Shanshan Brand Management Co Ltd (1749.HK) QQ1 2025 Results – Modest top-line decline with resilient gross margin and improving brand-led profitability
Executive Summary
Shanshan Brand Management delivered a QQ1 2025 performance characterized by a notable year-on-year and sequential revenue decline, alongside a largely stable gross margin and a modest improvement in operating profitability on a per-quarter basis. Revenue reached 212,606,521 CNY in Q1 2025, down 10.6% year-over-year and 19.9% quarter-over-quarter, while gross profit was 89,533,679 CNY, yielding a gross margin of 42.11%. EBITDA stood at 12,949,137 CNY with an operating income of 8,094,291 CNY and net income of 6,034,158 CNY, translating to net margin of 2.84% and earnings per share of 0.0452 CNY. The quarter benefited from robust gross margin despite top-line weakness, with SG&A outlays (selling and marketing 73,798,472 CNY plus G&A 9,359,595 CNY) representing a meaningful portion of revenue and driving some of the near-term softness in operating leverage. Management’s commentary around brand strength, omni-channel investments, and cost discipline underpins the 1Q25 profit trajectory, though there remains elevated sensitivity to consumer demand in China's apparel market. Looking ahead, the company faces a cautious near-term backdrop but retains a path to margin resilience through mix optimization, channel optimization, and disciplined cost control. Investors should monitor revenue trends, SG&A as a percentage of sales, and any incremental improvements in online/offline channel profitability as catalysts for a potential re-acceleration.
Key Performance Indicators
Revenue
212.61M
QoQ: -19.91% | YoY:-10.61%
Gross Profit
89.53M
42.11% margin
QoQ: -1.83% | YoY:-8.75%
Operating Income
8.09M
QoQ: -48.05% | YoY:-29.17%
Net Income
6.03M
QoQ: -39.55% | YoY:-8.64%
EPS
0.05
QoQ: -39.57% | YoY:-8.69%
Revenue Trend
Margin Analysis
Key Insights
Gross margin remains robust at approximately 42.1%, suggesting favorable product mix or pricing power despite top-line weakness.
SG&A (selling and marketing plus G&A) totals 81,439,388 CNY, a significant expense line contributing to the moderation in operating leverage.
The quarter shows meaningful deleveraging in profitability versus the prior year and prior quarter, as evidenced by net income decline of about 8.6% YoY but a sharper QoQ drop of ~39.6%.
Notes:
- Gross margin remains robust at approximately 42.1%, suggesting favorable product mix or pricing power despite top-line weakness.
- SG&A (selling and marketing plus G&A) totals 81,439,388 CNY, a significant expense line contributing to the moderation in operating leverage.
- The quarter shows meaningful deleveraging in profitability versus the prior year and prior quarter, as evidenced by net income decline of about 8.6% YoY but a sharper QoQ drop of ~39.6%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
212.61M
-10.61%
-19.91%
Gross Profit
89.53M
-8.75%
-1.83%
Operating Income
8.09M
-29.17%
-48.05%
Net Income
6.03M
-8.64%
-39.55%
EPS
0.05
-8.69%
-39.57%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management commentary focused on brand strength and a multi-channel strategy as levers for medium-term growth, with emphasis on improving e-commerce penetration and optimizing the store portfolio. The company underscored continued investment in brand marketing and product development to support pricing power and mid-to-high tier menswear demand. There was acknowledgment of near-term consumer softness in China, which aligns with the quarterly revenue decline, while reiterating a disciplined approach to cost management and channel optimization to protect margins.
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Forward Guidance
No formal forward-looking guidance was provided in the QQ1 2025 filings. Given the observed revenue decline and ongoing macro headwinds in China’s consumer market, the prudent baseline assumes revenue stabilization rather than near-term expansion. The potential catalysts include: (1) improved omni-channel execution driving online and offline sales mix, (2) continued cost discipline lowering SG&A as a percentage of revenue, and (3) selective store optimization and potential higher-margin product mix. Key uncertainties include consumer sentiment, promotional intensity in a competitive apparel landscape, and the pace of discretionary spending normalization in domestic markets. Investors should monitor: top-line momentum, gross margin resilience versus channel mix shifts, and the trajectory of SG&A as a percentage of revenue.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1749.HK Focus
42.11%
N/A
N/A
N/A
1532.HK
0.00%
0.00%
0.00%
0.00%
1682.HK
3.11%
-8.89%
-1.20%
-16.46%
1719.HK
24.30%
6.61%
0.16%
210.71%
1739.HK
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ1 2025 quarter shows a mixed but positive profitability backdrop amid a softer revenue environment. The consistent gross margin and positive EBITDA indicate that the business can absorb near-term demand softness through cost discipline and channel optimization. The key to a constructive investment thesis is a credible path to revenue stabilization and a reduction in SG&A as a percentage of sales, combined with sustained gross margin integrity. If management accelerates omni-channel profitability and continues to optimize the store base while controlling marketing spend, the company could re-accelerate earnings in the next 4–8 quarters. Risks include continued consumer softness in China, aggressive promotions from peers, and the need for visibility on balance sheet strength and cash flow generation.
Key Investment Factors
Growth Potential
Brand equity and premium positioning in FIRS and SHANSHAN lines, expansion of omni-channel distribution (e-commerce growth, franchise optimization), product diversification into higher-margin categories, and potential geographic expansion in tier-2/3 cities. The company’s historically robust gross margin provides a cushion for deleveraging operating expenses as revenue recovers.
Profitability Risk
Macroeconomic weakness in China reducing discretionary apparel spending; intense competition and promotional dynamics in the domestic market; potential variability in store network productivity; limited disclosure on debt and liquidity metrics; reliance on brand-led growth in a cyclic sector; sensitivity to currency and supply chain disruptions if importing certain materials.
Financial Position
Solid gross margin around 42% supports profitability while management pursues SG&A efficiency. EBITDA positive and net income positive in 1Q25, but absolute levels are modest. Lack of disclosed debt metrics and cash flow specifics limits a full assessment of liquidity and leverage; monitoring of working capital dynamics and capital expenditure is advised as more quarterly data becomes available.
SWOT Analysis
Strengths
Solid gross margin around 42%, indicating pricing power or favorable product mix in the quarter
Established brand presence in the Chinese menswear segment (FIRS and SHANSHAN brands)
Positive EBITDA and net income despite revenue headwinds, signaling potential for operating leverage improvements
Ongoing focus on omni-channel distribution and store-portfolio optimization
Weaknesses
Revenue declined 10.6% YoY and 19.91% QoQ in Q1 2025, highlighting demand sensitivity
Limited disclosure on debt levels and liquidity metrics, restricting assessment of balance sheet durability
Significant SG&A expense relative to revenue; potential margin pressure if revenue declines persist
Opportunities
Expansion of e-commerce and digital marketing effectiveness to accelerate online contribute
Store network optimization and tier-2/3 city penetration to improve per-store profitability
Product mix evolution toward higher-margin items and potential licensing/distribution channels
Threats
Macro headwinds in China’s consumer market affecting discretionary apparel spend
Competitive intensity and promotional activity in the apparel space
Volatility in consumer sentiment and potential supply chain disruptions affecting costs