The Hong Kong stock market is set to welcome another major player in emerging market consumer themes. Recently, SOFTCARE Limited (referred to as SOFTCARE), a leading hygiene products company in Africa, passed the main board listing hearing of the Hong Kong Stock Exchange, with CICC, CITIC Securities, and GF Securities (Hong Kong) acting as joint sponsors. According to Frost & Sullivan, SOFTCARE operates the largest number of local factories in Africa’s hygiene products sector and ranks first in both the African baby diaper and sanitary pad markets by 2024 production volume.

**Positioning in High-Potential Growth Markets** SOFTCARE is a multinational hygiene products company focused on rapidly growing emerging markets in Africa, Latin America, and Central Asia. It specializes in the development, manufacturing, and sales of baby diapers, training pants, sanitary pads, and wipes. Notably, markets like Africa and Latin America boast young demographics and high fertility rates, providing an expanding customer base for baby hygiene products. Meanwhile, rising female hygiene awareness and urbanization are driving demand for sanitary pads, marking a shift from non-existent to premium consumption—a vast, underserved growth market.

By 2024 sales volume, SOFTCARE led Africa’s baby diaper and sanitary pad markets with shares of 20.3% and 15.6%, respectively. In revenue terms, it ranked second in both segments, capturing 17.2% and 11.9% of the markets. This dominance stems from over 15 years of multinational operations. The company’s products reach over 30 countries across Africa, Latin America, and Central Asia, supported by 18 sales branches in 12 nations and a distribution network spanning 2,800+ wholesalers, retailers, and supermarkets.

**Financial Performance and Risks** SOFTCARE’s revenue grew steadily from $320 million in 2022 to $454 million in 2024, a 19.2% CAGR. Net profit surged 4.2x from $18.39 million to $95.11 million during the same period. However, risks loom: 1. **Currency Volatility**: The company reported net forex losses of $13.75 million in 2023 and $4.36 million in 2022 due to revenue (local currencies) and cost (USD/CNY) mismatches. 2. **Margin Pressure**: Gross and net margins dipped to 33.6% and 19.3% in early 2025, reflecting intensifying competition.

**Product Breakdown** - **Baby Diapers**: The core business (75% of revenue) saw volume grow 37.7% from 2022–2024, but average selling prices declined slightly, signaling market pressure. - **Sanitary Pads**: A growth driver, with revenue share rising to 18.5% by early 2025. Volume surged 70.6%, accompanied by price increases. - **Wipes**: Though small in scale, this high-margin (50%+) segment holds future potential.

**Challenges Ahead** 1. **Currency Risks**: Structural mismatches expose SOFTCARE to forex fluctuations, as seen in 2023’s steep losses. 2. **Core Business Slowdown**: Declining diaper prices and margins suggest eroding competitive advantages amid rising rivalry from global giants (e.g., P&G, Kimberly-Clark) and local players. 3. **Cost Pressures**: Rising input costs and potential currency devaluations could further squeeze margins.

Investors must monitor whether the recent margin dip is temporary or indicative of a ceiling under dual pressures from costs and pricing. The company’s ability to sustain growth while managing these risks remains critical.