HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Herbs Generation Group Holdings / Equity Capital Markets

<ul>
<li>Performance declined sharply in 24H1 mainly due to the decrease in orders from Customer A. Herbs Generation’s business/financial performance would be easily affected if the contributions from Customer A decline.</li>
<li>Current sales model of Herbs Generation is hard to change, and the Company still has to invest heavily in offline marketing and promotional efforts, but the efficiency is not high.</li>
<li>Herbs Generation’s ability to resist risks is relatively weak, which prevents us from building optimistic expectations for sustainable growth in the future. Valuation should be lower than peers.</li>
</ul>


Performance declined sharply in 24H1 mainly due to the decrease in orders from Customer A. Herbs Generation’s business/financial performance would be easily affected if the contributions from Customer A decline.
Current sales model of Herbs Generation is hard to change, and the Company still has to invest heavily in offline marketing and promotional efforts, but the efficiency is not high.
Herbs Generation’s ability to resist risks is relatively weak, which prevents us from building optimistic expectations for sustainable growth in the future. Valuation should be lower than peers.


Pre-IPO Herbs Generation Group Holdings (PHIP Updates) - Some Points Worth the Attention

Herb Standard Holdings Limited / Equity Capital Markets

<ul>
<li>Herb Standard adopts light-asset model, which helps to bring about high gross margin.However, gross margin showed a declining trend due to increase in promotional discounts to capture more market share</li>
<li>The total sales value of products returned was up 317% YoY in FY2025 due to unsold products after promotional events. There're concerns whether the current strong growth momentum is sustainable</li>
<li>Our forecast is revenue to increase 20%/15%/12% and net profit to increase 14% /11.7%/8.8% in FY2026/FY2027/FY2028, respectively.Due to higher growth/profit margin, valuation of Herb Standard could be higher than peer</li>
</ul>


Herb Standard adopts light-asset model, which helps to bring about high gross margin.However, gross margin showed a declining trend due to increase in promotional discounts to capture more market share
The total sales value of products returned was up 317% YoY in FY2025 due to unsold products after promotional events. There're concerns whether the current strong growth momentum is sustainable
Our forecast is revenue to increase 20%/15%/12% and net profit to increase 14% /11.7%/8.8% in FY2026/FY2027/FY2028, respectively.Due to higher growth/profit margin, valuation of Herb Standard could be higher than peer


Pre-IPO Herb Standard Holdings Limited - The Business, the Concerns and the Outlook

<ul>
<li>Herbs Generation's performance growth momentum is strong, with growth rate of net profit higher than that of revenue. However, net profit margin is not high due to high SG&amp;A expenses. </li>
<li>Due to small market size in Hong Kong, growth ceiling of Herbs Generation is obvious. It’s quite challenging to seize market share from top ranking providers due to fierce competition.</li>
<li>We’re concerned that future revenue could decline to single-digit growth, as the effectiveness of continuing to invest in marketing/promotion will diminish. Valuation of Herbs Generation should be lower than peers.</li>
</ul>


Herbs Generation's performance growth momentum is strong, with growth rate of net profit higher than that of revenue. However, net profit margin is not high due to high SG&amp;A expenses. 
Due to small market size in Hong Kong, growth ceiling of Herbs Generation is obvious. It’s quite challenging to seize market share from top ranking providers due to fierce competition.
We’re concerned that future revenue could decline to single-digit growth, as the effectiveness of continuing to invest in marketing/promotion will diminish. Valuation of Herbs Generation should be lower than peers.


Pre-IPO Herbs Generation Group Holdings - Concerns Behind the Strong Growth

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Herbs Generation Group Holdings (HGG HK)

Pre-IPO Herbs Generation Group Holdings (PHIP Updates) - Some Points Worth the Attention

Herbs Generation's performance took a hit in 24H1 due to decreased orders from Customer A, highlighting vulnerability to risk and need for...

Xinyao (Criss) Wang

Pre-IPO Herb Standard Holdings Limited - The Business, the Concerns and the Outlook

Herb Standard's light-asset model drive high gross margin but declining trend due to increased promotional discounts.Concerns arise over...

Xinyao (Criss) Wang

Pre-IPO Herbs Generation Group Holdings - Concerns Behind the Strong Growth

Herbs Generation's profitability/growth is hindered by high selling expenses/small HK market, making it hard to compete with top players.Future...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Pre-IPO Herbs Generation Group Holdings (PHIP Updates) - Some Points Worth the Attention

​Herbs Generation's performance took a hit in 24H1 due to decreased orders from Customer A, highlighting vulnerability to risk and need for...

Xinyao (Criss) Wang

Pre-IPO Herb Standard Holdings Limited - The Business, the Concerns and the Outlook

​Herb Standard's light-asset model drive high gross margin but declining trend due to increased promotional discounts.Concerns arise over...

Xinyao (Criss) Wang

Pre-IPO Herbs Generation Group Holdings - Concerns Behind the Strong Growth

​Herbs Generation's profitability/growth is hindered by high selling expenses/small HK market, making it hard to compete with top players.Future...

Xinyao (Criss) Wang

Herbs Generation's performance took a hit in 24H1 due to decreased orders from Customer A, highlighting vulnerability to risk and need for...

Herb Standard's light-asset model drive high gross margin but declining trend due to increased promotional discounts.Concerns arise over...

Herbs Generation's profitability/growth is hindered by high selling expenses/small HK market, making it hard to compete with top players.Future...