Growth momentum continues: "Africa's first consumer goods manufacturing stock" SOFTCARE (02698) accelerates market expansion in the mid-term, with profits increasing by 46% and a dividend payout ratio of 66%.

On August 19, after the market close, "Africa's first consumer goods manufacturing stock" SOFTCARE (02698) published its first interim performance report since going public. During the reporting period, the company achieved operating revenue of $333 million, a year-on-year increase of 30.7%; profit during the period was $75.819 million, a year-on-year increase of 46.0%; and adjusted profit was $78.605 million, a year-on-year increase of 53.1%. Notably, the company's revenue and profit growth rates were 2.7 percentage points and 6.1 percentage points higher than the minimum revenue and profit predicted in its previous positive profit forecast, demonstrating SOFTCARE's overall stable operations and its ongoing realization of the demographic dividend in emerging markets and long-term growth opportunities in hygiene products. (Diagram source: Company interim performance announcement) In the first half of the year, SOFTCARE also consolidated its current competitive barriers of "localized production + global supply chain + deep distribution," by continuously expanding its product matrix, enriching its brand portfolio, and establishing overseas production capacity in Latin America, thereby providing support for long-term growth. 1. Growth in both volume and price realizes benefits, enhancing operational foundation through production and sales synergy In the first half of the year, the main operating markets of SOFTCARE such as Ghana and Zambia saw continuous economic recovery, driving the local consumer demand for hygiene products. Coupled with the strengthening exchange rates of local currencies in Ghana (Cedi), Zambia (Kwacha), West African Franc, and Central African Franc against the U.S. dollar, the company achieved growth in both volume and price across its entire product range, expanding capacity through coordinated production and sales. On the product front, the revenue scale of the full product range continued to expand. Among them, infant care products generated revenue of $262 million, a year-on-year increase of 31.7%, with sales growing by 26.1%, and the number of SKUs increasing by 83 compared to the end of 2025; female hygiene products recorded revenue of $56 million, a year-on-year increase of 21.6%, with sales growing by 14.6%, and the number of SKUs increasing by 11 compared to the end of 2025; household care products achieved revenue of $15 million, a year-on-year increase of 52.5%, with sales growing by 49.2%, and the number of SKUs increasing by 8 compared to the end of 2025, realizing growth across all product categories. On the production side, the company continued to localize production capacity to meet the growing local market demand. In April this year, SOFTCARE's first factory in South Americathe Peru hygiene products plant officially commenced operations, alongside the Salvador hygiene products factory which started production last August, providing production capacity support for further market expansion in Latin America. As of June 30 this year, SOFTCARE has established 10 factories and 73 production lines in Africa and Latin America, a net increase of 7 production lines compared to the end of last year. This not only effectively optimizes production costs and strictly controls product quality, but also allows for flexible adjustments in production strategies to meet diverse consumer demands in different countries and for different tiers of consumers, forming a healthy operational closed loop of capacity enhancement + category expansion + demand matching. 2. Multiple breakthroughs in a comprehensive brand matrix, steadily advancing high-end and mass market penetration In terms of brand operation, SOFTCARE has established a brand matrix system that upgrades high-end products while penetrating the mass market, simultaneously opening up profitability and scale growth space. The mid-to-high-end main brand Softcare recorded revenue of $247 million in the first half of the year, a year-on-year increase of 22.4%, achieving steady growth in core African markets. The high-end brand Veesper, promoted in the Latin American market, recorded revenue of $12.152 million, a year-on-year increase of 60.2%. From the channel performance perspective, during the same period, the contribution of the supermarket channel to revenue increased from 3.6% last year to 4.5%, indicating that SOFTCARE's mid-to-high-end brands are gradually penetrating high-end consumption scenarios in emerging markets, gaining the favor of mid-to-high-end consumers. For the mass market brand, the Cuettie brand generated revenue of $6.1 million in the first half of the year, a year-on-year increase of 43.8%, with its contribution to revenue increasing by 1.7 percentage points, further penetrating the mass consumer base in Africa. Overall, in the first half of this year, SOFTCARE solidified its revenue base with its mid-to-high-end brands, broadened profitability boundaries while deepening market penetration with mass market brands, and differentiated brand layouts further opened up the growth space for the company's operations. 3. Focus on incremental markets, jointly opening growth potential in Latin America and Africa In terms of incremental markets, SOFTCARE blossomed in the export markets of Latin America and Africa in the first half of the year, likely unlocking long-term growth ceilings. In the Latin American market, after the local factories in El Salvador and Peru went into production within the last year, revenue contributions from the region have continually improved. In the first half of the year, the company achieved revenue of $11.909 million in the Peru market, a year-on-year increase of 57.0%; other Latin American markets, including El Salvador, recorded revenue of $7.477 million, a year-on-year increase of 566.4%. In the African market, SOFTCARE's revenue in other markets in East Africa, Central Africa, and West Africa grew by 97.5%, 44.5%, and 51.3% respectively, primarily because the company exported products produced in core business countries to surrounding countries, creating new "incremental markets" in Africa. In the future, these incremental markets are expected to replicate SOFTCARE's past development path of "trade exportslocalized production" in other countries, opening up new growth space for the company in the African market. While steadily expanding its business, SOFTCARE also places importance on continuously rewarding shareholders. This year, the company has completed the distribution of year-end dividends for 2025, totaling approximately $55 million with a dividend of 8.88 cents per share, resulting in a payout ratio of approximately 45%. In the latest earnings announcement, the company indicated it would declare an interim dividend of 8 cents per share, totaling about $49.7 million, with a payout ratio of approximately 66%. This year, SOFTCARE's total dividend payout exceeded $100 million. The long-term investment value of SOFTCARE has also gained recognition from southbound capital increases. On March 9 this year, the company was included in the Hong Kong Stock Connect, subsequently receiving continuous increases from mainland funds. As of August 18, southbound funds have purchased 40.47 million shares of the company, accounting for 6.51% of its total share capital. Looking ahead, relying on benefits from localized production, a global supply chain, and a wider channel marketing system, SOFTCARE is expected to continue enhancing its operational efficiency and market competitiveness. Meanwhile, the long-term growth trend in the hygiene product market and the ongoing economic recovery in major operating countries will also provide favorable conditions for the company's business development. As internal and external favorable factors are gradually released, and the growth space of incremental markets continues to open, SOFTCARE is expected to maintain rapid growth and bring more unexpected performance "surprises" to the market.