9.9 yuan toys sold out, Shaoxing boss earns over 600 million yuan annually, but Brucdo stock price drops back to IPO price

Why did AI·Bluoco’s profit margin decline despite turning a profit?

This article is from Times Finance. Authors: Wu Jiamin and Li Qian.

Image source: Visual China

Bluoco, once ranked as the second-largest “fund freeze king” in Hong Kong stocks, has released its first-year financial report.

On the evening of March 13, Bluoco Group Limited (00325.HK), a company specializing in role-playing toy sets, announced its 2025 annual financials. In 2025, the company’s revenue reached 2.913 billion yuan, a 30% increase year-over-year; net profit was 634 million yuan, turning from loss to profit compared to 2024.

Despite achieving a profit turnaround, Bluoco’s profitability has declined. In 2025, the company’s adjusted net profit margin dropped from 26.1% in 2024 to 23.2%. Meanwhile, sales costs grew by 45.9% year-over-year, outpacing the 30% revenue growth, leading to a gross profit margin decrease from 52.6% to 46.8%.

Founded in 2014 by Zhu Weisong, a post-80s entrepreneur from Shaoxing, Bluoco started with the design, R&D, and sales of building block toys. In 2021, Bluoco obtained licensing rights for the popular IP Ultraman and launched building block role-playing toys, quickly gaining market share and earning the nickname “China’s Lego.”

In January 2025, Bluoco listed on the Hong Kong Stock Exchange, with over 6,000 times oversubscription before listing. At that time, the amount of funds frozen exceeded that of Miao Geping, the “top beauty stock” listed in 2024, making Bluoco the second-largest fund freeze in Hong Kong stock history.

According to the prospectus, Bluoco completed three financing rounds before going public, raising nearly 1.8 billion yuan in total. Star investors like Yunfeng Fund, Junlian Capital, and Source Capital also participated.

However, just one year after listing, the stock price approached the IPO price. Why did the capital retreat from the “over-subscribed king” after the stock price fell back?

Net profit of 600 million yuan, is the profit turnaround achieved without selling toys?

With the rise of the “grain economy,” toy and trendy toy brands like Bluoco and Pop Mart have been favored by capital in Hong Kong stocks since 2023, with their performance and stock prices soaring.

In 2023 and 2024, Bluoco recorded revenues of 877 million yuan and 2.241 billion yuan, with year-over-year growth rates of 169% and 156%. However, after listing, Bluoco did not sustain these high growth rates. In 2025, revenue growth slowed to 30%.

Looking at different segments, in 2025, revenue from building block role toys, vehicle toys, and construction toys was 2.843 billion yuan and 69.81 million yuan, with growth rates of 29.15% and 77.05%. In comparison, in 2024, revenue from building block role toys grew by 186.2%.

According to financial data, the company’s adjusted net profit margin decreased from 26.1% in 2024 to 23.2% in 2025, a decline of 2.9 percentage points. In contrast, in 2024, the company’s adjusted annual profit grew by 702.1% to 585 million yuan, with the adjusted net profit margin increasing by 17.8 percentage points to 26.1%.

High sales costs have become a factor eroding profits. In 2025, Bluoco’s sales costs reached 1.549 billion yuan, up 45.87% year-over-year, exceeding the 30% revenue growth. The financial report explains that the surge in costs was partly due to a 41.6% increase in the cost of goods sold driven by higher sales volume, and partly due to increased depreciation from new SKUs, which rose by 120.6%.

According to Times Finance’s calculations, Bluoco’s gross profit margin fell from 52.6% in 2024 to 46.8% in 2025, a decline of over 5 percentage points.

In 2025, the company’s selling and distribution expenses increased by 36.62% to 387 million yuan, including a 37.7 million yuan increase in marketing and promotion expenses. R&D expenses also rose by 37.34% to 264 million yuan.

On one hand, the core business faces profitability challenges; on the other, the company achieved a profit turnaround. One key reason may be the fair value change of the company’s convertible redeemable preferred shares. In 2024, the fair value of these preferred shares was -542 million yuan. After listing in 2025, the preferred shares were converted into common stock, and this item no longer caused further changes or affected the profit statement.

Additionally, Bluoco’s administrative expenses in 2024 were as high as 465 million yuan, mainly due to a one-time stock-based compensation of 359 million yuan related to share incentive plans granted in April 2024. In 2025, administrative expenses decreased by 78.9% to 98 million yuan.

70% of revenue comes from licensed IPs, with products priced at 9.9 yuan sold in over 100 million units

Despite turning a profit, Bluoco, just one year after going public, faces challenges.

Over the past year, Bluoco has continued to expand its IP matrix and overseas markets.

In 2025, sales from the Chinese market increased by 19.2% to 2.594 billion yuan from 2024’s 2.177 billion yuan; overseas sales grew from 64.2 million yuan in 2024 to 319 million yuan in 2025, a 396.6% increase. The United States and Indonesia are Bluoco’s largest overseas markets. However, overseas revenue accounts for only 11% of total revenue. In the global building block toy market, Bluoco still lags behind Lego and Bandai.

With the stagnation of self-owned IPs, Bluoco relies heavily on expanding licensed IPs to attract global consumers. By the end of 2025, the company owned 2 self-developed IPs, up from 50 licensed IPs as of December 31, 2024.

As a toy company once heavily reliant on Ultraman IP, the dependence on licensed IPs remained significant in 2025.

In 2025, the combined revenue of Transformers, Ultraman, Kamen Rider, and Hero Unlimited accounted for 80.4% of total revenue. Among them, Hero Unlimited is the only self-developed IP, generating 264 million yuan, or 9.1% of total revenue; the other three core series are licensed IPs, collectively accounting for over 70%.

Moreover, unlike products from Lego and Pop Mart that target all age groups, Bluoco’s main revenue still comes from the 6-16 age group, accounting for 81.1% of total revenue. This keeps the company’s mainstream price range relatively low.

Notably, at the end of 2024, Bluoco launched products priced at 9.9 yuan. The financial report shows that in 2025, sales of these low-priced products reached 541 million yuan, with 122 million units sold, accounting for 47.8% of total sales. However, the low price further squeezed profit margins. On March 14, Times Finance checked its Taobao flagship store and found the lowest price for on-sale products was 12.9 yuan, with other main building block toys priced between 16.9 and 79 yuan.

As of the close on March 13, Bluoco’s stock price was 61.25 HKD per share, close to the IPO price of 60.35 HKD. Since listing in January 2025, the stock reached a mid-year high of about 198 HKD per share. However, it then declined, and in March, the stock price briefly fell below the IPO price.

In the capital market, whether Bluoco’s core business is healthy and whether the company’s profitability can be sustained remain key concerns. Rising costs for IP licensing renewals, whether the 9.9 yuan low-price strategy can be maintained long-term, and whether self-owned IPs can truly resonate with consumers are all tests of Bluoco’s core competitiveness. On March 14, Times Finance sent an interview request to Bluoco, but had not received a reply as of press time.