Shanghai Jahwa's net profit last year was 268 million yuan, with 80% coming from investment income.

Byline｜Intern Zheng Haoyuan｜Wang Chaoyang

Editor-in-Chief｜Chen Junhong

Recently, Shanghai Jahwa United Co., Ltd. (600315.SH, hereinafter “Shanghai Jahwa”) released its first complete annual report after Lin Xiaohai took office as chairman. The financial report shows the company achieved revenue of RMB 6.32B, up 11.25% year over year; attributable net profit to the parent company was RMB 268 million, successfully turning a loss into a profit.

However, behind this “double growth” performance there are still concerns. Of the attributable net profit, only RMB 45 million came from the core operating business, while non-recurring gains and losses contributed as much as RMB 223 million. The basic personal care segment represented by “Liu Shen” saw growth nearly come to a standstill, and high marketing expenses continued to erode profit margins. Combined with the unstable recovery of overseas business affected by the macro environment, whether this beauty-and-personal-care leader can convert short-term earnings recovery into sustainable growth still needs to be verified over time.

RMB 268 million profit, nearly 80% from investment gains

The financial report shows that in 2025, Shanghai Jahwa’s revenue was RMB 6.32B, up 11.25% year over year, ending the four-year downward trend since 2021; attributable net profit surged 132.12% year over year to RMB 268 million (a loss of RMB 833 million in 2024). This is also the company’s first complete annual report issued after Lin Xiaohai took over as chairman in June 2024.

The turnaround into profitability was mainly due to the strategic adjustments to the “four focuses” implemented after Lin Xiaohai assumed the role. The company increased R&D investment; R&D expenses for the first time exceeded RMB 200 million. It successfully built three RMB 100-million-plus product items, driving the gross margin of the core business up by 5 percentage points to 62.6%, the highest in the past five years. In addition to being boosted by the beauty segment, the company also optimized its logistics network through methods such as direct factory shipments, achieving a drop of nearly 1.3 percentage points in logistics rates and a synchronous reduction in procurement costs.

However, behind the impressive on-paper figures, the profitability of the main business still looks fragile. In 2025, attributable net profit reached RMB 268 million, but it was mainly a rebound from a low base created by a one-time goodwill impairment of RMB 613 million for the overseas subsidiary Tommee Tippee Star (汤美星) booked in the prior year. This still leaves a significant gap versus the net profit level of RMB 650 million in June 2021. Excluding non-recurring items, net profit was only RMB 45 million, while non-recurring gains and losses totaled RMB 223 million, mainly from fund investment income and fair value changes. If this portion of gains is excluded, the net profit margin corresponding to the core business would be about 0.7%. The financial report shows that within non-recurring gains and losses, fund investment income and fair value changes together contributed RMB 219 million, accounting for as much as 98%.

In addition, the losses in the fourth quarter sharply contrasted with the year’s growth. Against the backdrop of the “Double 11” traffic peak, Shanghai Jahwa recorded a loss of RMB 138 million in the fourth quarter last year, making it the only loss-making quarter of the year. The company’s CFO, Luo Yongtao, said that revenue exhibited obvious seasonality; combined with the additional marketing investment in major products during the “Double 11” period that failed to convert effectively into revenue, pressure on single-quarter profits increased. The financial report shows that the selling expense ratio in the fourth quarter was as high as 52.3%, significantly above the full-year average of 48.0%.

The response in the secondary market was also cautious. On the first trading day after the financial report was released (March 26), the company’s stock opened at RMB 20.80, closed at RMB 20.66, down 1.1%. The next day it continued to slide and closed at RMB 20.59.

Personal care growth stalls; marketing expenses erode profits

By product line, the company’s main revenue base—its personal care business—saw growth nearly stall. The personal care segment represented by “Liu Shen” and “Miss Ph… ” (美加净) generated full-year revenue of RMB 2.42B, accounting for 38.3% of total revenue, with year-over-year growth of only 1.65%. By contrast, the beauty segment represented by “Yuze” and “Botanic” (佰草集) delivered explosive growth: revenue rose 53.7% year over year to RMB 1.61B, but its share of total revenue was only 25.5%. Industry insiders noted that although “Liu Shen Mosquito Repellent Egg” achieved sales at the RMB 100-million level, it failed to break through the brand’s strong seasonal characteristics; momentum was insufficient during off-peak periods, and support for overall performance continued to weaken.

Although the beauty segment has become the main driver of profit growth, it still lags behind industry leading players. The financial report shows that the beauty segment’s gross margin reached 73.8%, up 4.13 percentage points year over year—well above the personal care segment’s 64.89% and the innovation segment’s 49.75%. However, in a horizontal comparison, this gross margin level is still below industry average levels such as Baitain (Vin… ), which is around 75% year-round, Minqing (毛戈平) at 84.2%, and Giant Cell Biology (巨子生物) at 80.3%. Moreover, the beauty business volume of RMB 1.61B still shows a significant gap compared with leading domestic brands such as Proya (珀莱雅) and Shangmei Shares (上美股份).

At the same time, rigid expense spending continues to squeeze profit space. In 2025, the company’s selling expenses grew 14.36% year over year to RMB 3.03B, outpacing the revenue growth of 11.26%. The selling expense ratio rose to 48.03%, up 1.34 percentage points year over year. In other words, for every RMB 100 of revenue generated, RMB 48 was used for marketing expenditures, reflecting that the company is still highly dependent on marketing-driven growth. Some analysts believe that if the beauty segment’s high growth of 53.7% mainly relies on swapping for growth through high-traffic costs, then with traffic dividends reaching their peak and marketing expenses remaining high, the profit margin space of the core business may be further compressed. The financial report shows that in 2025, beauty’s online channels grew 60.6% year over year, but its marketing spend intensity was also significantly higher than that of other categories.

The channel side also shows divergence. In 2025, revenue from offline channels grew 16.39% year over year to RMB 3.65 billion, and gross margin increased 7.53 percentage points to 60.31%, indicating positive results from channel reforms and efficiency improvements. Although online channels had a gross margin of 65.72%, revenue grew only 4.92% year over year to RMB 2.66 billion. If adjusted by the same accounting standard to classify special channel business, online revenue would grow 21.9% year over year, still below market expectations. The “focus on online” strategy proposed by Lin Xiaohai may not yet have been effectively implemented; domestic online business revenue share increased to 44.4%, but there is still a gap from a full online transformation.

The unevenness of regional growth is also prominent. The East China region, with the largest domestic revenue scale, saw revenue grow only 10.92%, while overseas markets—making up 23.29%—grew only 3.90%, both below the overall growth rate. By contrast, regions with less than 10% share, such as Central China, South China, and Northwest China, all achieved growth exceeding 20%.

Sustainability of growth remains to be tested

The company’s inventory continued to decline, falling from RMB 823 million in 2021 to RMB 620 million. Inventory turnover days shortened from 102 days to 94 days, and the results of destocking across channels were evident. Meanwhile, accounts receivable decreased 27% year over year to RMB 570 million; turnover days fell from 50 days to 33 days. Contract liabilities increased 19.2% year over year to RMB 347 million, suggesting stronger pricing power with downstream parties. Improved inventory management and faster cash collection jointly drove operating cash flow to surge 193% year over year to RMB 801 million after three consecutive years of decline, reaching the best level in history.

However, some industry insiders have raised concerns about the sustainability of this cash flow improvement, arguing that its growth mainly depends on the success of destocking and the expansion of the beauty segment rather than purely natural growth from organic sales revenue. As the marginal returns of the “heavy marketing for growth” model diminish, the beauty segment may face a growth ceiling in the future. The company’s ability to continue improving cash flow will be put to the test.

For overseas business, “Tommee Tippee Star” grew 3.9% but the recovery foundation remains unstable. The brand was acquired at a premium by Shanghai Jahwa in 2017; its core overseas business is infant feeding and nursing. It contributes the vast majority of revenue of the overseas segment. From 2022 to 2024, performance continued to decline, and the company has already booked RMB 613 million in goodwill impairment in total. Currently, the North American market is affected by tariff policies, leading to rising cost and pricing pressures, and coupled with a decline in global birth rates, overseas business still faces dual challenges. The financial report shows that the overseas subsidiary Abundant Merit Limited had a net profit of RMB -16.24 million in 2025 and remains loss-making.

The “focus on core brands, focus on brand building, focus on online, focus on efficiency” strategy proposed by Lin Xiaohai has, to a certain extent, achieved cost reduction and efficiency gains. In 2025, the company successfully cultivated three major brands and products, including Baitujing’s Da Bai Ni (annual GMV over RMB 200 million), Yuze Ganminshuang (second generation; after a refresh it achieved double-digit growth), and three RMB 100-million-plus product items such as Liu Shen Mosquito Repellent Eggs, which validated the initial effectiveness of the focus strategy. But amid intensifying traffic competition and diminishing marginal utility of marketing investment, how to transition from “traffic-driven” to “brand-driven” will be the key to determining the quality of its future growth. Whether these three RMB 100-million-plus big products can continue to deliver incremental gains, and whether other brands can avoid being sidelined, will directly affect whether the company can achieve double-digit growth in 2026 and return to its RMB 7 billion revenue target.

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