Key Takeaways
Chinese outdoor apparel firm Benfu Ziran is making its third attempt at a Hong Kong initial public offering, reporting 75% compound revenue growth but also flagging risks from soaring inventories and a deep reliance on marketing spend.
"The company operates an asset-light business model and does not have its own production facilities," the prospectus filed May 8 states, noting it worked with 155 contract manufacturers in 2025.
The filing, co-sponsored by CICC and CITIC Securities, shows revenue surged from 908 million yuan in 2023 to 2.79 billion yuan in 2025. However, sales and distribution costs reached 1.06 billion yuan, or 38% of revenue, causing the adjusted net margin to fall from 17.2% to 14.6% over the same period.
The IPO aims to fund an expansion into physical retail, a move that will test investor appetite for the high-growth, low-margin model, particularly as inventory ballooned to 870 million yuan in 2025, according to the filing.
Behind the impressive revenue growth, the company's operational efficiency shows signs of strain. Inventory levels climbed from 238 million yuan in 2023 to 870 million yuan in 2025, with turnover days extending from 189 to 264. This led to a 52.71 million yuan inventory impairment loss in 2025, a 211% increase from two years prior, signaling a significant risk of obsolescence and pricing pressure.
The company, which recently changed its name from Pelliot to Benfu Ziran to shed a "pseudo-foreign brand" image, relies entirely on an OEM-based supply chain. Its product mix is heavily skewed towards its mass-market "classic series," which contributes 83.7% of revenue, while its "professional performance" line accounts for just 7.7%. This positions it in a precarious spot, squeezed between high-end global brands like Arc'teryx and mass-market giants like Decathlon.
Despite the risks, Benfu Ziran has attracted high-profile investors. Tencent became the fourth-largest shareholder after a 300 million yuan investment in March 2025, joining early backers like Qiming Venture Partners. The company plans to use the IPO proceeds to build out its direct-to-consumer offline retail footprint and for brand transformation.
The offering provides a critical test of investor appetite for high-growth Chinese consumer brands with weak operational metrics. First-day trading will be a key indicator of whether the market values top-line growth over inventory risk and declining profitability.
This article is for informational purposes only and does not constitute investment advice.
