Key takeaway

The company achieved a revenue of RMB3.492bn (+7.3% YoY) and a net profit attributable to shareholders of the parent company of RMB208mn (-27.7% YoY) in 2025. The company achieved a revenue of RMB1.055bn (+6.0% YoY) and a net profit attributable to shareholders of the parent company of RMB144mn (+10.0% YoY) in 1Q26. By channel, offline channel revenue was RMB727mn (+11.8% YoY) in 1Q26. Revenue in the core five provinces decreased slightly. Peripheral provinces grew by about 50% YoY. E-commerce channel revenue was RMB312mn in 1Q26, down by a low single digit YoY. Despite the slight dip, operating quality has improved, and the channel is expected to reach a basic break-even point. Looking ahead to 2026, the company will expand its e-commerce scale while ensuring operation quality. For the offline core five provinces, focus remains on achieving sustained, steady growth and optimizing the product structure. For offline peripheral regions, strategy involves concentrating resources on key provinces, implementing a phased expansion, and unlocking economies of scale. On the product side, the company expects to iteratively upgrade the "probiotics" series in H1 and explore more new products in the general health series in H2. In the long run, consumers' increasing demands for health and safety are expected to drive the industry competition landscape to concentrate towards leading enterprises with supply chain and manufacturing advantages.

Event

Baiya Corporation releases its 2025 annual report. The company achieved a revenue of RMB3.492bn (+7.3% YoY), a net profit attributable to shareholders of the parent company of RMB208mn (-27.7% YoY), and a net profit attributable to shareholders of the parent company after deducting nonrecurring gains and losses of RMB195mn (-23.1% YoY) in 2025. Net operating cash flow was RMB199mn (-38.7% YoY). Basic EPS was RMB0.48 (-28.4% YoY). Weighted ROE was 14.83% (-6.00 pcts YoY). The company plans to distribute a cash dividend of RMB4.0 (tax included) for every 10 shares. The total dividend amount is RMB172mn, with a dividend payout ratio of 82.6%. On a single-quarter basis, the company achieved a revenue of RMB870mn (-6.4% YoY), a net profit attributable to shareholders of the parent company of RMB-37mn (-174.4% YoY), and a net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses of RMB-42mn (-252.8% YoY) in 4Q25. The weak performance in 4Q25 is mainly related to the late Spring Festival in 2026, which affected the delivery pace.

Baiya Corporation releases its 1Q26 report. The company achieved a revenue of RMB1.055bn (+6.0% YoY), a net profit attributable to shareholders of the parent company of RMB144mn (+10.0% YoY), and a net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses of RMB138mn (+7.1% YoY) in 1Q26.

Quick Take

E-commerce operation quality improves in 1Q26, and provinces outside the offline core regions maintain rapid growth. For independent brands by channel in the first quarter, 1) Offline: In 1Q26, the company's offline channel achieved a revenue of RMB727mn, up 11.8% YoY. Peripheral provinces (regions outside the core five provinces of Sichuan, Chongqing, Yunnan, Guizhou, and Shaanxi) are expected to grow by about 50% YoY, and the net profit margin may have reached a high single-digit level. Revenue in the core five provinces decreased slightly, mainly due to the base effect, while profitability remained stable. 2) Online: In 1Q26, the company's ecommerce channel revenue was RMB312mn, expected to decrease by a low single digit YoY. The company actively promoted the strategic adjustment of e-commerce channels. The revenue decline has narrowed significantly, and the operation quality has improved. It is expected to basically achieve break-even.

In 2025, the e-commerce channel faced pressure and underwent correction due to negative publicity. Meanwhile, offline revenue in provinces outside the core regions experienced high growth. For independent brands by channel, 1) Online: In 2025, e-commerce revenue was RMB1.343bn, down 11.9% YoY, with a gross profit margin of 53.7%, up 1.0 pct YoY. Affected by the "March 15" PR incident, the e-commerce channel was under pressure and correction, and the net loss is expected to be large. 2) Offline core five provinces: In 2025, revenue from the offline core five provinces was RMB1.229bn, up 3.9% YoY, with a gross profit margin of 59.2%, up 0.3 pct YoY. The core five provinces maintained steady growth and high profitability. 3) Regions outside the offline core five provinces: In 2025, revenue from regions outside the offline core f ive provinces was RMB834mn, up 92.3% YoY, with a gross profit margin of 52.0%, up 3.7 pcts YoY. It grew rapidly throughout the year. With the expansion of revenue scale in key provinces, it is expected to have achieved a low single-digit net profit margin in 2025.

The big health series led revenue growth, and the probiotic series products are expected to be upgraded in 1H26. In 2025, the Freedom Point product achieved a revenue of RMB3.341bn, up 10.0% YoY. In 1Q26, Freedom Point revenue was RMB1.026bn, up 7.8% YoY. Among them, the big health series products (including probiotics/probiotics Pro, sensitive skin, and organic pure cotton series) saw faster revenue growth. In 2025, the revenue of the big health series increased by 36.3% YoY. The product structure was continuously optimized, and the proportion of mid-to-high-end series increased, driving the company's gross profit margin up. In 2025, the company renewed the organic pure cotton series and strengthened its strategic positioning within the pure cotton segment. In 2026, the company expects to iterate and upgrade the "probiotics" series in H1, and plans to launch new products of other big health series in H2.

In 2025, the net profit margin was under pressure due to the decline in the return on investmen t of ecommerce. In 1Q26, the e-commerce strategy was adjusted, and profitability improved significantly. 1) Profit margin: In 2025, the company's gross margin was 54.30% (+1.12 pcts), net margin was 5.95% (-2.88 pcts),and income tax rate was 16.68% (+1.52 pcts). In 1Q26, the company's gross margin was 58.52% (+5.19 pcts), and net margin was 13.62% (+0.50 pcts). 2) Expense side:In 2025, the company's selling expense, administrative expense, R&D expense, and financial expense ratios were 41.75% (+4.08 pcts) , 2.85% (-0.74 pcts), 2.52% (+0.30 pcts), and 0.01% (+0.07 pcts) respectively. Selling expense was RMB1.458bn (+19.0% YoY). The difference between gross margin and selling expense ratio was 12.55% (-2.97 pcts). This was mainly due to the PR incident affecting the company's e-commerce revenue and ROI, as well as increased brand promotion expenses. In 1Q26, the company's selling expense, administrative expense, R&D expense, and financial expense ratios were 37.32% (+3.33 pcts), 3.14% (+0.69 pcts), 2.10% (+0.59 pcts), and 0.05% (+0.05 pcts) respectively. Looking ahead to 2026, the recent price increase of upstream raw materials has a limited overall impact. Gross margin is expected to further improve with product structure optimization. On the expense side, the company will continue to maintain a certain level of brand resource investment while improving expense allocation efficiency in the future .

In 2026, it is expected to achieve high-quality online growth and step-by-step key breakthroughs offline. Looking ahead to 2026, the company's e-commerce is expected to expand in scale while ensuring operational quality. The core five offline provinces will maintain steady growth, optimize product structure, and improve gross margin. Offline peripheral areas are expected to concentrate resources on key provinces and advance step by step. As economies of scale materialize, the net profit margin is expected to reach high single digits. Looking ahead, the fundamentals of the sanitary napkin industry as a consumer staple remain unchanged. As consumers pay more attention to the health and safety of sanitary napkin products, it is expected to drive the industry's competitive landscape to concentrate towards leading enterprises with supply chain and manufacturing advantages. The company continues to refine its marketing strategy of "deep cultivation in Sichuan and Chongqing markets, orderly domestic expansion, and simultaneous e-commerce development". It focuses on advantageous resources, leverages its own advantages, and continuously builds brand power and product power.

Earnings forecast:The company's revenue for 2026-2028 is estimated to be RMB4.016bn, RMB4.646bn, and RMB5.351bn, up 15.0%, 15.7%, and 15.2% YoY respectively. Net profit attributable to shareholders of the parent company is estimated to be RMB400mn, RMB479mn, and RMB565mn, up 92.5%, 19.6%, and 18.1% YoY respectively. The corresponding PE is 19.7x, 16.5x, and 13.9x. We maintain the "Buy" rating.

Risks: 1) Risk of declining profitability: At the current development stage, the company pays more attention to the improvement of scale and market share, and increases the investment in brand promotion and channel expenses. Although the revenue growth rate of e-commerce channels and peripheral provinces is high, their contribution to profit is small. The company faces the risk of continuous decline in profitability. 2) Risk of expansion into peripheral provinces falling short of expectations: The company's sanitary napkin brand has expanded from the southwestern region to the entire country. While it has achieved a high market share in core areas like Sichuan, Chongqing, Yunnan, Guizhou and Shaanxi, it faces competition from regional and international brands in newly-developed peripheral provinces. 3) Risk of raw material price fluctuations: The company's raw materials mainly include non-woven fabrics, polymer materials, and fluff pulp. Raw material price fluctuations will have an adverse impact on the company's profitability. 4) Brand and public opinion risks:In recent years, consumers have paid increasing attention to the safety and quality of sanitary napkins, and public opinion incidents occur frequently. If the company's products or brands are affected by negative public opinion, it may have an adverse impact on revenue and performance.