SOFTCARE (02698), known as the "African diaper king," is approaching a significant test in the capital markets. The company's IPO lock-up shares are set to be released on May 10. Approximately 41.2074 million shares will become tradable, representing about 45.31% of the total shares offered globally. A key point is that these shares are held by 15 cornerstone investors, resulting in a relatively fragmented ownership structure. Historically, the combination of a large-scale lock-up expiration and a highly dispersed shareholder base often subjects a company's stock price to significantly increased liquidity pressure, potentially even triggering a temporary liquidity crisis. The key to navigating this situation lies in whether the market recognizes the company's fundamental strengths. If its future growth logic continues to gain investors' trust, long-term capital may still use any short-term price pressure from the share release as an opportunity to build positions, thereby mitigating volatility and helping the stock price gradually return to its value trajectory. The question remains: can SOFTCARE successfully pass this test?
Despite a premium lineup of cornerstone investors and frenzied subscription demand, SOFTCARE's stock price has continued to experience wide fluctuations. SOFTCARE's IPO utilized a "Mechanism B" issuance. The total number of shares offered was 90.884 million, representing 15% of the company's total share capital (before any exercise of the over-allotment option). The public offering portion consisted of 9.0884 million shares, accounting for 10% of the total offering, with the remaining 90% allocated to the international placement. Even during the IPO stage, SOFTCARE attracted strong investor interest, particularly in securing cornerstone investors. According to the prospectus, SOFTCARE attracted 15 cornerstone investors who collectively subscribed for 41.2074 million shares. This represented approximately 50.38% of the international placement shares (before any over-allotment) and about 45.34% of the total shares offered. This group of cornerstone investors included well-known domestic and international investment institutions. Among them were BA Capital, a Singapore MAS-regulated private equity firm, holding a 0.97% stake, and Arc Avenue Asset Management, with a Singapore family office background, holding 0.98%. Major international investment banks like Morgan Stanley (via its Beijing Shunao entity), prominent venture capital firm Sequoia Capital (through its funds), and established private equity firm CDH Investments each held a 0.49% stake. Domestic mutual funds such as Fullgoal Fund and E Fund each held a combined 0.39%, while China Asset Management (Hong Kong) held a 0.24% stake. The cornerstone lineup also included institutions like Boyu Capital, Southern Fund, NewTrails Capital, Hozon Capital, TruMed Investment, Qihuirunjin, and quantitative market maker Jane Street.
SOFTCARE's roster of cornerstone investors can be described as "premium," gathering leading institutions from various sectors and laying a solid foundation of credibility. This strong endorsement significantly fueled market subscription enthusiasm: the international placement was oversubscribed by approximately 34.33 times, and the public offering was oversubscribed by a remarkable 1813.77 times, reflecting exceptionally high demand from retail investors. In terms of the actual number of shares freely tradable, SOFTCARE's float was not large post-listing. After the cornerstone investors locked up approximately 45.34% of the total shares offered, the proportion of shares tradable within the first six months after listing was only about 8.199% of the total share capital, corresponding to roughly 49.683 million shares. Calculated at the issue price of HKD 26.2, the market value of these freely tradable shares was merely HKD 1.301 billion. However, despite the dual stimuli of a premium cornerstone lineup and狂热subscription sentiment, SOFTCARE's stock price performance post-listing, with its relatively small HKD 1.3 billion free-float market cap, did not demonstrate the strength many anticipated. Observations show that SOFTCARE officially began trading on the Hong Kong Stock Exchange Main Board on November 10, 2025. Within the first 10 minutes, its share price surged to HKD 36.8, a 40.46% increase from the issue price. Subsequently, under profit-taking pressure, the price quickly retreated by nearly ten percentage points. Although it stabilized at lower levels in the afternoon, it plunged again near the market close,最终narrowing its first-day gain to 25.95%. Unexpectedly, the high of HKD 36.8 reached on the first day marked the peak of SOFTCARE's stock price over the next five months. During this period, the stock entered a phase of wide-ranging sideways volatility. On March 9 of this year, it一度fell to HKD 25.7, breaching the issue price before recovering. As of the close on April 16, SOFTCARE was trading at HKD 31.34 per share, representing a cumulative increase of approximately 19.62% from the issue price. While the cornerstone investors still hold some paper profits, the margin is limited. A point of caution is the high dispersion among these investors; if some choose to realize profits, it could exert significant downward pressure on the stock price. Since the beginning of the year, trading in the stock has remained thin, with the average daily turnover in April being only about HKD 32.44 million. This relatively low liquidity might struggle to absorb concentrated selling pressure following the lock-up expiration. The most critical factor determining whether cornerstone investors will sell after the lock-up period hinges on the company's ability to maintain its future growth prospects.
Examining SOFTCARE's financial performance since 2022 reveals steady growth. From 2022 to 2025, SOFTCARE's revenues were approximately $320 million, $411 million, $454 million, and $564 million (in USD), respectively. During the same period, its adjusted net profits were $29.266 million, $83.724 million, $98.355 million, and $122 million. Behind this consistent growth lies SOFTCARE's established competitive moat as a leading FMCG player in emerging markets, built on "localized production + global supply chain + deep distribution," enabling it to maintain strong competitiveness. Regarding localized production, the company has adopted a fundamentally different strategy from traditional traders reliant on finished goods exports. By independently operating 8 production bases and 51 production lines across 8 African countries, including Ghana and Kenya, SOFTCARE has not only significantly reduced tariff and logistics costs by approximately 10% through local sourcing and production but also gained crucial supply chain agility. The company can quickly adjust product specifications (like size, absorbency strength) based on specific local market demands, shortening the traditional months-long international shipping cycle to an on-demand localized production cycle. In the African market, where per capita income is low, this cost advantage translates directly into extreme price competitiveness—its per-diaper selling price is only 6-20 cents, significantly lower than international brands. Through cost compression and economies of scale achieved via localization, the company has built a high-volume, low-margin business model, establishing a dominant market position in numerous regional markets.
The global supply chain is the key foundation supporting the efficient operation of its localized production. SOFTCARE conducts centralized global procurement of bulk raw materials (like non-woven fabric, superabsorbent polymer), leveraging group-level purchasing scale to achieve significant cost advantages that are difficult for local small and medium-sized manufacturers to match, further cementing the "extreme value-for-money" positioning of its end products. More importantly, the global supply chain layout avoids dependence on suppliers from any single region. When facing supply disruptions or price volatility in a specific area, the company can swiftly switch to other qualified suppliers, ensuring production continuity and stability. This supply chain resilience holds crucial strategic value in emerging markets where infrastructure is often underdeveloped and external risks are frequent. The final link converting product strength into market share is the deep distribution network SOFTCARE has built. The company has established a channel system in Africa comprising over 2,800 distributors and retail outlets, reaching deep into township and even village-level markets. This capillary-like coverage density is difficult for international giants (like P&G, Kimberly-Clark), reliant on modern retail channels, to directly access, and it sets up a channel barrier that is hard for newcomers to replicate in the short term. Through high-density, consistently available terminal coverage, SOFTCARE achieves "see it, get it" convenience in consumers' daily lives. This deep channel penetration is not only key for completing sales conversions but also the most effective means of cultivating user habits and building local brand loyalty.
Leveraging the competitive moat built on the three pillars of "localized production + global supply chain + deep distribution," SOFTCARE replicates its capabilities across both product categories and geographic markets. At the category level, the company is expanding from baby care into feminine care and further into home care products. At the market level, it is deepening its presence in West Africa, expanding into East and Central Africa, and establishing a foothold in South America, continuously accelerating regional expansion and validating its experience in pioneering emerging markets and the logic of capability replication. In 2025, SOFTCARE achieved significant results from channel deepening and regional expansion. During the reporting period, revenues from East Africa/West Africa/Central Africa/Latin America were $256 million, $231 million, $58 million, and $22 million, respectively, representing year-on-year growth of 23.9%, 18.4%, 34.5%, and 134.3%, with the Latin American market becoming a new growth driver. Benefiting from rapid revenue growth across all regions, SOFTCARE achieved high-quality growth across all product categories in 2025, with each category showing a稳健trend of rising both volume and price. Specifically, sales volume/average selling price for the baby care business increased by 17.90%/4.38% year-on-year, driving revenue growth of 23.07% to $446 million. For the feminine care business, sales volume/ASP grew by 19.37%/7.12% year-on-year, leading to a 27.87% revenue increase to $99 million. The home care business saw sales volume/ASP rise by 52.75%/0.67% year-on-year, resulting in a 53.78% revenue surge to $22 million. It is foreseeable that, based on its localization advantages, global supply chain, and deep channel penetration capabilities, SOFTCARE's continued expansion across both categories and markets within emerging markets is expected to drive sustained and steady growth for the company. This outlook is also supported by research reports, such as one from Zhongtai Securities, which forecasts SOFTCARE's revenue for 2026 to 2028 to be $670 million, $780 million, and $910 million, representing growth of 18%, 17%, and 17%, respectively. Net profit attributable to shareholders is projected to be $142 million, $166 million, and $196 million for the same years, growing 17%, 17%, and 18%, respectively. This稳健growth expectation should provide fundamental support for the company's stock price and help, to some extent, disperse potential concentrated selling pressure post-lock-up.
However, investors should also clearly recognize that the company's current valuation is already in a relatively reasonable range. Further upside in the stock price will primarily depend on endogenous drivers from earnings growth, with limited potential for significant gains from valuation expansion. As of the April 16 close, SOFTCARE's market capitalization was HKD 19.5 billion. Based on the 2025 net profit of $122 million, this translates to a static P/E ratio of approximately 20.41 times. Even based on the projected 2026 net profit of $142 million, the current market cap implies a forward P/E ratio of 17.55 times for 2026. This valuation already aligns with the company's net profit growth rate, which helps explain why SOFTCARE's stock has experienced wide fluctuations since its IPO—this is essentially the market's spontaneous process of digesting the valuation. Of course, if the stock price declines significantly due to heavy selling pressure after the lock-up expiration, pushing the P/E ratio down to around 12 times, the risk-reward profile for SOFTCARE would become more attractive.
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