HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<ul>
<li>BUTONG’s growth momentum remained high, but customers are more focused on cost-effectiveness rather than premium products. We are unsure whether BUTONG’s  current high growth is sustainable in this low-growth industry. </li>
<li>The more revenue proportion from baby care products, the lower overall gross margin would be.BUTONG's strategy of emphasizing sales over R&amp;D isn’t conducive to establishing core competitiveness in fierce competition.</li>
<li>After Series B financing, the post-investment valuation reached about RMB2 billion. However, the market value of peers is not high. BUTONG’s post-IPO valuation performance may be lower than expected.</li>
</ul>


BUTONG’s growth momentum remained high, but customers are more focused on cost-effectiveness rather than premium products. We are unsure whether BUTONG’s  current high growth is sustainable in this low-growth industry. 
The more revenue proportion from baby care products, the lower overall gross margin would be.BUTONG's strategy of emphasizing sales over R&amp;D isn’t conducive to establishing core competitiveness in fierce competition.
After Series B financing, the post-investment valuation reached about RMB2 billion. However, the market value of peers is not high. BUTONG’s post-IPO valuation performance may be lower than expected.


Pre-IPO Butong Group - The Current High Growth May Not Be Sustainable

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