Hong Kong IPO disclosure precedents · 324 companies, 337 items
sales through distributors: share of revenue, number and movement of distributors, relationship (sell-in / consignment), measures against channel stuffing and inventory build-up
Distributor sales represented the majority of our product sales revenue during the Track Record Period, accounting for 90.8%, 88.1%, 80.9% and 78.4% in 2023, 2024, 2025 and for the five months ended May 31, 2026.
Business · p. 128
We believe the risk of channel stuffing in our distribution network is low and recommended retail prices are strictly followed across our channels.
Business · p. 155
In particular, the increase in the number of terminated online distributors from 17 in 2023 to 41 in 2024 was primarily due to our evaluation and consolidation of online distributors in accordance with our policies and strategies.
We began building our distributor network in 2024, and strategically engaged eight, 15 and 25 distributors, respectively, in 2024, 2025 and the six months ended June 30, 2026 to broaden our customer reach and amplify our market presence.
Business · p. 169
To prevent cannibalization and channel stuffing, we designate predetermined distribution areas for our distributors as defined in the distribution agreements.
Business · p. 169
We increased the number of distributors that we engaged from eight as of December 31, 2024 to 25 as of June 30, 2026, primarily to support the launch of our SCARA robots and the strong sales momentum of our high-payload cobots.
Our products are primarily sold through distributors; however, we also accommodate direct sales to certain customers upon request.
Business · p. 161
Under the consignment model, products are stored at the distributor but title remains with us until the distributor sells to the end customer, at which point revenue is recognized.
Business · p. 162
We do not set sales targets or minimum purchase requirements on our distributors.
Our revenue was mainly generated through distribution channels, accounting for 82.8%, 73.7% and 68.5% of total revenue in 2023, 2024 and 2025, respectively, and 70.7% and 64.4% for the six months ended June 30, 2025 and 2026, respectively.
Summary · p. 10
In 2023, 2024 and 2025 and the six months ended June 30, 2025 and 2026, the number of new distributors that joined us was 13,814, 10,226, 8,467, 4,504 and 4,236, respectively, while the number of distributors that ceased to distribute our products was 9,187, 9,182, 8,864, 10,910 and 11,581, respectively.
Business · p. 174
We primarily adopt a Cash-On-Delivery ("COD") model for our distributors.
We sell all of our products to third-party distributors, who are our direct customers and are responsible for selling and delivering our products to hospitals, other medical institutions and pharmacies.
Business · p. 169
We have a seller-buyer relationship with our distributors.
Business · p. 171
We specify the designated distribution area for which our distributors are responsible in our distribution agreements with them.
In 2023, 2024, 2025 and the five months ended May 31, 2026, revenue from trading companies amounted to RMB190,871.7 million, RMB204,344.6 million, RMB196,667.6 million, and RMB73,263.3 million, respectively, representing 76.2%, 75.7%, 72.7% and 66.5% of our revenue from commodity trading, respectively.
Business · p. 117
We discontinued transactions with certain trading companies during the Track Record Period, primarily due to changes in demand or preferences of the relevant end customers.
Business · p. 118
Since our transactions with these trading companies are based on the real demand from end customers, we do not believe that our relationship with them raises concerns related to channel stuffing, cannibalization, or the recoverability of accounts receivable.
In 2023 and 2024, the revenue generated through our distributorship with Zhejiang Energy Atlas was RMB761.4 million and RMB76.0 million, respectively, representing 32.1% and 3.2% of our total revenue for the same years, respectively.
Business · p. 161
During the Track Record Period and up to the Latest Practicable Date, no product was returned by Zhejiang Energy Atlas.
Business · p. 162
Starting from December 2024, our collaboration model with Zhejiang Energy Atlas shifted from a distribution model to a sales agent model.
In 2023, 2024, 2025 and the five months ended May 31, 2025 and 2026, revenue generated from distributors accounted for 56.6%, 60.4%, 57.8%, 74.0% and 45.1% of total revenue under Yuen Kee Taste, respectively.
Business · p. 133
As of December 31, 2023, 2024, 2025 and May 31, 2026, we had 9, 19, 46 and 57 distributors for our Yuen Kee Taste offerings.
Business · p. 134
We believe that our sales correspond to actual consumer demand and therefore our products are at low risk of channel stuffing in our distribution network, because: (i) we closely monitor the inventory level of distributors and require them to report to us regularly on, and to maintain a reasonable level of, their inventory; (ii) we generally require certain prepayment amount before delivering products to distributors and generally do not set minimum purchase requirements as we believe such arrangements encourage distributors order products based on actual sales forecasts; and (iii) we generally do not allow returns of products sold to distributors except for quality issues.
Revenues from sales of our products and solutions to our distributors represented approximately 68.7%, 54.0%, 51.4% and 60.2% of our revenues in 2023, 2024, 2025 and the three months ended March 31, 2026, respectively.
Business · p. 158
During the Track Record Period, the amount of returns accounted for less than 1% of our total sales to distributors.
Business · p. 159
We monitor and manage our distributors through a reporting mechanism, under which our distributors are required to provide a monthly report of their sales, including sales volume and product categories.
As of December 31, 2023, 2024, 2025 and April 30, 2026, we collaborated with 956, 866, 881 and 569 distributors, respectively.
Business · p. 132
In 2023, 2024, 2025 and the four months ended April 30, 2026, we entered business relationships with 543, 446, 428 and 189 new distributors, respectively, reflecting our continuous business developments in new regions.
Business · p. 132
During the Track Record Period, our total number of distributors recorded a net decrease of 8, 90 and 15 in 2023, 2024 and 2025, respectively.
We are not involved in the R&D and manufacturing of Esomeprazole Magnesium Delayed-Release Capsules and Propofol Injectable Emulsion, we acquired the listing rights of the products from independent third parties and engage CMOs to manufacture the products, and distributed our Esomeprazole Magnesium Delayed-Release Capsules products via our distributor in the U.S., and our Propofol Injectable Emulsion products via our distributors in the PRC.
Summary · p. 10
During the Track Record Period, we entered into one distribution agreement with our MAH Business customer for the distribution of esomeprazole magnesium delayed-release capsules in the U.S. and service agreements with our CRO Services customers for the provision of CRO Services.
Business · p. 192
The key contractual terms under our esomeprazole magnesium delayed-release capsules distribution agreement are as follows: (i) the distributor is restricted to sales of the product within the U.S. only; (ii) the distributor shall be solely responsible for establishing its selling prices for the product throughout the U.S.; (iii) the distributor submits purchase orders for its requirements with three months prior notice; (iv) we manufacture (through contract manufacturer) and supply the product to the distributor on a mutually exclusive basis at a fixed price; (v) both parties share the net profits based on a predetermined percentage; and (vi) unless terminated for cause, the term is for a period of seven years and renewed automatically thereafter annually unless either party terminates.
In 2023, 2024, 2025 and the three months ended March 31, 2025 and 2026, our total sales to distributors amounted to RMB299.2 million, RMB361.3 million, RMB501.0 million, RMB66.9 million and RMB288.5 million, respectively, accounting for 2.8%, 1.5%, 1.3%, 1.0% and 1.5%, respectively, of our revenue for the corresponding periods.
Business · p. 181
We have in place internal control policies (including our “Distributor Management Policy” (《經銷商管理制度》)) to manage risks relating to distributor inventory.
Business · p. 182
We have adopted various measures to avoid channel stuffing.
Revenue from our distribution channels amounted to RMB711.3 million, RMB800.9 million, RMB803.2 million, RMB188.8 million and RMB211.1 million in 2023, 2024 and 2025 and the three months ended March 31, 2025 and 2026, respectively, representing 66.3%, 56.4%, 49.8%, 56.0% and 42.9% of our total revenue for the respective periods.
Business · p. 132
Under the seller-and-buyer model, control and risk of loss transfer to distributors upon product delivery and receipt, at which point we recognize revenue.
Business · p. 133
We have established a dedicated market order management system to prevent channel stuffing and cross-regional sales.
Revenue from sales to distributors is recognized upon delivery of products to the distributors and the transfer of control in accordance with our revenue recognition policies.
Business · p. 140
Given the immaterial revenue contribution from distributors during the Track Record Period, we believe our exposure to channel-related risks is limited.
Business · p. 142
To mitigate such risks, we have implemented internal control measures, including demand-driven inventory management, monitoring of inventory turnover and sell-through performance, defined territorial and product authorizations, and standardized compliance requirements supported by ongoing communication and reporting mechanisms.
In 2023, 2024 and 2025, and for the four months ended April 30, 2026, revenue from our distributors amounted to RMB363.4 million, RMB391.6 million, RMB480.7 million, and RMB247.3 million respectively, representing 22.2%, 24.9%, 24.6% and 29.6% of the total revenue for the respective years/period.
Business · p. 169
We had 32, 32, 54 and 48 distributors as of December 31, 2023, 2024 and 2025, and as of April 30, 2026, respectively.
Business · p. 169
We recognize that managing the risks of channel stuffing and cannibalization among distributors is essential to ensuring the authenticity of sales and maintaining a healthy distribution network.
The above procedures, combined with our policies that we generally do not accept product returns unless the products are defective, help to ensure that our sales to distributors reflect genuine market demand and mitigate the risk of inventory pile-up in the distribution channels.
Business · p. 141
Under the distribution agreements with our Hong Kong distributor, we have a seller-buyer relationship with our Hong Kong distributor and we do not have any contractual relationship with or impose any control or oversight over any of its downstream customers.
During the Track Record Period, a majority of our revenue was generated from sales to our distributors.
Business · p. 155
Concurrently, we discontinued our partnership with 17, 539, 47, and 39 distributors in 2023, 2024, 2025 and the five months ended May 31, 2026, respectively.
Business · p. 156
The significant number of 540 discontinued distributors in 2024 was the result of a focused optimization initiative conducted during that year.
Our revenue from distributor sales was RMB561.8 million, RMB314.8 million, and RMB432.8 million in 2023, 2024, and 2025, respectively, representing 84.7%, 71.2%, and 83.4% of our total revenue for the same periods.
Business · p. 158
The relationships between distributors and us are categorized as “seller-buyer” relationships, where the distributors purchase products from us on a “buy-out” basis, assuming relevant risks after purchase, and resell to the end-customers.
Business · p. 160
To mitigate the risks of market cannibalization and channel stuffing, we have established a customer reporting system.
As of March 31, 2026, our distribution network comprised 234 distributors. During the Track Record Period, our revenue from sales of products by distributors was RMB539.7 million, RMB462.5 million, RMB540.1 million and RMB123.4 million, which approximately accounted for 52.4%, 41.1%, 40.8% and 36.6% of our total revenue for the years ended December 31, 2023, 2024 and 2025, and the three months ended March 31, 2026, respectively.
Business · p. 148
The significant decrease in the three months ended March 31, 2026 was mainly attributable to the natural expiry of annual cooperation agreements at the end of 2025 and our proactive adjustments to certain smaller distributors in response to market conditions, which are part of our ordinary course of channel management.
Business · p. 149
We operate on a buy-out model, meaning our distributors purchase products for resale and bear the primary inventory risk.
Distributors at the end of year/period | 5 | 5 | 5 | 5
Business · p. 117
Our distributors generally place purchase orders based on their sales needs and, subject to the terms of the relevant distribution agreements, purchase products from us on a buy-out basis and bear inventory risks after delivery and acceptance.