Breaking Out of the Blind Spot: Understanding the “Advanced Logic” of Blue Moon (06993) from the Three Core Signals

The Zhitong Finance App learned that since this year, the market has maintained a high level of attention to the performance and dividend arrangement of Blue Moon Group (06993). Recently, along with fluctuations in market sentiment, the company's stock price showed a phased correction, once again becoming the focus of the market. However, simply focusing on the short-term market or discussions on a single indicator is often easy to fall into the “myopia” of the capital market — in the current hustle and bustle, the market has clearly ignored the three core business facts that support Blue Moon's long-term basic market.

1. Finance has a secure foundation, and there are signs of marginal improvement in operations

Looking beyond controversy, it is possible to observe operational and financial changes during the enterprise transformation process from various indicators disclosed in financial reports.

First, the scale of losses continues to narrow, and the market has already reversed loss expectations. Net loss narrowed to HK$329 million in 2025, down 56.1% year on year; net loss due to mother narrowed further to HK$192 million in the first half of 2026, narrowing by 55.8% year on year. The loss reduction trend continued for many reporting periods. In line with past quarterly operating trends, in 2022 to 2023, before the company expanded into emerging e-commerce platforms, the first half of the year usually had a slight loss of HK$150-170 million, but net profit during the peak sales season in the second half of the year could reach HK$500-800 million, enabling Blue Moon to achieve net profit of HK$611 million and HK$325 million respectively for the full year of 2022 to 2023. In the first half of this year, Cathay Pacific Haitong Securities covered Blue Moon for the first time based on the company's loss reduction trend and gave it an “increase in holdings” rating. The target price is HK$3.63 billion. The bank expects Blue Moon's 2026 revenue to increase 7.8% year-on-year to HK$9.063 billion. (Note: The above institutional views are from Cathay Pacific Haitong Securities's public research report. They do not represent the company's position and are for investors' reference only.)

From 2024 to 2025, this pace was interrupted by channel changes. Douyin's investment in construction and supporting marketing and promotion from 0 to 1 caused losses of HK$664 million and HK$435 million in the first half of 2024 and the first half of 2025, respectively — this is no longer a regular seasonal off-season loss, but a strategic investment during the channel construction period. By the first half of 2026, net loss to mother had narrowed to HK$192 million, and the scale had basically returned to the same period in 2022 to 2023.

Second, the main business's cash hematopoietic capacity has been restored, and the quality of operations has been improved. Compared to book profits, the Hong Kong stock capital market places more value on the cash hematopoietic capacity of the main business. In the first half of 2026, the company's operating cash flow reached HK$140 million, indicating that the main business has formed a positive cash inflow, which is an important sign of improvement in operating quality.

Third, the balance and liability structure is stable, and there is sufficient safety cushion for transformation. As of the 2026 interim report, book cash and cash equivalents were HK$2,837 million, with a balance ratio of 17.68%. There were no bank interest-bearing liabilities. The composition of liabilities was mainly interest-free operating current liabilities such as accounts payable and contract liabilities. The current ratio was about 4.27 times, which is at a high level among listed daily chemical companies. The net cash asset structure provides sufficient safety cushion for the company's business transformation, can hedge against industry cycle fluctuations, and also preserves financial flexibility for subsequent product iterations and market layout.

2. Iterate business strategies and shift resource allocation to efficiency priority

During the business development period, the company tilted resources towards new product promotion, lean channel operation, and brand building to consolidate the basic market market. As the industry environment changes, marketing and channel strategies have entered an optimization cycle, and more emphasis is placed on input and output efficiency.

At the marketing level, the company implemented a knowledge marketing system, which outputs professional popular science content around clothing care scenarios and empowers product dissemination with professional content; at the same time, it implements accurate marketing delivery to focus resources on high transformation scenarios and key products. According to the 2026 interim results announcement, promotion expenses fell from HK$996 million to HK$643 million, a year-on-year decrease of 35.4%; at the same time, the company increased independent channels and brand asset construction such as brand self-broadcasting, shelf e-commerce, and film and television IP.

The shift in resource allocation to the accumulation of own brand assets is reflected in the short-term adjustment of marketing investment ratios. The long-term goal is to achieve a steady improvement in marginal marketing costs.

Promote optimization and upgrading at the channel level. The company continues to consolidate the basic online market and increase the decline in offline networks across the country. Online channels account for 69.4% of revenue (HK$2 billion) and are still the company's largest channel. Online operations continue to evolve towards improved efficiency: According to third-party data, the company has set up about 20 brand self-broadcast accounts on the Douyin platform, with an average of over 16 hours of live streaming per day. The top 5 delivery stores are all official flagship stores. Offline direct sales revenue to major customers (KA) continued to grow in the first half of 2026, with a year-on-year increase of 9.5%, maintaining the growth trend for two consecutive periods.

The company is moving towards refined operation on the marketing and channel side as a whole. The continuous optimization of the marketing structure and channel layout will continue to consolidate the operating chassis and lay a solid foundation for the Group's profit recovery.

3. Product matrix restructuring is an underestimated main line

Currently, the company is building a multi-level matrix around the “home cleaning scenario”.

Concentration circuit: Continue to promote the popularization of concentrated washing.

Concentrated laundry detergent products represented by “Supreme” are becoming a solid support for the company's gross margin. As the core of the strategy, Extreme Concentrated Laundry Detergent focuses on the differentiated experience of “high activity, saving water and time”. In the context of the industry facing price wars with diversified products and platforms' own brands, Blue Moon adheres to its high-quality brand positioning and avoids falling into the quagmire of low price competition. The company chose to break the game through the concentrated route, with the aim of using the technical dividends of “less usage and lower single washing cost” to break the inertia of the industry's low price competition and promote long-term value return.

Segmentation circuit: explore laundry scenarios and lay out functional segmented products.

Focusing on segmenting laundry needs, functional products such as underwear, sterilization and deodorization, and sportswear have been launched one after another. The logic of this step is to increase customer reach and repurchase rates — a single laundry detergent is standardized and strongly replaced; functional segmented products are diversified and weakly replaced. Based on a unified brand perception and a differentiated product matrix to meet diverse needs, this is a typical path for daily chemical brands to broaden their user base and enhance the life cycle value of individual customers.

Horizontal expansion: Personal care and household cleaning. The second growth curve is being cultivated.

Personal care products such as the Jingxiang series have achieved steady volume. The company extended its existing clothing cleaning technology accumulation to personal cleaning and household cleaning tracks, completing the initial layout of the second growth curve. Personal care business revenue increased 12.8% year over year to HK$578 million in 2025, maintaining steady development in the first half of 2026. Although the above sectors are still being nurtured and their contribution to the group's overall performance has yet to be released, their complete product and business matrix has already been implemented. Relying on years of accumulated R&D heritage, the sector already has solid growth momentum.

The financial significance of restructured product matrices will eventually fall on gross margin. The proportion of concentrated products represented by “Supreme” has increased, and the volume of high-value-added categories such as personal care and household cleaning has been added to push the company's product structure towards high gross profit. According to the latest financial report, the company's gross margin for the first half of 2026 was 57.1%, which remained stable year on year. Among them, the gross margin of the concentrated series was higher than the company's overall level, which became a key buffer against price pressure in the industry.

Conclusion: Revaluing the Blue Moon: Underrated “Value Reshaping” and Fundamental Restoration

Looking at the above financial security margins and profit recovery paths intertwined with multi-brand strategies, Blue Moon's underlying fundamentals have shown strong and sustainable signs of improvement.

First, “abundant cash flow and zero interest-bearing debt” built the company's financial rigidity through the cycle; secondly, “hematopoietic capacity” accelerated recovery, which not only drastically narrowed losses by 55.8%, operating cash flow returned to the right track and recorded HK$140 million, but also achieved active optimization in terms of sales expenses - promotion expenses decreased by 35.4%, while revenue from major customers increased by 9.5%, which fully confirmed the improvement in channel efficiency; furthermore, the company is undergoing a deep transformation into a diversified matrix of “laundry concentration+functional segmentation+personal care extension”.

Facing such an industry leader with zero interest-bearing liabilities, positive cash flow, active cost reduction and efficiency, and the second curve has already taken shape, if the market still stereotypically classifies it as a “traditional laundry detergent company that pays losses and dividends,” there is clearly a lag in perception and one-sided nature. In an age of uncertain stock, an established consumer leader has actively restructured itself and is beginning to show results. The strategic endurance and transformation value it has shown is itself worthy of more thorough attention and reevaluation by the capital market.