A century-old eyewear brand with a history spanning the late Qing Dynasty, the Republic of China, and the People's Republic of China is preparing to list on the Hong Kong Stock Exchange. On April 2, 2026, Zhejiang Mao Yuanchang Eyewear Co., Ltd. submitted its listing application to the Main Board of the Hong Kong Exchange, with China Wealth Huabao as its sole sponsor. The company operates the flagship Mao Yuanchang brand, whose origins date back to 1862. In 2006, Mao Yuanchang was officially recognized as a "China Time-Honored Brand" by the Ministry of Commerce, and in 2015, it was designated as a "Well-Known Trademark in China" by the former State Administration for Industry and Commerce. The company also operates self-owned stores under the "Lan Keda" brand in Gansu province. However, behind the story of a heritage brand's revival, the prospectus reveals a different picture: while the eyewear industry is often perceived as highly profitable, and Mao Yuanchang boasts a gross margin of 61.1%, investors are cautious about its net margin of only 15.52%. This raises the question of whether the company represents a high-barrier value investment or an inefficient model burdened by high costs.
As a leading regional eyewear retail chain in Zhejiang and Gansu provinces, Mao Yuanchang operates under a dual-brand strategy, offering comprehensive services including optometry, vision care, and myopia prevention. Its core products include prescription glasses for myopia, hyperopia, and presbyopia, as well as specialized items like myopia control products for adolescents and progressive lenses. The company sells both its own brand and third-party frames and lenses. Its retail network, which combines self-operated and franchised stores, spans 18 cities nationwide, with 78 self-owned stores and 194 franchise outlets as of the latest date. The company holds a dominant position in its core markets: it ranked first in Zhejiang's offline eyewear retail market in 2024 with an 8.8% share based on total retail sales, and its Lan Keda brand led in Gansu with a 10.2% share based on self-owned store sales.
Despite its strong regional presence and high gross margins, the company's financial performance highlights a common industry challenge: high gross margins do not necessarily translate into high net profits, as scale, costs, and business model collectively determine final profitability. From 2023 to 2025, revenue was RMB 272 million, RMB 250 million, and RMB 265 million, respectively, while net profit was RMB 37.12 million, RMB 18.05 million, and RMB 41.18 million. Revenue declined by 8% in 2024 before rebounding by 6% in 2025, yet remained below 2023 levels. Net profit fell sharply by 51.3% in 2024, then surged by 128.1% in 2025, indicating significant volatility. Gross margins remained robust at 58.3%, 57.1%, and 61.1% over the same period, but net margins were substantially lower at approximately 13.64%, 7.21%, and 15.52%. This means that for every RMB 1,000 in gross profit, net profit was only about RMB 155.
The gap between gross and net profit is primarily attributable to high and relatively fixed operating expenses. Sales and distribution expenses totaled RMB 97.506 million, RMB 105 million, and RMB 101 million from 2023 to 2025, consistently accounting for over 37% of revenue. In 2024, employee costs represented 16.99% of revenue, while depreciation of right-of-use assets and property expenses accounted for 13.75%. Additionally, brand upgrade activities in 2024 further increased marketing costs. This discrepancy between high gross margins and low net margins is an industry-wide issue. For comparison, a peer company reported a gross margin of approximately 54.65% but a net margin of only 8.51% in the first half of 2025. Given that Mao Yuanchang's revenue base is smaller, its ability to achieve a slightly higher net margin suggests some efficiency in cost management, though it has not fundamentally altered the high-cost operational structure.
The eyewear retail market in which Mao Yuanchang operates is poised for steady growth, driven by stable demand for vision correction, rising penetration of functional products, increasing consumer emphasis on professional optometry, and industry-wide service upgrades. According to market forecasts, the offline eyewear retail market in Zhejiang is expected to grow from RMB 5.4923 billion in 2024 to RMB 6.843 billion by 2029, while the market in Gansu is projected to expand from RMB 795.5 million to RMB 1.068 billion over the same period. Factors such as ongoing efforts in adolescent myopia prevention, an aging population, and industry standardization are likely to fuel demand for functional lenses, progressive lenses, and specialized services, creating opportunities for branded, service-oriented retailers.
However, despite favorable industry trends, Mao Yuanchang faces significant growth challenges. The competitive landscape is intensifying, with online retailers, national chains, and regional players vying for market share. Furthermore, the company's ability to replicate its success beyond its core regions remains unproven. While it is a leader in Zhejiang and Gansu, its presence in other provinces such as Anhui, Jiangsu, Qinghai, and Hebei is minimal, and its two stores in Shandong represent only a tentative expansion. In China's highly fragmented eyewear retail sector, a lack of national scale could limit valuation premiums. Another concern is the decline in the number of franchise stores, which dropped from 205 in 2023 to 194 in 2025. Despite this reduction, franchise-related income increased, driven by a significant rise in franchise management fees, which jumped 333.2% year-over-year to RMB 10.215 million in 2025. This resulted in higher total franchise revenue, creating a short-term profit boost despite a shrinking store network. However, this reliance on fee increases is likely unsustainable, and the ongoing loss of franchisees highlights a fundamental constraint on expansion.
In summary, as a leading regional chain and a century-old brand, Mao Yuanchang benefits from a stable revenue base and relatively high profitability. Its recent profit recovery, fueled by increased franchise fees, provides some defensive value. Nonetheless, clear growth limitations and a lack of a compelling expansion narrative may hinder its ability to command a high valuation premium following its Hong Kong listing.
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