Hla Group Corp.,Ltd. (600398.SH) has announced its Hong Kong listing plans to accelerate overseas expansion and brand upgrading. However, with performance volatility, high dividend controversies, and transformation pressures coexisting, whether this "men's wardrobe" can achieve a second breakthrough through the Hong Kong stock market remains highly debated.
**Key Points:**
1. **High Dividends**: Hla Group's dividend payout ratio exceeds 90% of net profit, raising concerns about funding pressure for expansion. Inventory turnover days have increased to 322.6 days, with the main brand showing aging issues and ineffective transformation results, constituting core listing risks.
2. **Low Overseas Revenue**: Hla Group's overseas revenue is only 210 million yuan (1.8% of total revenue), with scale requiring significant improvement.
3. **New Market Opportunities**: Building on its existing foundation of 111 overseas stores, the company plans to enter Central Asia, Middle East and other new markets. The Hong Kong listing is expected to broaden financing channels to support global expansion.
To address intensifying industry competition, Hla Group has finally initiated its Hong Kong listing plan.
On September 8, the "men's wardrobe" Hla Group announced it would launch overseas share issuance (H shares) and list on the Hong Kong Stock Exchange. The announcement stated that the Hong Kong listing is primarily driven by the company's global strategic positioning, accelerating overseas business development, enhancing international brand image, while creating a diversified capital operation platform to further strengthen capital capabilities and support high-quality development.
The 2025 interim financial report shows Hla Group is primarily focused on Southeast Asian markets, but will systematically advance into Central Asian, Middle Eastern, and African markets in the second half of 2025, with plans to open its first Australian store in Sydney. As of the reporting period, the company operated 111 overseas stores with overseas revenue of approximately 206 million yuan, up 27.42% year-over-year.
**Growth Formula of "Men's Wardrobe"**
Hla Group's development journey serves as a growth model for Chinese menswear brands. In 1988, Zhou Jianping founded Sanmao Factory with 300,000 yuan startup capital, beginning with coarse spinning operations. The company decisively transformed to fine spinning in 1991, and by 1997, group sales first exceeded 1 billion yuan with profits and taxes surpassing 100 million yuan.
On December 28, 2000, Sanmao Group achieved a major breakthrough in capital operations with 45 million A-shares successfully listing on the Shanghai Stock Exchange, renamed "Heilan Group" the following year.
In October 2002, the "Hla" brand was born with the opening of the first menswear chain specialty store, pioneering the "self-service menswear retail" model. Through an "upstream returnable + downstream quasi-direct operation" light-asset operating structure, rapid expansion was achieved. Under this model, franchisees needed to pay 2 million yuan initial investment (including 1 million yuan merchandise deposit) plus 60,000 yuan annual management fees, while Hla promised cumulative guaranteed profits of no less than 1 million yuan over five years. This risk-sharing mechanism drove geometric growth in store numbers.
After the reverse merger listing in 2013, Hla Group reached its performance peak. In 2019, company revenue reached 21.97 billion yuan with net profit attributable to shareholders of 3.2 billion yuan, increasing nearly 5-fold compared to pre-listing levels, becoming the undisputed leader in China's menswear market. Its core competitiveness stemmed from precise product positioning—focusing on business casual menswear as the main product line, establishing category recognition through the "men's wardrobe" brand slogan. The combination of standardized product systems and efficient franchise networks enabled it to occupy a significantly leading position in China's menswear market.
**Performance Bottleneck and Dividend Controversy**
After reaching its performance peak in 2019, Hla Group's growth momentum gradually weakened. The 2025 interim report shows the company's net profit attributable to shareholders in the first half was 1.58 billion yuan, down 3.42% year-over-year. The performance decline reflects multiple overlapping factors: weak domestic consumption leading to slower menswear demand growth, e-commerce impact on traditional offline channels, and customer loss due to brand aging.
In stark contrast to declining performance is the company's continued high dividend strategy. Data shows Hla Group has paid cumulative dividends of 21.404 billion yuan since listing, with a dividend-to-financing ratio of 157.55%.
For example, Hla Group's 2022 dividend amount was approximately 1.887 billion yuan (pre-tax), accounting for about 86.18% of net profit attributable to ordinary shareholders; in 2023, dividends totaled approximately 2.69 billion yuan (pre-tax), representing about 91.11% of net profit; 2024 total dividends were approximately 1.969 billion yuan (pre-tax), accounting for 91.22% of net profit.
According to Hla Group's Articles of Association, cash dividends are prioritized for profit distribution, and for 2021-2023, average annual cash dividends should not be less than 70% of average annual net profit attributable to listed company shareholders. In actual practice, Hla Group's dividend ratio far exceeds the company's stipulated minimum.
This "high dividend-low retention" capital operation model has sparked widespread market controversy.
Users on platforms have pointed out that the company's annual distribution of most profits as dividends leads to insufficient expansion funding. The planned 2025 overseas market expansion requires substantial capital support, but first-half overseas revenue of only 206 million yuan can only cover partial expansion costs.
Market concerns also exist about whether excessively high dividend ratios will weaken the company's long-term development capabilities amid lackluster domestic market growth, and whether this can sustainably support globalization strategy.
In recent years, Hla Group's performance has shown significant volatility, with revenue scale confined to the 180-220 billion yuan range.
For instance, during the six years from 2019 to 2024, Hla Group's revenue growth has cycled between rises and falls—from 21.97 billion yuan in 2019 down to 17.96 billion yuan in 2020. Net profit attributable to shareholders has also fluctuated significantly, reaching over 3.2 billion yuan at its peak and falling to less than 1.8 billion yuan at its lowest. Operating cash flow has similarly fluctuated, with Hla Group's net operating cash flow in 2024 reaching only 2.317 billion yuan, down 55.7% year-over-year.
Additionally, in the first half of 2025, Hla Group's inventory turnover days reached 322.9 days, up 50 days year-over-year. Since Q3 2024, inventory turnover days have consistently exceeded 300 days. From 2021 to the first half of 2024, Hla Group's inventory turnover days remained below 300 days.
**"Second Generation" Transformation and Expansion Path**
Facing growth pressure, Hla Group views overseas markets as its second growth curve.
Hla Group stated that as of June 2025, the company operated 111 overseas stores covering Southeast Asian, Middle Eastern, and African markets, with all four store types in Malaysia and other Southeast Asian markets achieving profitability. In the second half of 2025, the company plans to enter Central Asian, Middle Eastern, and African markets and open its first Australian store in Sydney, continuing the "localization + high cost-effectiveness" expansion model.
Research reports indicate that Southeast Asia's high Chinese population ratio and strong consumption power, combined with air-conditioned shopping malls serving as scarce social spaces, provide ideal development ground for Hla Group.
Brand matrix diversification represents another important strategic pillar. Hla Group has built comprehensive category coverage through internal incubation and external cooperation: women's brand OVV, children's brand Yingshi, and home brand Heilan Premium form product complementarity; while representing international brands like HEAD and Adidas FCC series, entering the premium sportswear segment.
The "JD Outlets" discount retail business in cooperation with JD.com has opened 23 stores, becoming a new growth point. This multi-brand strategy aims to reduce dependence on the main brand, with non-menswear category revenue reaching 28% in the first half of 2025.
Brand rejuvenation transformation is led by "young master" Zhou Lichen.
After this post-85s leader took over as chairman in 2020, he drove a series of reforms: significantly reducing CCTV advertising, shifting to popular variety shows like "Running Man" and "The Brain"; frequently appointing young idols like Pan Zhanle and Chen Zheyuan as spokespersons; personally entering livestreaming to connect with younger consumers.
However, transformation effects have not fully materialized, with the main brand's "men's wardrobe" middle-aged image remaining relatively fixed, and product design disconnect from fashion trends remaining unresolved. Whether capital support obtained after Hong Kong listing can translate into product innovation capabilities will be key to testing transformation success.
From Sanmao Factory to Hong Kong IPO, Hla Group's development journey reflects the growth and breakthrough of Chinese apparel enterprises. The Hong Kong listing represents not only expansion of financing channels but comprehensive upgrading of corporate governance and brand image. Under the dual challenges of domestic market saturation and intensifying overseas competition, whether this menswear giant can achieve strategic transformation through capital operations deserves attention.
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