Preview of new stocks | High gross profit margin vs low net profit margin, why does the "Chinese time-honored brand" Mao Yuanchang glasses expose performance A and B sides?

A glasses brand that spans three eras of the late Qing Dynasty, the Republic of China, and the People's Republic of China is preparing to knock on the door of the Hong Kong Stock Exchange. On April 2, 2026, Zhejiang Maoyuanchang Glasses Co., Ltd. (hereinafter referred to as "Maoyuanchang") officially submitted its prospectus to the Hong Kong Stock Exchange, intending to list on the main board of Hong Kong and Huafu Jianye Enterprise Finance as the exclusive sponsor. The company is a century-old heritage brand with a history of over 160 years, and the origin of its flagship brand Maoyuanchang Glasses can be traced back to 1862. In 2006, Maoyuanchang was officially recognized by the Ministry of Commerce as a "Chinese time-honored brand," and in 2015, it was recognized as a "China Famous Trademark" by the former State Administration for Industry and Commerce (now reorganized as the State Administration for Market Regulation). The company also operates self-operated stores under the brand "Lankeda Glasses" in Lanzhou. However, this seemingly "time-honored brand starting anew" story revealed a different side in the face of the data in the prospectus: when the eyewear industry, which is perceived as "highly profitable" by the public, encounters a high gross profit margin of 61.1%, investors hesitate when looking at a net profit margin of 15.52% is this a value investment with high barriers to entry, or an inefficient model eroded by layers of expenses? Zhejiang and Gansu regional leaders vs. top-heavy profits and low net profits According to the prospectus, Maoyuanchang is a leading regional eyewear retail chain enterprise in Zhejiang and Gansu provinces, operating under the brands "Maoyuanchang" and "Lankeda," building a comprehensive service system covering optometry, vision care, myopia prevention, and control. On the business side, the company's core services focus on professional optometry and vision care, offering products including prescription glasses for myopia, hyperopia, presbyopia, youth myopia prevention products, progressive multifocal lenses, etc. It also sells self-owned brand and third-party brand lenses and frames, forming a standardized and professional eyewear retail format. In terms of channel network, Maoyuanchang mainly adopts a parallel model of "self-operated + franchised." As of the latest feasible date, the retail network covers 18 cities nationwide, with a total of 78 self-operated stores and 194 franchised stores, with store resources highly concentrated in the two core provinces of Zhejiang and Gansu, forming a strong regional density advantage and local brand recognition. Based on offline retail sales including self-operated and franchised stores, the company ranked first in the Zhejiang provincial offline eyewear retail industry in 2024, with a market share of around 8.8%; based on self-operated store offline retail sales, Lankeda ranked first in the Gansu provincial market in 2024, with a market share of about 10.2%. Although Maoyuanchang is in a "highly profitable" industry and is a regional leader in two provinces, the company's financial data also reveals the industry's true profit ecology high gross profit does not necessarily mean high net profit, as scale, costs, and modes collectively determine the final profit quality. According to the prospectus disclosure, from 2023 to 2025, the company achieved revenues of 272 million yuan, 250 million yuan, and 265 million yuan respectively, with net profits of 37.12 million yuan, 18.05 million yuan, and 41.18 million yuan respectively, showing unstable performance in both key financial indicators. In 2024, revenue fell by 8% year-on-year, and although it rebounded by 6% in 2025, the overall revenue scale was still lower than in 2023, showing a "standstill" trend; net profit plummeted by 51.3% in 2024, followed by a sharp increase of 128.1% in 2025, showing significant fluctuations. However, despite the fluctuating performance of the two key financial indicators of revenue and net profit, Maoyuanchang's gross profit margin remains at a relatively high level from 2023 to 2025, the company's gross profit margin was 58.3%, 57.1%, and 61.1% respectively, performing exceptionally well in the retail industry. However, what stands in stark contrast to the high gross profit margin is Maoyuanchang's low net profit margin from 2023 to 2025, the net profit margin was approximately 13.64%, 7.21%, and 15.52% respectively, meaning that for every 1000 yuan of eyewear gross profit, only 155 yuan was net profit. So, the question arises, where did over 45 percentage points of profit from gross profit to net profit go? The answer lies in the high and rigid expenses. From 2023 to 2025, sales expenses were 97.506 million yuan, 105 million yuan, and 101 million yuan respectively, consistently accounting for over 37% of revenue. In 2024, employee costs accounted for 16.99% of revenue, while depreciation of right of use assets and property costs accounted for 13.75%. In addition, in 2024, Maoyuanchang held a brand upgrade event, which further increased marketing expenses. However, comparing with peers in the industry, the high gross profit margin and low net profit margin discrepancy is a common issue. According to relevant financial data disclosures, in the first half of 2025, Doctorglasses Chain had a gross profit margin of approximately 54.65%, but a net profit margin of only 8.51%. Considering that Maoyuanchang has a smaller revenue scale than Doctorglasses Chain, the fact that its net profit margin can still be slightly higher than Doctorglasses Chain in a situation where economies of scale are insufficient indicates that the company has unique strengths in cost control, but it still struggles to fundamentally change the basic situation of "high gross profit margin, low net profit margin." Stable industry growth, expansion momentum needs enhancement Looking at the industry trends, while the eyewear industry where Maoyuanchang is located shows a clear growth trend, factors such as high regional concentration and a decrease in the number of franchised stores may affect the company's overall expansion momentum. According to the prospectus, the offline eyewear retail markets in Zhejiang and Gansu provinces are expected to continue expanding, thanks to stable demand for vision correction and eye health management, increasing penetration of functional products, growing consumer focus on professional optometry and compliant lens fitting, and the continuous upgrading of the industry's overall services. According to the Euromonitor report, the offline eyewear retail market in Zhejiang province is expected to increase from 549.23 million yuan in 2024 to 684.30 million yuan in 2029 (forecast); during the same period, the offline eyewear retail market in Gansu province is expected to increase from 79.55 million yuan to 106.80 million yuan. Meanwhile, with the ongoing efforts in youth myopia prevention, aging population trends, and the development of industry standards, it is expected to further drive demand for functional lenses, progressive multifocal lenses, and more professional services, prompting the market to transition towards brand-oriented, standardized, and service-oriented retailers, creating sustained growth opportunities for related enterprises. Therefore, for Maoyuanchang, these industry trends clearly represent visible and tangible growth opportunities. However, despite the stable industry growth, Maoyuanchang still faces three major growth challenges that cannot be ignored. On one hand, intensifying industry competition, the competition between online lens fitting, nationwide chain brands, and regional eyewear stores, as well as external factors such as myopia prevention product policies and technological iterations, may have a business impact on the company. On the other hand, unproven cross-regional replication capabilities. Although Maoyuanchang is a regional leader in Zhejiang and Gansu, due to the high regional concentration, the company may lack sufficient expansion momentum, with its store layout in Anhui, Jiangsu, Qinghai, Hebei, and other areas being extremely thin, with only two stores in Shandong serving as exploratory moves. Against the backdrop of China's highly dispersed eyewear retail market, the lack of national capabilities will significantly limit capital market valuation premiums. Lastly, the long-term growth bottleneck exposed behind the decline in store numbers and increase in profits. From 2023 to 2025, Maoyuanchang's number of franchised stores continued to decline for three consecutive years, from 205 to 194. However, although the number of franchised stores decreased, relying on a significant increase in franchise management fees led to a reverse increase in income. Franchise management fees surged from 2.358 million yuan in 2024 to 10.215 million yuan in 2025, a year-on-year increase of 333.2%, driving total income from franchise business from 59.408 million yuan to 65.840 million yuan, creating a short-term profit rebound of "reducing stores while increasing profits." However, it should be noted that this model of relying on the sharp rise in management fees to support performance is not sustainable, as the main bottleneck of store expansion has been exposed behind the continuous loss of franchised stores. In conclusion, it is evident that as a regional eyewear chain leader in Zhejiang and Gansu provinces + a century-old heritage brand, Maoyuanchang has a stable revenue scale and relatively high profit level, achieving short-term profit rebound through a significant increase in franchise management fees. However, with a clear long-term growth ceiling and insufficient growth story, it may find it difficult to enjoy high valuation premiums after listing in Hong Kong.