Chinese E-Commerce Firm Ruoyuchen Eyes Hong Kong IPO After 639% Stock Rally
Guangzhou Ruoyuchen Tech, a once-obscure Chinese e-commerce services company, is planning a Hong Kong initial public offering after a strategic pivot to building its own brands fueled a dramatic surge in its stock price and profitability.
The Shenzhen-listed company, whose shares have soared about 639% over the past year, is capitalizing on its successful business transformation to seek an international listing. The move is intended to raise capital for global expansion, enhance its brand image, and explore strategic acquisitions, according to its preliminary filing.
The plan follows a fundamental shift in Ruoyuchen’s business model. Revenue from its in-house brands, a recent focus for the company, surpassed its traditional e-commerce agency services for the first time in the first half of 2025, becoming its core growth engine and driving a sharp increase in margins and net profit.
The company’s stellar performance has attracted a wave of investor attention, with institutional research activity surging this year. The market rally has also provided a lucrative exit for its largest external shareholder, which has been actively selling down its stake at multi-year highs.
From Agent to Brand Owner
Founded in 2011 by Wang Yu, an entrepreneur born in the 1980s, Guangzhou Ruoyuchen Tech initially focused on providing online store operations, digital marketing, and supply chain management for global brands in China. However, facing intensifying competition and shrinking traffic dividends in the traditional e-commerce agency sector, the company embarked on a decisive pivot toward developing its own consumer brands.
This strategic shift has yielded remarkable results. In the first half of 2025, revenue from its proprietary brands surged 242.4% year-on-year to 603 million yuan, accounting for 45.75% of total revenue. This milestone marked the first time that own-brand sales outstripped its legacy brand management and agency business. The higher profitability of this new segment was a key driver, with own-brand gross margins hitting 67%, far outpacing the 39% margin from its agency operations.
Stellar Growth, Soaring Costs
The pivot has transformed Ruoyuchen from an underperformer into the most profitable company among China’s six listed e-commerce solution providers. For the first six months of 2025, the company reported total revenue of 1.319 billion yuan (approximately US$182 million), a 67.6% increase from the same period last year. Net profit jumped 85.6% to 72.26 million yuan.
This performance builds on a multi-year growth trend. Between 2022 and 2024, Ruoyuchen’s revenue grew at a compound annual growth rate (CAGR) of 20.5%, while net profit expanded at a CAGR of 76.8%. The company’s primary in-house brands, home cleaning line “Zhanjia” and oral beauty supplement “Feicui,” have become its main growth drivers.
However, this rapid growth has been fueled by aggressive marketing. Sales and marketing expenses skyrocketed 124% to 599 million yuan in the first half of 2025, indicating a heavy reliance on promotional spending to drive sales. The company also depends on an extensive network of original equipment manufacturers (OEMs) for production, collaborating with 26 suppliers in 2024.
Investor Frenzy, Shareholder Exit
Ruoyuchen’s turnaround has captured the market’s attention. Its stock price surged from 6.4 yuan a year ago to a recent high of 47.3 yuan, pushing its market capitalization past 13 billion yuan in May. The company has hosted more investor research meetings in 2025 than in all previous years since its 2020 Shenzhen listing combined.
In stark contrast to the new wave of investor interest, its key early backer, Lancy, has been cashing in. Lancy, which became Ruoyuchen’s largest institutional shareholder in 2015, has accelerated its selldown this year. As of May 20, it had sold shares worth approximately 217 million yuan and has announced plans for further disposals, which would reduce its stake to below 5%.
Meanwhile, Ruoyuchen’s management has displayed confidence in its outlook. On June 9, the company raised the upper limit of its share buyback price from 30.22 yuan to 88.4 yuan, signaling a belief that its stock remains undervalued despite the recent rally.
Global Ambitions and Founder’s Caution
The proposed Hong Kong listing is a core part of Ruoyuchen's next growth phase. According to its filing, the company plans to build a multi-brand portfolio focused on “quality, self-pleasure, and health” and leverage a Hong Kong listing to deepen its global strategy. The initial focus for overseas expansion will be Southeast Asia, involving product localization and targeted marketing.
Despite the firm's success, founder Wang Yu has expressed a degree of caution. He recently admitted to “losing sleep” over the immense market expectations created by the stock’s performance. "It is a law of nature that a company cannot maintain high growth forever," Wang said, while affirming the team's commitment to delivering on its targets.
The company is operating in a promising market. China’s broader e-commerce solutions industry is projected to grow from 1.3 trillion yuan in 2024 to 2.2 trillion yuan by 2029. The health and wellness category, a key focus for Ruoyuchen, is expected to be the fastest-growing segment with a projected CAGR of 24.3% over the same period.