Turning Losses into Profits Fails to Reverse Stock Decline: Why Isn't Blueocean's Low-Margin High-Volume Strategy Driving Overseas Expansion and Transformation?

Listing: Sina Finance Listed Company Research Institute

Author: Mu Yu

Bluereco finally turned profitable, but still hovers near the breaking point.

According to the annual report, in 2025, the company achieved total revenue of 2.913 billion yuan, a year-on-year increase of 30.0%; net profit was 634 million yuan, compared to a net loss of 398 million yuan in 2024. Notably, this is Bluereco’s first profit since 2021, after four years of cumulative losses totaling 1.53 billion yuan.

On the first trading day after the earnings release, its stock price rose nearly 22% intraday, closing at HKD 66.55 per share, an approximate daily increase of 8.7%. However, it quickly reversed course, losing a total of 8.2% over two consecutive trading days from March 18 to 19. Compared to the peak in June 2025, Bluereco’s stock has sharply retreated from HKD 198 per share to around HKD 60, even falling below the issue price and bottoming out at HKD 51 per share. As of the time of writing, the company’s latest market value is approximately HKD 15.628 billion, evaporating 67.6% in just nine months.

Meanwhile, Bluereco’s rating was downgraded from “Buy” to “Hold” by PuYin International, and institutions such as CICC, Citibank, and BOC International have lowered their target prices to the HKD 80-90 range.

Nine-yuan products support half the market, a sea of questions with nearly 1,000 new SKUs launched this year

The capital market is not buying it, mainly because Bluereco’s actual profitability is not optimistic.

The annual report shows that the key to turning losses into profits was excluding non-operating factors such as fair value changes of convertible redeemable preferred shares, listing expenses, and share-based compensation. In 2025, Bluereco’s adjusted net profit was about 675 million yuan, a year-on-year increase of approximately 15.5%, far below the revenue growth rate; the adjusted net profit margin was about 23.2%, down 2.9 percentage points from 2024.

There are two main culprits eroding profit margins.

First, a low-margin, high-volume strategy has lowered the average transaction price. During the reporting period, revenue from products priced at 9.9 yuan in the affordable price range totaled 541 million yuan, accounting for about 18.6% of total revenue; sales volume was 122 million units, accounting for 47.8% of total sales. Based on previous financial disclosures of segmented revenue and sales data, before the launch of low-cost products, the average selling prices of role-playing toys in the first half of 2023-2024 were 21.13 yuan and 18.27 yuan, respectively. In the second half of 2024, this figure plummeted by 18.4% to 14.91 yuan. From January to June 2025, the average price of role-playing toys further dropped to 11.94 yuan. In the second half of the year, the average price fell below 11 yuan, decreasing by another 8.5% month-on-month, nearly halving compared to 2023.

Second, a “sea of questions” strategy has driven up mold depreciation costs. The annual report discloses that Bluereco launched 913 SKUs in 2025, with 273 and 640 new SKUs in the first and second halves of the year, respectively. By the end of 2024, the company had only 682 SKUs on sale. In other words, the number of new SKUs launched from July to December 2025 alone reached 93.8% of the total SKUs retained over the past decade. To meet the high-precision and multi-cavity mold requirements for these new SKUs, the company’s mold depreciation costs surged by 120.6% year-on-year.

Additionally, Bluereco remains a major license IP holder. Although the company has worked to reduce reliance on the single IP Ultraman in 2025, the combined revenue from Transformers, Ultraman, Kamen Rider, and Hero Unlimited totaled 2.361 billion yuan, contributing over 80% of total revenue. Among these, Hero Unlimited, a self-owned IP, accounts for less than 10%, while a licensed IP like Transformers accounts for nearly one-third of revenue.

As of December 31, 2025, Bluereco’s licensed IPs reached 73, a 46.0% increase year-on-year, covering major popular IPs such as Toy Story, Zootopia, Frozen, Journey to the West, Nezha Conquers the Sea, and JoJo’s Bizarre Adventure. The company has commercialized 29 IPs and renewed or extended licensing agreements with well-known IPs like Kamen Rider, Marvel, Disney Princess, Naruto, and Pokémon, keeping licensing costs high.

Due to pressure from the nine-yuan products, Bluereco’s revenue growth has become difficult to replicate the previous over 100% surges; rising mold depreciation and licensing costs led to a 45.9% year-on-year increase in sales costs to 1.549 billion yuan, causing gross profit margin to drop below 50%, down 5.8 percentage points from 2024.

Unstable foundation for channel expansion; selling toys to adults—what are the prospects?

Overseas markets are a bright spot for Bluereco in 2025.

According to the annual report, during the reporting period, the company’s overseas sales reached 3.19 billion yuan, nearly five times the 642 million yuan in 2024. Sales in Asia (excluding China) and the Americas grew by 238.1% and 804.1%, respectively, both surpassing 1 billion yuan. Indonesia and the United States are the top two markets.

However, unlike Pop Mart, which has built a global presence with its own IP LABUBU, Bluereco is essentially still a toy supplier relying on channel and price advantages for overseas expansion. In 2025, the company opened flagship stores on overseas e-commerce platforms such as Amazon, Shopee, and Lazada, and established offline presence in Walmart, Target, Toys “R” Us, 7-Eleven, among others. Online product prices range from $3 to $15.99, less than one-tenth of LEGO’s average price, and lower than the $4.22-20.0 price range of Hasbro’s mass-market products.

While actively participating in international toy fairs in New York, Nuremberg, and Indonesia to build brand influence, most overseas consumers still “recognize IPs, not brands.” The low-price channel-driven model makes it difficult for Bluereco to build brand premium, leaving it relatively passive. It must continuously invest in advertising, maintain relationships with distributors, and remain alert to competitors offering lower prices and higher playability.

In 2025, the company’s sales and distribution expenses increased by 36.6% year-on-year, with marketing and promotion expenses rising by about 33.7%. The sales expense ratio increased from 12.6% in 2024 to 13.3%. However, the inventory in the company’s warehouses increased by 19.9% to 345 million yuan, with finished goods accounting for about 76.4%, and inventory turnover days extended to 75 days, about 1.17 times that of 2024.

In addition to expanding overseas, Bluereco is also turning its attention to the more affluent adult consumer group. The annual report shows that out of 1,447 SKUs on sale in 2025, 287 are mainly targeted at consumers over 16 years old, accounting for about 19.8% of total SKUs, up from 4.6% in 2024; this segment’s revenue accounts for approximately 16.7% of total revenue, an increase of over 5 percentage points year-on-year. Historically, Bluereco’s core customer base has been children aged 6-16. In 2024, SKUs aimed at this age group accounted for about 76.1% of total SKUs. In the first half of 2025, revenue from products for ages 6-16 was about 82.6% of total revenue.

It is worth noting that these two consumer groups have distinct purchasing characteristics. Children aged 6-16 have limited purchasing power, are easily influenced by peers, and prefer channels near schools; adults over 16 tend to pay a premium for emotional value, seeking identity through interest circles and collectibles. Therefore, Bluereco’s transition to these new markets faces significant challenges.

In terms of products, Bluereco currently offers only simple IP variations for these two groups, lacking the differentiated gameplay design for adults seen in LEGO or limited-edition or collectible products with appreciation potential like Pop Mart. In channels, Bluereco heavily relies on distribution networks near schools in lower-tier markets, whereas brands like LEGO, Pop Mart, TOP TOY (Miniso), and X11 (KKV) have established flagship and pop-up stores in core urban areas to directly reach target consumers. In operations, LEGO and Pop Mart have invested heavily in movies and theme parks to extend the lifecycle of adult consumers; Bluereco’s future investments in this area are likely to be substantial.