IPO Preview | From Top Three in Poultry Vaccines to Tenth in Animal Health, Can Xinde Technology Break Its Market Share Bottleneck with Capital?

As one of China's top ten animal health companies, Shandong Xinde Technology Co., Ltd. (hereinafter referred to as "Xinde Technology") has officially submitted its prospectus to the Hong Kong Stock Exchange, seeking a listing on the Main Board. It is understood that since its establishment in 1999, after 27 years of development, Xinde Technology has become a comprehensive animal health enterprise integrating R&D, production, and sales. The company's product lines cover veterinary biological products (such as vaccines, antibodies, transfer factors, etc.), traditional Chinese veterinary medicine, chemical drug preparations, as well as feed and feed additives. According to data from China Insights Consultancy, based on 2025 revenue, Xinde Technology ranks tenth in China's animal health market and among the top three in China's poultry veterinary biological products market. Amid a cycle in which the industry as a whole is advancing toward greater scale and standardization, can this long-established animal health enterprise leverage the capital market to further break through the growth bottleneck of its tenth-place ranking and achieve a leap from a top-three player in a niche segment to a broader market? **Top Three in Poultry Biological Products, but Scale Expansion Still Requires Overcoming Competitive Barriers** It is understood that animal health products are important tools for disease prevention and control and for reducing breeding losses in modern farming, and their market demand is closely related to farming scale, disease prevention and control requirements, and farm management levels. According to China Insights Consultancy data, the size of China's animal health market in 2025 was approximately RMB 72.7 billion. Among this, Xinde Technology ranks tenth in China's animal health market and among the top three in China's poultry veterinary biological products market, demonstrating that the company has already established a certain industry position in a segmented market. However, the company's overall market share is approximately 1.5%, which also indicates that industry competition is intense and there is still room for improvement in the future. In terms of product structure, the company's business covers veterinary biological products, traditional Chinese veterinary medicine, chemical veterinary drug preparations, feed and additives, among others. Among these, veterinary biological products have become the most important source of revenue. In 2023 and 2024, revenue from this business was approximately RMB 626 million and RMB 631 million, respectively; in 2025, it grew to approximately RMB 806 million, accounting for 67.5% of the company's full-year revenue. Among these, looking solely at vaccine products, 2025 revenue was approximately RMB 630 million, a year-on-year increase of 32.3%, accounting for 52.7% of total revenue. The growth of core products not only drove overall performance but also reflects the company's certain market foundation in segmented demand such as poultry disease prevention and control. In addition to independently developed products, the company also enriches its product portfolio through agency products. According to the prospectus, MS-H and TS-11 vaccines are products for which the company holds exclusive agency rights in China, and combined revenue from these two products increased from approximately RMB 116 million in 2023 to approximately RMB 147 million in 2025. In terms of production capacity, the company has four major production bases, with 34 production lines certified under the new version of veterinary drug GMP, and invested approximately RMB 1.19 billion during the track record period for advanced production capacity construction. The capacity utilization rate of some antibody and transfer factor production lines exceeded 90% in 2025. As of May 31, 2026, the company had more than 6,800 customers and 321 distributors. Among these, direct sales revenue in 2025 was approximately RMB 831 million, accounting for 69.6% of total revenue. It is understood that the company has maintained cooperative relationships with some large poultry and livestock farming enterprises for more than ten years, which helps in understanding end-user demand and promoting product application. The customer retention rate in 2025 was 68.2%, reflecting a certain customer base, but also meaning that customer relationship maintenance and continuous development remain key priorities in business operations. Overall, Xinde Technology's market position in the poultry biological products sector provides a foundation for subsequent business development; however, there are numerous veterinary drug manufacturers in the industry, and market competition remains fierce. Whether the company can continue to expand its share in the future still depends on product efficacy, R&D conversion efficiency, sales and service capabilities, and cost management levels. **Profitability Recovers After Impairment Disruption, Overseas Markets Become an Important Incremental Driver** In terms of revenue performance, in 2023 and 2024, the company's revenue was approximately RMB 985 million and RMB 982 million, respectively; in 2025, revenue increased to approximately RMB 1.194 billion, a year-on-year increase of 21.6%, with the main growth driver coming from businesses such as veterinary biological products. In the first five months of 2026, the company's revenue was approximately RMB 507 million, a year-on-year increase of 3.9%. The business has continued to grow, but the growth rate has slowed compared with 2025, and subsequent performance still needs to be observed in light of full-year demand and business structure. Compared with revenue growth, profit trends better reflect the company's operating quality. In 2024, the company's net profit was approximately RMB 28.12 million; in 2025, it declined to approximately RMB 10.84 million. The prospectus discloses that during the period, the company recognized approximately RMB 28.49 million in goodwill impairment and recognized approximately RMB 30.49 million in impairment for property, plant and equipment and other assets related to Shandong Haili, with the related expenses affecting profit for the period. Therefore, the decline in net profit in 2025 does not entirely equate to a weakening in main business revenue performance, but the impairment factors also remind investors that asset quality, post-acquisition integration, and operating efficiency still require continuous attention. Under the non-Hong Kong Financial Reporting Standards basis disclosed in the prospectus, after excluding certain listing expenses and impairment losses and other items, the company's adjusted net profit in 2025 was approximately RMB 75.76 million, with an adjusted net margin of approximately 6.3%. It is understood that as of the first five months of 2026, the company's performance has released relatively positive signals. The company's net profit for the period was approximately RMB 51.09 million, an increase of 82.8% compared with RMB 27.95 million in the same period last year; the net margin rose from 5.7% to 10.1%. During the same period, the gross margin rose from 48.8% to 49.7%, and gross profit increased from approximately RMB 238 million to approximately RMB 252 million. At the same time, the net impairment loss on financial instruments decreased from approximately RMB 16.79 million in the same period last year to approximately RMB 440,000. The increase in gross margin and the reduction in impairment losses jointly improved profit performance for the period, but a profit recovery in a single period is still insufficient to prove that the trend has become solid, and it remains to be seen whether revenue growth, expense control, and changes in impairment items can continue to improve. In addition, overseas markets have provided the company with new growth space. In 2023, the company's overseas revenue was approximately RMB 12.16 million; in 2024, it increased to approximately RMB 28.28 million; in 2025, it further rose to approximately RMB 66.79 million, a year-on-year increase of 136.2%. In the first five months of 2026, overseas revenue was approximately RMB 42.38 million, an increase of 91.2% compared with RMB 22.16 million in the same period last year. The proportion of overseas revenue increased from 1.2% in 2023 to 5.6% in 2025, and reached 8.4% in the first five months of 2026. Currently, the company has conducted business in markets such as Pakistan, Egypt, Vietnam, and Nigeria, and is screening local partners and advancing product registration in regions such as Africa, the Middle East, and Southeast Asia. Based on current performance, the overseas business is growing rapidly and is gradually becoming an important incremental component of the company's revenue structure. However, its overall proportion remains limited, and in the short term it is still difficult for it to completely change the company's operating structure, which is mainly based on the Chinese mainland market. However, different countries differ in veterinary drug registration, market access, channel development, and customer development. Whether overseas business growth can continue also depends on product registration progress, the capabilities of local partners, and market expansion efficiency. At the same time, the company still needs to face risks such as fluctuations in raw material prices, industry competition, commercialization of R&D results, and changes in customer demand. Overall, Xinde Technology has a long history of industry operations, has established a certain market position in the veterinary biological products sector, and continues to consolidate its business foundation through R&D investment, production construction, and sales networks. Revenue growth in 2025, as well as the improvement in net profit and gross margin in the first five months of 2026, provide positive signals for the company's subsequent development; the rapid expansion of overseas business also brings new possibilities for medium- to long-term growth. In the future, whether the company can further increase its market share, stabilize profitability, and convert overseas revenue growth into sustained returns will be an important standard for measuring the quality of its development.