On August 17, 2026, TONGSHIFU (00664.HK), which carries the halo of being the "first copper cultural creative stock," issued a profit warning: it expects net profit for the first half of 2026 to be only approximately 1 million to 1.5 million yuan, compared with 30.2 million yuan in the same period of 2025, a year-on-year decline of 95.03% to 96.69%. Excluding the impact of exchange losses and one-off listing expenses, adjusted net profit is expected to be approximately 15 million to 20 million yuan, still down 53.37% to 65.03% from 42.9 million yuan in the same period last year.
This profit alert comes less than five months after the company listed on the Hong Kong Stock Exchange on March 31. The company attributed the sharp decline in net profit to three "strategic investments" in its announcement: the rapid expansion of offline direct-sales stores. As of June 30, 2026, the company had 65 direct-sales stores, compared with just 10 on June 30, 2025, a net increase of 55 stores, representing a 5.5-fold increase. At the end of December 2025, the number of direct-sales stores was 36, meaning 29 stores were opened within six months. Store expansion has led to significant increases in sales personnel compensation, decoration amortization, rent, and other expenses.
Capacity expansion has brought phased costs. The company's second production center commenced operations in the second quarter of 2026, increasing total capacity by more than 50%. However, the initial depreciation of new production lines, losses from scrapping old equipment, and workshop renovation costs have created a phased drag on current profits. R&D investment has continued to increase. In order to expand product lines in copper, silver, and gold materials, and to support the development of new IPs such as "A Record of a Mortal's Journey to Immortality," "The Peaceful Era," and "Havoc in Heaven," the company has continued to expand its R&D team and increase licensing fee expenditures.
The stock price performance of TONGSHIFU has been even more brutal than its financial results. On March 31, 2026, the company listed on the Hong Kong Stock Exchange at an issue price of 60 Hong Kong dollars, but on the first day of trading it opened at 35.42 Hong Kong dollars, plunging 40.97%, and ultimately closed at 30.5 Hong Kong dollars, a drop of 49.17%, with market value nearly halved. The stock price continued to decline thereafter. By early July, the stock price had fallen below 15 Hong Kong dollars, with a cumulative decline of over 75% and a total market value of less than 1 billion Hong Kong dollars. The day after the profit warning on August 17, the stock price fell another 2.45% to 13.95 Hong Kong dollars. As of the close on August 21, the stock price was reported at 13.58 Hong Kong dollars, down 77.4% from the issue price of 60 Hong Kong dollars.
The market once labeled TONGSHIFU as the "Pop Mart for middle-aged people." However, this comparison contains a fundamental logical flaw. Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, pointed out that Pop Mart is driven by IP, high-frequency repurchases, and blind box mechanisms, while copper handicrafts have high unit prices, heavy consumer decision-making, and low repurchase rates — the commercial cores of the two are completely different. The bigger problem is the ceiling of the track. According to Frost & Sullivan data, the size of China's copper handicraft market in 2025 was only 2.52 billion yuan. Even if TONGSHIFU holds approximately 35% share in this niche market, its 2025 revenue was only 617 million yuan. The high concentration and limited scale of the track itself make the space for high valuation in the capital market extremely narrow.
The company attributes the current profit sacrifice to "strategic investments," expecting returns to be realized gradually in the future. However, this expectation does not naturally hold. The expansion of direct-sales stores from 10 to 65 has brought a significant increase in rent, compensation, and decoration amortization, but new stores need time to cultivate foot traffic and sales per square meter. The second production center has high depreciation costs in its initial stage, and whether capacity utilization can climb quickly remains uncertain. Whether increased R&D investment and IP co-branded products can truly open up the younger consumer market also remains to be seen.
Meanwhile, Zhu Bingren Copper, a company in the same city as TONGSHIFU, is sprinting toward a listing on the Beijing Stock Exchange. In 2024, the two companies held 35% and 31.8% shares of the copper cultural creative market respectively, with a highly competitive landscape. Zhu Bingren Copper's 2025 revenue has already reached 1.009 billion yuan, while TONGSHIFU's is only 617 million yuan, with the scale gap widening.
The capital market story of TONGSHIFU is a complete curve of "high opening and low closing": an issue price of 60 Hong Kong dollars, halving on the first day, falling more than 70% within five months, and net profit plunging from 30.2 million to 1 million yuan — every data update is testing the limits of investors' patience. Management explains the performance collapse as "the price of expansion," but the market is clearly not buying it. When a company faces a track ceiling, suffers profit erosion during expansion, and must cope with pursuers in the competitive landscape, the stock price of 13 Hong Kong dollars may not be the end. The question TONGSHIFU needs to answer is simple: when will expansion stop, and when will profits return? Until then, investors' patience is likely to continue being worn down.
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