New stock outlook | Behind high growth lies the hidden worry of heavy marketing and light research and development. Can the business experience of parenting products from different groups support an IPO?

Established at the end of 2018, Different Group launched its new consumer brand, BeBeBus, on the second day of the new year to make a sprint towards the Hong Kong Stock Exchange. On January 2nd, shortly after the New Year's bell sounded, Different Group submitted its application for a main board listing to the Hong Kong Stock Exchange. Despite being founded just over 6 years ago, Different Group's performance has shown a strong growth momentum. From 2022 to September 2024, the group's revenue was 507 million yuan, 852 million yuan, and 884 million yuan respectively, with corresponding gross profits of 242 million yuan, 427 million yuan, and 438 million yuan, and gross profit margins of 47.7%, 50.2%, and 49.5% respectively. The core reason behind the steep financial data curve is the popularity of the BeBeBus brand established by Different Group in 2019. According to Frost & Sullivan, based on the GMV in 2023, BeBeBus is already the best-selling durable high-end parenting product brand in China. Despite being in a low-growth industry, Different Group's performance has been successful, particularly due to the popularity of the BeBeBus brand. How will the capital story of this young group unfold after its rapid submission to the Hong Kong Stock Exchange? Are surging sales expenses supporting performance? Different Group positions itself as a family life products technology company, with the name "Different" seeming to convey its attitude and determination to create differentiation. So, what sets Different Group apart? Initially focusing on high-end parenting products, Different Group strategically entered the market with its BeBeBus brand, attracting families who value quality, functionality, and aesthetics. The group's prospectus shows that during the performance period, the average transaction amount for orders containing at least one core product remained above 2,400 yuan. After introducing the four core products, Different Group expanded its product categories and introduced products for more related care scenarios, such as baby sleeping bags, pillows, feeding scene products, and other consumer parenting products. While most of Different Group's revenue comes from online channels, the company has also started to expand to offline channels as its brand recognition grows. In 2023, Different Group established its first experience store in Ningbo, Zhejiang, and saw a significant increase in revenue from offline channels. Although Different Group's BeBeBus products are known for their innovative design and exceptional aesthetics, the company's research and development expenses have not changed much over the past few years. In contrast, the expenses for sales and distribution have increased significantly. Will the sustainability of high growth in a low-growth industry be sustainable? The market demand for parenting products in China is driven by increasing disposable income and child-related expenditures. The market size of the parenting products market in China reached 137.4 billion yuan in 2023. Despite being a billion-dollar market, the growth pace of the parenting products market is not constant and is influenced by factors such as child population and economic conditions. In fact, the CAGR of the parenting products market in China was only 3.2% from 2019 to 2023, marking the end of the high growth period." english:"Although in terms of sub-markets, the growth rate of high-end childcare products is significantly higher than that of mass market childcare products, and it is expected that the growth rate of high-end childcare products will continue to rise in the coming years, the fact that the compound annual growth rate is less than double digits also means that the industry's growth "ceiling" is hard to determine. It is worth noting that during the period from 2019 to 2023, due to a decrease in the number of women of childbearing age and the continuous delay in the average age of marriage and childbirth, the number of newborns in China has decreased from 14.7 million to approximately 9 million. According to forecasts by institutions, from 2024 to 2028, the number of newborns in China is expected to remain at around 8 million per year. In the face of the new situation, different groups aiming to maintain growth rates above the industry average in a low-growth industry will inevitably face increasing challenges over time. Different groups seem to be considering this as well. In their prospectus, different groups have stated that the company will expand global business in the future to consolidate their leading position in the high-end childcare products sector; at the same time, the company will upgrade and expand product categories to cater to a wider range of family scenarios; in addition, for offline sales, different groups will optimize their offline business by opening more brand image stores to strengthen their presence in high-end shopping centers and other high-traffic locations. Regarding international expansion, different groups have already expanded their business to major international markets including Europe, Southeast Asia, and North America. In terms of online sales overseas, the company plans to reach overseas consumers through platforms such as Amazon; in addition, the company launched a new website in October last year to promote international online sales. In offline sales, different groups have also established subsidiaries in the United States and Indonesia to promote local distribution. American management scholar Collins once stated in his book "Built to Last": "Foresight is the premise of successful enterprises; innovation is the core of sustainable development for enterprises". For different groups, the limited operating history to a certain extent determines that the current business and future prospects of the company have a high degree of unpredictability. It is difficult to quantify the actual sustainability of the high-speed growth performance achieved in the past few years in the coming years. However, from the perspective of the company's past investment in research and development and marketing, it seems difficult to say that the periodic "success" of different groups is completely due to differentiated products rather than high-density online marketing activities. It is undeniable that in just over six years, growing into a company with an annual revenue expected to exceed 900 million RMB, different groups do have their strengths, but as they embark on their listing on the Hong Kong Stock Exchange, standing at a new starting point, different groups may need to prove to the external world their growth resilience and sustainability that can withstand the test of time.