BLOKS (0325.HK) has been under pressure recently. As of the close on September 17, the company's stock price has fallen more than 50% from its June high.

Over the past few years, BLOKS' significant increase in building block role-play toy sales drove rapid business growth, with company revenue rising from 326 million yuan in 2022 to 22.41 billion yuan in 2024.

In the first half of 2025, the company's performance growth slowed, with revenue growing 27.9% year-on-year and adjusted net profit increasing 9.6% year-on-year. The company's gross margin declined by more than 4 percentage points year-on-year.

Notably, BLOKS relies heavily on core intellectual properties (IP), including Ultraman and Transformers. In the first half of 2025, BLOKS' top four IP products collectively accounted for 83.1% of total revenue.

**Performance Growth Slowing, Accelerating Overseas Market Expansion**

Financial reports show that BLOKS achieved revenue of 1.338 billion yuan in the first half of 2025, up 27.9% year-on-year. Compared to the company's 2024 revenue growth rate of 155.6%, the company's revenue growth in the first half of this year has significantly slowed.

In terms of profitability, BLOKS' adjusted net profit for the first half of 2025 was 320 million yuan, up 9.6% year-on-year, with growth slower than the revenue growth rate for the same period.

In the first half of 2025, BLOKS' gross margin was 48.39%, compared to 52.93% in the same period last year, a decline of more than 4 percentage points.

Regarding expenses, BLOKS saw significant year-on-year increases in both sales and distribution expenses and R&D expenses in the first half of this year. The company's sales and distribution expenses as a percentage of total revenue rose from 11.5% in the first half of 2024 to 13.2% in the first half of 2025. During the same period, R&D expenses as a percentage of total revenue increased from 7.3% to 9.6%.

The company's administrative expenses decreased by 88.3% from RMB 403.9 million for the six months ended June 30, 2024, to RMB 47.2 million for the six months ended June 30, 2025, mainly due to a significant reduction in one-time share-based compensation from stock options granted under the share incentive plan.

Notably, BLOKS is accelerating its overseas market expansion. According to financial data, in the first half of 2025, the company's overseas revenue reached 111 million yuan, compared to 11 million yuan in the same period last year. The company's overseas revenue mainly comes from Asia (excluding China) and North America.

**Heavy Dependence on Licensed IPs Like Ultraman and Transformers**

BLOKS is a leader in China's building block role-play toy category. As of June 30, 2025, the company had commercialized 19 IPs with a total of 925 SKUs on the market.

Notably, BLOKS is quite dependent on core IPs.

According to the company's prospectus, in the first half of 2024, approximately 81.3% of the company's revenue came from licensed IPs, primarily Ultraman and Transformers, accounting for 57.4% and 18.7% of revenue respectively during the same period.

The prospectus shows that the company has signed non-exclusive licensing agreements with licensors, obtaining rights to develop and sell toys in China and overseas regions. Generally, the company's licensing agreements do not specify predetermined conditions for renewal and may be renewed or extended by mutual agreement.

The prospectus indicates that the Ultraman IP license for China expires in 2027, while licenses for North America, Europe, and parts of Asia expire in 2025. The Transformers IP license in over 50 countries worldwide expires in 2028.

In the first half of 2025, each of BLOKS' top four IP products contributed more than 10% of total revenue, collectively accounting for 83.1% of total revenue.

**Stock Price Halved from Peak**

BLOKS listed on the Hong Kong Stock Exchange in January 2025 with an IPO price of HK$60.35 per share. In June 2025, the company's stock price peaked at HK$198 per share.

Since then, the company's stock price has declined continuously. As of the close on September 17, the stock price has fallen more than 50% from its June high.

On August 26, 2025, BLOKS announced a share buyback program, with the company funding the share repurchase plan using existing available cash reserves and free cash flow. The repurchased shares will be used for subsequent employee equity incentives.

As of September 17, the company has cumulatively repurchased 395,400 shares, spending a total of over HK$41 million.