development, Kaijie E-commerce needs to expand its customer base, reduce its dependency on top brands, and build genuine core competitiveness to cope with the intensifying market competition. If these structural pain points are not addressed, the company may struggle to command a high valuation in the capital market that matches its "O2O leader" label.