Cosmetics OEM Becomes a "Money-Losing Business"? Barvi Co.'s Shareholder Net Profit Declined Over 10% Last Year

Ask AI · Bavi Co., Ltd. Revenue Increases but Profit Does Not: What Are the Hidden Concerns in the Major Client Strategy?

Under the halo of the “Major Client and Big Product Strategy,” how to improve gross profit margin has become the primary issue facing Bavi Co., Ltd.

According to the 2025 performance quick report released by Guangdong Bavi Biotechnology Co., Ltd. (hereinafter referred to as “Bavi Co.”), during the reporting period, the company achieved operating revenue of 842 million yuan, a year-on-year increase of 21.15%; net profit attributable to the parent decreased by 14.64% to 38.7448 million yuan.

Behind the “revenue growth without profit increase” loss-making deal is the gross profit margin.

Regarding the decline in net profit attributable to the parent in 2025, Bavi Co. stated that the main reason was “in a fiercely competitive industry environment, to increase market share, the company provided higher cost-performance products to customers, resulting in a 3.82 percentage point decrease in gross profit margin year-on-year.”

Last year, net profit attributable to the parent decreased by 14.64%, and gross profit margin continued to decline

Founded in 2006, Bavi Co. positions itself as a “cosmetics brand customer service provider,” with main business in the research and development, production, sales, and testing of cosmetics. In March 2024, Bavi Co. listed on the Beijing Stock Exchange, becoming the “first cosmetics manufacturing stock on the BSE.”

As a company mainly engaged in OEM (original equipment manufacturing) of cosmetics, Bavi Co. has a “luxurious” client roster.

“The company’s product sales cover domestic and international markets, providing products and services for over 1,000 cosmetics brands,” Bavi Co. stated in its previously disclosed investor relations activity record. It has established relatively stable business relationships with well-known brands such as Ximu Yuan, Ocean Supreme, Red, and Merdar.

In its first year of listing, thanks to the continued efforts of the “Major Client and Big Product Strategy” and rapid growth of domestic and international brand clients, Bavi Co.'s revenue increased by 48.27% year-on-year to 695 million yuan. During the same period, net profit attributable to the parent was about 45.39 million yuan, a year-on-year increase of approximately 10.28%.

However, this “double growth” in profit did not continue throughout 2025.

[Image: Screenshot of Bavi Co.'s 2025 annual performance quick report]

The quick report shows that in 2025, Bavi Co.'s net profit attributable to the parent was 38.7448 million yuan, down 14.64% year-on-year; net profit after deducting non-recurring gains and losses was 35.5758 million yuan, down about 13.65% from the same period last year.

The issue lies in the gross profit margin. “The company’s gross profit margin decreased by 3.82 percentage points year-on-year,” Bavi Co. explained when analyzing the reasons for the decline in net profit attributable to the parent. The company stated this was to enhance market share in a fiercely competitive environment and to offer higher cost-performance products to customers.

Looking at the longer term, due to changes in customer structure, Bavi Co.'s gross profit margin had already declined in 2024, dropping 6.51 percentage points from 33.19% in 2023 to 26.68%.

By the first half of 2025, the company’s gross profit margin decreased by 4.46 percentage points year-on-year to 23.68%. The main reasons include changes in customer and product structure, providing high cost-performance services to major clients, and expanding market share.

Revenue relies on a single product category, with small proprietary brand presence

From an operational perspective, Bavi Co.'s main business is OEM (original design manufacturing) of cosmetics, producing products mainly in four categories: skincare, masks, cleansing, and makeup. Additionally, it conducts cosmetic testing through its subsidiary Youzhi Testing.

By category, skincare (excluding masks) is the company’s primary revenue source.

[Image: Screenshot of Bavi Co.'s 2025 semi-annual report]

Data shows that in the first half of 2025, Bavi Co. achieved approximately 369 million yuan in main business revenue. Among these, skincare products (excluding masks) grew 38.02% year-on-year to 332 million yuan, accounting for about 90% of main business revenue. However, due to changes in customer and product structure, gross profit margin decreased by 5.44 percentage points.

During the same period, mask products revenue increased by 97.57% to 17.8271 million yuan, accounting for about 4.8% of main business revenue. Thanks to rapid production growth and scale benefits, its gross profit margin increased by 0.52 percentage points; cleansing products revenue was about 11.4633 million yuan, accounting for roughly 3.1%; makeup and other products, as well as testing services, achieved revenues of 6.2228 million yuan and 1.3556 million yuan respectively, down 14.44% and 36.75% compared to the same period last year.

It is worth noting that in recent years, Bavi Co. has gradually implemented a “service major clients, focus on big products” strategy, but also faces risks of unstable client cooperation and order loss.

The company admits that in recent years, the revenue scale of its top five clients and some individual clients has fluctuated. The main reasons include: many clients are emerging domestic brands and new industry brands, which update quickly, leading to frequent addition and reduction of clients and relatively low cooperation stability; the company actively optimizes smaller, less risk-resistant clients; in a highly competitive market, the lifecycle of a single cosmetic product is short, making long-term order scale difficult to sustain.

Additionally, reporters from Beijing News Shell Finance noticed that besides OEM, Bavi Co. is also exploring OBM (own brand manufacturing), but has not yet formed a significant scale.

In its 2024 semi-annual report, Bavi Co. stated that it was trying to promote OBM products, with advertising expenses increasing by 6.01 million yuan compared to the previous year. In the investor relations activity record disclosed in September 2025, when asked about “the sales situation of the company’s own brands,” Bavi Co. admitted that “own brand is still in the exploration and trial stage, and the scale is still very small.”

Entering 2026, industry adjustments continue. For Bavi Co., short-term pain may be unavoidable, but the real test lies in whether it can find a balance between “volume” and “profit.”

[Reporter: Li Zheng, Beijing News Shell Finance]

Editor: Yue Caizhou

Proofreader: Wang Xin