Yanzhiwu: Tightening Its Belt to Pursue Growth

Why does AI · House of Swallows’ net profit growth contrast with declining revenue?

Zebra Consumer Chen Xiaojing

Swallow nests are becoming harder to sell. How will House of Swallows compensate? From its recently disclosed 2025 performance, we can see the company is seeking growth through product, channel, and new consumption scenarios.

In the minds of Chinese consumers, swallow nests have always been rare and noble, unaffordable for most. But House of Swallows seems to be ready to overturn this perception by adopting a swallow nest + strategy to penetrate the mass consumer market.

If you can’t afford the thousands-of-yuan pure swallow nests, eating a bowl of swallow nest porridge priced around 20 yuan isn’t so difficult. Besides swallow nest porridge, House of Swallows has also entered the swallow nest peptide field, developing products to boost energy, improve sleep, and enhance skin, opening new application scenarios for swallow nests.

Through multi-dimensional product, channel, and scenario layouts, the company’s product structure and consumer scenarios have initially improved. But whether this can drive future performance growth remains uncertain.

Cost Reduction and Expense Control Lead to Significant Profit Growth

While operating revenue slightly declined, net profit saw a substantial increase. House of Swallows (01497.HK) delivered an extraordinary performance in 2025, attracting industry and market attention.

In 2025, the company recorded approximately 2.001 billion yuan in operating revenue and about 189 million yuan in net profit attributable to shareholders, representing a 2.41% decrease and a 20.64% increase year-on-year, respectively.

According to the company, under macro consumption structural adjustments, demand for high-end consumer goods slowed, impacting the company’s high-end health supplement track more significantly. Swallow nest products have always been non-essential items with a relatively limited consumer base.

The core reason for the countercyclical surge in net profit is mainly due to internal cost reduction and expense control measures.

Last year, the company improved production efficiency and optimized cost structure through upgrades in its new factory’s intelligent manufacturing and process improvements. Production costs decreased from about 1.037 billion yuan in 2024 to approximately 930 million yuan in 2025, a 10.36% drop, far exceeding the revenue decline.

With the optimized cost structure, gross profit margin increased by 4.13 percentage points to 53.53%. Last year, gross profit was about 1.071 billion yuan, up 5.74% year-on-year.

On the expense side, the company tightened its belt as well. Selling and distribution expenses totaled about 671 million yuan, down 1.00%; R&D expenses were 25.5 million yuan, down 10.63%. Meanwhile, financial expenses decreased by 10.49%.

However, overall revenue remains under pressure due to shrinking offline channels. As of the end of last year, the company had 620 offline distributor stores, down 30 from the previous year. Self-operated stores increased by 4 to 112. The overall offline channel layout contracted, directly causing offline sales to decline.

Last year, direct sales to offline distributors and customers amounted to about 422 million yuan and 308 million yuan, respectively, down approximately 13.17% and 4.35% year-on-year.

In response to the underperformance of offline store revenue, House of Swallows has provisioned about 14.2 million yuan for goodwill impairment.

Last year, the company’s employees decreased by 234 to 1,635, but labor costs did not decline accordingly, including salaries and share payments to directors and supervisors, totaling about 292 million yuan, consistent with the previous year.

Alongside the performance disclosure, the company announced a dividend of 2.66 yuan per 10 shares, attempting to stabilize market confidence through dividends. However, the market doubts its long-term growth prospects, and small- and medium-sized investors remain worried.

Yesterday, after opening higher, the stock price fluctuated and closed up slightly by 0.34%, with a turnover rate of only 0.02% and a trading volume of 76,000 shares.

Swallow Nest Sales Are Weak

House of Swallows’ overall revenue has declined for the first time since its listing in 2023, sounding an alarm. The main reason is weak sales of core products, with new products still in development.

The company mainly has three major product lines: pure swallow nests, swallow nest + and + swallow nest products, and others (including mooncakes, pastries, and zongzi). Pure swallow nests, including bowl nests, fresh stewed nests, other bottled nests, and dried nests, are the core products. Last year, this segment generated about 1.771 billion yuan in revenue, down 1.35% year-on-year, accounting for 88.5% of total revenue. In fact, by 2024, growth in pure swallow nest products had already stagnated.

Beyond core products, the company has developed swallow nest porridge and other products in recent years, targeting breakfast substitutes, afternoon tea, and snack scenarios. Driven by swallow nest porridge, revenue from swallow nest + and + swallow nest products surged 63.31% in 2024.

But in 2025, this growth momentum was not maintained. Due to underwhelming promotion of derivative new products, revenue from swallow nest + and + swallow nest products was about 216 million yuan, down 6.90% year-on-year.

In the “others” category, revenue was about 13.76 million yuan, a sharp decline of 39.53% year-on-year, due to optimization and adjustment of non-core SKUs.

In summary, the main product, pure swallow nests, failed to maintain its core position, and other products did not generate growth support, causing the core business to face bottlenecks. Nonetheless, facing growth pressure, the company has been exploring long-term sustainable growth drivers through multi-channel deep cultivation.

Besides online and offline channels that contribute most of the revenue, the company has expanded into new retail channels, private domain channels, and new overseas markets.

Online channels mainly include self-operated online stores, distributor online stores, and e-commerce platforms. In 2025, online revenue was about 1.271 billion yuan, accounting for 63.51% of total revenue, with a modest growth of 2.29%, much slower than the 12.5% growth in 2024.

Although online sales remain the main revenue source, the growth rate has slowed significantly. The company has shifted focus to private domain channels to tap consumer potential. Last year, House of Swallows organized golf tournaments, exclusive member salons, concerts, and launched its first global member house in Shanghai, aiming to strengthen member engagement through social activities and explore growth among its 580,000 Jin Yan Hui members. While specific performance contributions are not disclosed, this reflects the company’s strategy of “focusing on quality over size” in customer base.

Swallow nest consumers have traditionally been mainly women, but the company is also targeting men.

On March 18 last year, the company announced that Vanke founder Wang Shi would endorse the “CEO Bowl Swallow Nest” product, aiming to expand into the high-net-worth male health supplement market. The product, priced over 3,000 yuan, became a social media hotspot, but its market performance may not have met expectations, with no specific sales data disclosed.

In September last year, the company adjusted its brand ambassador lineup, signing Zhu Yilong as the global brand ambassador and forming a dual endorsement with Gong Li to promote a multi-dimensional brand image.

Traditional swallow nests are losing appeal, so House of Swallows is deepening its layout of new swallow nest applications. Besides piloting “Yan Yu New Tea,” which lowers the consumption threshold by combining swallow nests with tea drinks, the company is also leveraging its independent brand YANPEP to develop swallow nest peptides, targeting segments like sleep improvement and skin enhancement.

In this segment, the company has launched swallow nest peptide natural strontium water, swallow nest probiotics powder, swallow nest walnut milk, and protein powder, building a swallow nest peptide + product matrix to seek new growth points.

Author’s note: Personal opinions are for reference only.