After a difficult return to the issue price, CAROTE LTD (02549) faces new challenges with the lifting of cornerstone investor restrictions.

The four characters "high open, low walk" best describe the price performance of CAROTE LTD (02549) since its listing. On October 2, 2024, CAROTE LTD successfully listed on the main board of the Hong Kong Stock Exchange, with its stock price closing up 58.3% on its first day of trading, allowing investors to earn substantial profits. However, its stock price then declined continuously, reaching a low of 4.22 Hong Kong dollars within a month, a drop of nearly 27% from the issue price of 5.78 Hong Kong dollars, and a sharp drop of over 61% from the highest price of 10.88 Hong Kong dollars on the first day of trading, displaying a "plummeting from the sky to the ground" performance. After hitting a low of 4.22 Hong Kong dollars, CAROTE LTD's stock price rebounded by over 50% to 6.4 Hong Kong dollars in four trading days, "regaining" the issue price. However, it then started a new round of decline, and after consolidating for nearly a month, it resumed its upward trend, breaking through the previous high resistance level of 6.4 Hong Kong dollars, but then retreated below the previous high resistance level. As of the close on February 21, the stock was priced at 6 Hong Kong dollars per share, only slightly higher than the issue price. With the stock price at this level, the question arises of whether the future trend will be up or down. The upcoming unlocking of restricted shares will also be a key factor affecting the future stock price trend. It is observed that two cornerstone investors introduced at the IPO of CAROTE LTD will have their share lock-up restrictions lifted on April 3, with each holding 4.88% of CAROTE LTD's shares (after the exercise of the over-allotment option), totaling 9.76%. If the cornerstone investors sell their shares after the lock-up period, it may significantly weigh on CAROTE LTDs stock price. After the excitement, "the dust settles" Looking back at CAROTE LTD's performance at the time of listing, it showed extremely high market enthusiasm during the subscription phase. Before the subscription, CAROTE LTD attracted two cornerstone investors, namely Legend Capital and Yuan Life Capital, both of whom had mainly focused on the primary market in the past and subscribed to approximately 27.09 million shares of CAROTE LTD, totaling 54.183 million shares, accounting for about 41.72% of the global offering and a staggering 83.45% of the international placement, with most of the international placement chips accumulating with the two cornerstone investors. During the subscription phase, CAROTE LTD received further funding...According to the retail sales data for 2023, CAROTE LTD ranks among the top five in the online cookware industry in major markets, ranking fourth in China, second in the United States, third in Western Europe, second in Southeast Asia, and third in Japan, with market shares of 1.2%, 13.1%, 1.3%, 8.6%, and 8.1% respectively.In terms of performance, CAROTE LTD has achieved rapid growth, with revenues from 2021 to 2023 reaching 675 million, 769 million, and 1.583 billion respectively, while adjusted net profits for the same period were 31.7 million, 1.09 billion, and 2.43 billion. By the first three months of 2024, CAROTE LTD's revenue had increased by 72.34% to 503 million, and adjusted net profit had increased by 73.21% to 97 million. The continuous rapid growth of CAROTE LTD can be attributed to several factors. Firstly, the strong rise of its own branded kitchenware. From 2021 to 2023, the revenue share of CAROTE LTD's branded business was 41.9%, 69.1%, and 87.2% respectively, with a continuous increase in revenue from its own branded products, resulting in the share of ODM business decreasing to 12.8% in 2023. Secondly, overseas markets have become the main driving force for performance growth. In 2023, CAROTE LTD's revenue from markets outside China accounted for 79.3%, with rapid growth in overseas market revenue, particularly in the US and Western Europe. However, in CAROTE LTD's voluntary announcement on October 28, 2024, the company stated that the unaudited revenue for the first three quarters of 2024 had increased by approximately 40%-50% year-on-year. The significant revenue growth of 72.34% in the first quarter of 2024 suggests that the growth rate of CAROTE LTD may have declined in the second and third quarters of 2024, which could be a major reason for the current low stock price. In addition, CAROTE LTD faces numerous operational challenges. Firstly, market competition may continue to intensify. The kitchenware market, both domestically and internationally, is highly competitive, prompting CAROTE LTD to adjust its pricing strategy in 2023 to focus more on product value, resulting in a decrease in the brand business gross margin to 39.2% in 2023 from 45.9% in 2022. If market competition intensifies in the future, it could affect CAROTE LTD's profitability. Secondly, there is a high dependence on individual e-commerce platforms. According to the prospectus, in the first three months of 2024, CAROTE LTD's revenue from Amazon and Walmart accounted for 52.2% and 17.2% respectively, totaling approximately 70%. Over-reliance on certain e-commerce platforms could pose potential risks to business operations if these platforms increase service fees or other charges in the future. Thirdly, there is an excessive reliance on a single market. As of the first quarter of 2024, CAROTE LTD's revenue from the US market had reached 60%, a significant increase from 16.5% in 2021. Overreliance on the US market could negatively impact CAROTE LTD if demand in the US market declines or if there are tariff-related issues in the future. Overall, while CAROTE LTD's outstanding past performance and high market sentiment initially led to a large increase in stock price on its first day of trading, the decline in sentiment and chip disorder has resulted in a continuous drop in stock price. Although it has since recovered above the IPO price, the unlocking of restricted shares may put pressure on the stock price. Investors should be cautious of the potential slowdown in revenue growth of CAROTE LTD, as well as the intense market competition, excessive reliance on certain e-commerce platforms, and a single market, all of which increase the potential operational risks and may continue to suppress CAROTE LTD's valuation level.