COFOE MEDICAL, a domestic home medical device company, officially launched its Hong Kong IPO on April 27, 2026. The company plans to issue 27 million H shares, with an maximum offer price of HK$39.33 per share, aiming to raise up to approximately HK$1.06 billion. It is expected to list on May 6. While the company possesses certain industry barriers through its comprehensive product portfolio, online channel advantages, and leading position in the rehabilitation aids segment, several issues cannot be ignored. These include weak post-pandemic growth, a focus on marketing over research and development, a less impressive lineup of cornerstone investors, and a fragmented industry landscape. Compounded by a prolonged slump in its A-share price and the absence of a greenshoe option for the H-share offering, the company faces intensified tests regarding both its valuation and performance post-listing.

Growth anxieties exist despite the broad product portfolio, alongside a reliance on the 'Beibejia' brand. Having focused on home medical devices for nearly 20 years, COFOE MEDICAL's products span five major categories: rehabilitation aids, medical care, health monitoring, respiratory support, and traditional Chinese medicine physiotherapy, comprising over 200 categories and tens of thousands of SKUs. The company has built an integrated online and offline channel network. Based on 2024 domestic revenue, it ranks second among Chinese home medical device companies with a 2.1% market share. Within this, its rehabilitation aids segment holds a 2.4% market share, ranking first in the industry, with its 'Beibejia' brand being a benchmark in the posture correction belt segment, commanding a dominant 27.2% market share.

Financially, the company's overall scale continues to expand. From 2023 to 2025, revenue grew from RMB 2.85 billion to RMB 3.39 billion, representing a two-year compound annual growth rate of about 9%. Revenue for the first quarter of 2026 further increased to RMB 1.01 billion, a year-on-year increase of 37.2%, showing some periodic growth elasticity.

However, behind the seemingly strong overall figures lie a significant slowdown in core growth drivers and structural concerns. The company's largest revenue source, rehabilitation aid products, saw revenue surge 42.8% year-on-year to RMB 1.10 billion in 2024, bolstered by the acquisition of the 'Beibejia' brand in 2022. However, by 2025, this growth rate abruptly halved to 12.7%, with revenue reaching RMB 1.24 billion. This indicates that growth pulses driven by acquisitions of single star brands are difficult to sustain, and the company lacks new, strong organic growth drivers in the post-pandemic era. Other business lines also show high volatility: health monitoring product revenue rebounded 20.1% in 2025 after a 16.7% decline in 2024, while respiratory support product revenue remained largely flat in 2025 after a sharp 41.3% drop in 2024. The company's growth exhibits a clear pattern of fluctuations across segments, lacking a comprehensive and stable main driver.

A heavy emphasis on marketing over research and development is eroding profit margins, with the net profit margin remaining persistently around 10%. While profit scale has increased in tandem, profit conversion capability remains weak. In 2025, the company achieved a net profit of RMB 370 million, an increase of 18.6% year-on-year; net profit for the first quarter of 2026 was RMB 110 million, up 17.1% year-on-year. Although the gross profit margin has continuously improved, rising from 43.3% in 2023 to 50.6% in 2025 and further to 55.2% in Q1 2026, the net profit margin has stayed at low levels. From 2023 to 2025, the company's net profit margins were 8.9%, 10.5%, and 10.9% respectively; the Q1 2026 net profit margin was 10.6%, still hovering around 10%, highlighting a clear characteristic of revenue growth without corresponding profit growth.

The core reason for the difficulty in improving the net profit margin is the persistent erosion of profits by high sales expenses. From 2023 to 2025, the company's sales expenses were as high as RMB 740 million, RMB 970 million, and RMB 1.16 billion respectively, accounting for 26.0%, 32.6%, and 34.2% of revenue during those periods, showing a continuous upward trend. In the first quarter of 2026, the sales expense ratio further climbed to 34.9%. In stark contrast, R&D investment has remained consistently 'stingy': R&D expenses for the same periods were RMB 110 million, RMB 100 million, and RMB 90 million respectively, with the R&D expense ratio declining from 4.0% to 2.6%. In Q1 2026, the R&D expense ratio was 2.2%.

This characteristic becomes more pronounced when compared to A-share peer companies. In 2025, COFOE MEDICAL's sales expenses were 13.3 times its R&D expenses. During the same period, this ratio was 3.1 times for Yuwell Medical and 4.6 times for Sinocare. The excessively high sales expenses erode profit space and also lead the market to question the stability of its brand and channel moat, wondering if it is overly reliant on continuous advertising and traffic investment to maintain its market position.

Despite the光环 of being 'industry second' and 'segment leader,' COFOE MEDICAL operates in a highly fragmented market. In 2024, the size of the Chinese home medical device market was approximately RMB 198.2 billion, yet the market share of the top-ranked company was only 3.4%. COFOE MEDICAL, as the second-ranked player, held a mere 2.1% share. In the rehabilitation aids sub-segment, the company leads with a 2.4% share, but the second-place player holds 2.2%, and the combined market share of the top five players is only about 10%, with over 90% of the market fragmented among numerous small and medium-sized participants. This structure means that the company's so-called leading position does not confer strong pricing power or significant market share advantages, and future growth will still require a hard-fought battle in a competitive 'red ocean.'

The IPO discount is limited, the cornerstone investor lineup lacks strength, and the absence of a greenshoe mechanism leaves post-listing performance reliant on southbound capital. For this Hong Kong IPO, COFOE MEDICAL's maximum offer price is HK$39.33 per share, representing a discount of approximately 35.4% relative to its A-share closing price on April 29 (RMB 54.06 per share). While this offers some discount, against the backdrop of the company's small A-share market capitalization and its own valuation pressures, the attractiveness of this discount to Hong Kong investors remains to be seen. Furthermore, the offering does not include a greenshoe mechanism, meaning there will be no stabilizing funds to cushion the stock price after listing. Combined with a relatively small free float, this poses a high risk of share price volatility. Although the stock might receive periodic support from southbound capital, this is unlikely to change the fundamentally pressured outlook.

The lineup of cornerstone investors also fails to inspire confidence. The company has introduced 12 cornerstone investors who have collectively subscribed to $48.5 million, accounting for 35.8% of the base offering size. While the list includes industrial investors like Lens Technology and Zhongkang Technology, as well as capital with backing from the Changsha Yuhua District Government, it lacks influential long-term foreign institutional investors or top-tier financial investors. More notably, the list includes several individual investors. Although permitted by regulations, a significant proportion of individual investors among cornerstone investors is often seen as a reflection of insufficient interest from institutional investors.