SOFTCARE initiated its global offering on October 31, with pricing expected on November 6 and listing on the Hong Kong Stock Exchange scheduled for November 10. The base offering consists of 90.88 million shares, priced between HKD 24.2 and HKD 26.2 per share, translating to a fundraising range of HKD 2.20–2.38 billion. With the greenshoe option, the total offering could reach HKD 2.53–2.74 billion. The IPO is jointly sponsored by CICC, CITIC Securities, and GF Securities. While the offering has attracted institutional interest, concerns remain over slow expansion in emerging markets, decelerating growth, and operational risks such as inventory management, channel efficiency, and compliance issues.
**Strong Cornerstone Lineup but Lacks Industry Players; IFC as Pre-IPO Investor with No Lock-Up** SOFTCARE is a multinational hygiene products company focused on fast-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. With over 15 years of cross-border operations, the company has become a leader in Africa’s hygiene sector and a key player in emerging markets. According to its prospectus, 71.4% of the net proceeds will be allocated to expanding production capacity and upgrading production lines, 11.6% for marketing and promotions in Africa, Latin America, and Central Asia, 4.7% for strategic acquisitions, 0.4% for CRM system upgrades, 2.6% for management consulting on new markets and products, and 9.3% for working capital and general corporate purposes.
Fifteen cornerstone investors have committed a combined $139 million, accounting for 49.1% of the base offering at the lower price range—the highest cornerstone ratio among Hong Kong IPOs raising HKD 2–3 billion in 2024. Participants include Morgan Stanley Investment Management ($10 million), other foreign multi-strategy funds ($5 million), and Chinese mutual funds such as Southern Asset Management, Fullgoal Fund, and E Fund ($8 million each), as well as private equity firms like BlackAnt Capital, IDG, Boyu, CDH, and Sequoia. Notably absent are strategic industry investors, which may limit future support in supply chain integration and market expansion.
A unique aspect is the pre-IPO investment by the International Finance Corporation (IFC), which invested $30 million in February 2024 for a 2.91% stake at HKD 15.54 per share—a 35.8% discount to the lower IPO price—with no lock-up period, a rare arrangement in Hong Kong’s volatile IPO market. IFC also secured a guaranteed return clause where the controlling shareholder, Sunda Enterprise, would compensate if shares are sold below cost within 180 days post-listing. Despite this, IFC’s influence in Africa and ESG sectors could benefit SOFTCARE.
**Slowing Revenue and Profit Growth in 2025; Weak Inventory and Channel Efficiency** Financially, SOFTCARE’s growth momentum is waning. Revenue grew from $320 million in 2022 to $450 million in 2024, but the growth rate plunged from 28.6% in 2023 to 10.5% in 2024. While the first four months of 2025 saw a rebound to 15.5%, sustainability is questionable amid market saturation in Africa, rising competition, and slow expansion into new markets.
Gross margins recovered from a pandemic-driven low of 23.0% in 2022 to 34.9%–35.3% in 2023–2024 but dipped to 33.6% in early 2025 due to declining average selling prices for baby hygiene products. Infant diaper prices fell to 8.29 cents per piece (down 0.43 cents from 2023 highs), while training pants dropped to 8.60 cents (down 0.89 cents). Price cuts risk squeezing profitability and triggering a volume-for-price trap.
Net profit surged from $18.39 million in 2022 to $95.11 million in 2024 (a 127.42% CAGR), but growth slowed to 19.7% in early 2025, with net margins easing from 20.9% to 19.3%. Currency risks loom large, as revenues are denominated in local African currencies while procurement is in USD and CNY. A $18.67 million forex loss in 2023 highlights ongoing volatility threats.
Inventory turnover days remained high at 134–152 days, far behind industry leaders like Procter & Gamble and Kimberly-Clark (~60 days). Weak channel efficiency is another concern: while customer concentration is low (top five clients contributed 5.2%–6.3% of revenue), inactive distributors (99) and wholesalers (572) in early 2025 outpaced new additions (56 and 479, respectively), shrinking the network and potentially hampering growth.
**Unresolved Compliance Issues and Outdated Financials; Valuation at Parity with Global Peers** SOFTCARE faces compliance lapses, including $200,000 in unpaid social security and housing funds despite holding $84.53 million in cash and distributing $35.35 million in dividends in 2024. Such practices raise governance concerns.
The prospectus only includes financials up to April 2025, lagging peers who disclosed mid-year or even Q3 data to showcase growth. This delay fuels skepticism about performance.
Valuation is another challenge. At 19.6x 2024 P/E, SOFTCARE trades at a slight discount to P&G (23.2x) but a premium to Kimberly-Clark (13.2x). Given its reliance on Africa, slowing growth, and operational risks, this multiple appears stretched without robust growth catalysts. Earnings misses or intensified competition could trigger a valuation correction.