For Three Squirrels Inc., a successful entry into the A+H market may only signify the beginning of a new journey. The true test lies in whether the company can achieve a substantial transition from a "traffic brand" to a "power brand" by precisely balancing profit and quality while pursuing scale expansion.
On the night of October 13, Three Squirrels (300783.SZ) announced a proposal to change its audit firm, planning to appoint Deloitte Huayong as the company’s auditor for the fiscal year 2025, with a one-year contract.
It is noteworthy that the previous audit firm, Da Hua Certified Public Accountants, had provided services for 10 years and issued a standard unqualified audit report for the last fiscal year. Additionally, the audit fee for 2025 with Deloitte Huayong is set at 2.26 million yuan, representing a 7.62% increase from the 2.1 million yuan fee charged by Da Hua for the previous year.
Three Squirrels attributes this change to its business conditions, development needs, and overall audit requirements. On one hand, the new firm, Deloitte Huayong, may offer fresh perspectives and resources, potentially enhancing audit quality and efficiency; the fee increase reflects the enhanced service value. On the other hand, the change may introduce transition costs and adaptation risks due to the loss of familiarity built over the 10 years with Da Hua.
Given that the third-quarter report for 2025 is approaching, it is essential for Three Squirrels to ensure a transparent and compliant process in changing auditors. The choice of the new firm should be based on its professional capabilities and independence, rather than influenced by any non-professional factors, to achieve a significant improvement in audit quality.
A focus of investors remains the progress of Three Squirrels’ IPO in Hong Kong. On September 30, Three Squirrels obtained the record-filing permission from the China Securities Regulatory Commission for its Hong Kong IPO, planning to issue 81.5 million H-shares, with CITIC Securities as its sponsor. If this IPO proceeds successfully, Three Squirrels will become the first domestic snack food brand listed in both A-share and H-share markets.
From a financial performance perspective, Three Squirrels has delivered a mixed results report. In the first half of 2025, the company achieved a revenue of 5.478 billion yuan, a year-on-year increase of 7.94%, marking a historical high for that period. However, net profit attributable to shareholders fell by 52.22% year-on-year to only 138 million yuan, with a second-quarter loss of 101 million yuan. This decline is mainly attributed to the rising costs of online promotion, which have eroded profit margins, as well as increased costs for nut raw materials that further pressured gross margins.
According to Wind data, from 2023 to the first half of 2025, Three Squirrels has invested nearly 2.76 billion yuan in advertising platform services and promotional expenses. This substantial marketing investment has yielded some results, with the company generating 4.295 billion yuan in revenue through third-party e-commerce platforms in the first half of 2025, accounting for 78.42% of total revenue. Notably, the Douyin ecosystem accounted for 1.478 billion yuan in revenue, contributing 26.98% of total sales and becoming one of the company's most critical sales channels.
Meanwhile, Tmall and JD accounted for 882 million yuan and 808 million yuan, respectively.
However, it is important to note that as marketing expenditures continue to rise, the issue of increasing costs has become more pronounced for Three Squirrels. In the first half of 2025, the company’s selling expenses reached 1.119 billion yuan, up 25.11% year-on-year, while management expenses surged to 156 million yuan, a 57.89% increase. The growth rate of expenses significantly outpaces revenue growth, indicating that even as the overall revenue expands, the e-commerce benefits from unit costs are gradually diminishing, potentially leading to a passive scenario of "dressing up the e-commerce platforms."
From the perspective of consumer satisfaction, as of October 15, 2025, Three Squirrels had received a cumulative total of 2,657 complaints on the Black Cat Complaints platform, primarily focused on product quality issues such as contamination and spoilage. In comparison to peers, its complaint volume is higher than that of Liangpin Shop at 2,214 complaints, Haixianglai at 946, Snack Busy at 646, and Yanjin Shop at 483 complaints, indicating room for improvement in product quality.
In summary, if Three Squirrels successfully navigates into the A+H market, it may only indicate the start of a new chapter. The real challenge lies in achieving an effective transformation from a "traffic brand" to a "power brand" while pursuing scale expansion and maintaining a keen focus on profit and quality balance.
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