The parent company plans to go public in Hong Kong, losing 18 million last year, with a sudden dividend payout of 130 million.

Ask AI · Will the large dividend distribution before Small Kuo Technology’s IPO affect its financing purposes?

Recently, the oral care brand “Sanban” parent company Shenzhen Small Kuo Technology Co., Ltd. (hereinafter “Small Kuo Technology”) officially submitted an IPO application to the Hong Kong Stock Exchange, with CMB International serving as the sole sponsor.

If successfully listed in Hong Kong stocks, Small Kuo Technology is expected to earn the title of “Hong Kong’s No. 1 Oral Care Stock.”

This brand, endorsed by singer Hua Chenyu and rising through online traffic, is a new personal care brand. While experiencing rapid revenue growth, it also reveals issues such as category dependence, heavy marketing with light R&D, and OEM manufacturing. Its path to capitalization still faces multiple challenges.

Relying on OEM factories with annual revenue of 2.5 billion yuan

Small Kuo Technology was founded in 2015, with founder Yin Kuo initially entering the personal care field with electric toothbrushes. At that time, the domestic electric toothbrush market was dominated by foreign brands and traditional daily chemical giants, making it difficult for startups to break through technological and channel barriers. The company did not form a scale advantage early on. In 2018, Small Kuo Technology shifted its strategic focus, launching the core oral care brand “Sanban,” and turning to mass-market fast-moving consumer goods such as toothpaste, mouthwash, and oral sprays. With affordable pricing and online content marketing, it quickly gained market share, ranking among the top domestic oral care brands.

As of now, Small Kuo Technology has built a product matrix covering toothpaste, mouthwash, oral cleaning tools, and oral fragrances, with over 500 SKUs. Its products are priced for the mass market with quality, with main toothpaste retailing between 9.9 yuan and 49.9 yuan. According to industry data from Frost & Sullivan, based on 2025 retail sales, Small Kuo Technology ranks third in China’s oral care product market.

Sanban dental floss product Water Lotus / Photo

While expanding rapidly, the company’s performance has also achieved leapfrog growth.

Financial data shows that from 2023 to 2025 (hereinafter “Reporting Period”), Small Kuo Technology’s revenue was 1.1B yuan, 1.37B yuan, and 2.5B yuan, respectively, with an impressive year-over-year growth rate of 82.5% in 2025. The company’s gross profit margin remained relatively stable at 72.1%, 69.8%, and 71.9%, maintaining around 70%, indicating good profitability.

However, behind the high revenue growth, the company’s net profit performance has shown a clear turning point.

In 2023, it achieved a net profit attributable to parent of 41.62 million yuan, which decreased to 34.23 million yuan in 2024, still profitable; in 2025, net profit suddenly turned to a loss of 18.25 million yuan, a year-over-year decline of 153%. The reason for the net loss in 2025 was due to an equity-settled share-based payment expense exceeding 110 million yuan. Excluding dividends, share payments, and other factors, the company’s adjusted net profit for 2025 was 155 million yuan.

From a business structure perspective, Small Kuo Technology’s revenue sources are highly concentrated, with core categories showing divergence.

In 2025, the company’s revenue from basic oral care products centered on toothpaste and toothbrushes was 2.32B yuan, accounting for 92.9% of total revenue, and continued to lead growth, becoming the main pillar driving overall company growth.

Meanwhile, the growth of the early hit product mouthwash has slowed significantly. The company’s professional and beauty oral care business (including mouthwash and oral sprays) only generated 168 million yuan in that period, accounting for 6.8%, with the star category gradually losing growth elasticity.

The issue of a single brand and product structure is also prominent. Both of the above business segments are sold under the “Sanban” brand, which nearly accounts for all revenue contribution. In 2025, the company launched a new personal care brand “Little Arrow,” expanding into head wash and shower gel categories, priced between 39.9 yuan and 79.9 yuan, but last year this brand only generated about 8 million yuan, accounting for just 0.3%, still lacking scale effects and unable to effectively supplement the main business.

On the production side, Small Kuo Technology mainly adopts OEM mode, meaning external manufacturers produce on its behalf, with limited independent capacity. Some consumers posted on social platforms about purchasing Sanban mouthwash, with the OEM factory being Liangmianzhen (600249.SH), known as “the No. 1 toothpaste stock” in A-shares. Over-reliance on external OEMs also exposes the company to certain supply chain management and quality control risks.

Sales expenses are twice the cost price

Small Kuo Technology’s rapid growth relies on a typical influencer brand development model of “heavy marketing, light R&D,” which is especially evident in the IPO prospectus.

During the reporting period, the company’s sales and distribution expenses were 685 million yuan, 835 million yuan, and 1.53B yuan, respectively, accounting for over 60% of revenue for three consecutive years. Considering cost information, a consumer purchasing a 30-yuan Sanban product incurs a cost of about 9 yuan, but the sales investment is about 18 yuan—twice the cost—meaning consumers are largely paying for “advertising.”

The huge expenses mainly go toward KOL promotion, brand promotion, content placement, celebrity endorsements, and e-commerce platform marketing. The IPO prospectus states that entertainment marketing, especially through brand ambassadors, significantly boosts product sales. Over the past record period, the company signed 13 brand ambassadors, currently collaborating with singer Hua Chenyu.

This traffic-driven model also makes the company’s revenue heavily dependent on online channels.

From 2023 to 2025, Small Kuo Technology’s online channel revenue was 1.04B yuan, 1.21B yuan, and 2.01B yuan, respectively. Although the proportion declined slightly, it still accounts for over 80%, with offline channels remaining to be expanded.

Mainstream oral care products in offline malls / Photo by Zuo Yu

Contrasting sharply with the high marketing expenses is the very low R&D investment.

During the reporting period, R&D expenses were 17.82 million yuan, 16.88 million yuan, and 19.39 million yuan, respectively, with the proportion of revenue gradually falling below 1%. Insufficient R&D investment may lead to a lack of core technological barriers, with formulas and efficacy becoming homogenized with similar products, making it difficult to build a long-term competitive moat.

Currently, competition in China’s oral care industry is intensifying, with traditional giants like Yunnan Baiyao and P&G expanding into mass markets, while emerging brands like usmile and Roman continuously divert young consumers. Industry price wars and marketing battles are escalating. Without a technological moat, Small Kuo Technology relying solely on marketing investment to sustain growth may face long-term pressure.

The company is aware of this issue. One of the uses of funds raised in this IPO is to strengthen product design and R&D capabilities to maintain competitiveness. However, it will also continue to enhance brand marketing and promote market recognition. Balancing marketing expansion and R&D investment will be a long-term challenge for Small Kuo Technology.

Beyond operational issues, the large dividend payout just before the IPO has also attracted attention.

In 2023 and 2024, Small Kuo Technology did not distribute dividends; but in 2025, just before applying for listing, the company suddenly paid out 130 million yuan in dividends to shareholders. At the same time, senior management salaries surged, with Yin Kuo earning about 115 million yuan in 2025, mainly due to share-based payments. The large dividend payout before listing has raised questions about the true purpose of the company’s financing.

Regarding the above issues of expense control, product layout, and pre-IPO dividend payout, reporters have sought confirmation from Small Kuo Technology, but as of press time, no response has been received.

Reporter: Zuo Yu

Text Editor: Sun Wanqiu