经销模式

For the years ended December 31, 2023, 2024 and 2025, revenue generated from overseas distributors amounted to RMB953.7 million, RMB910.1 million and RMB847.4 million, respectively, accounting for 96.1%, 95.6% and 96.6%, respectively, of our total overseas revenue for the same years.

We recognize revenue from sales to distributors when control over the products has been transferred, which typically occurs upon delivery to distributors.

The number of domestic active distributors decreased to 59 as of December 31, 2025, mainly attributable to normal adjustments to individual distributors’ business arrangements amid prevailing global market conditions.

In 2023, 2024 and 2025, our total sales to distributors amounted to RMB62.9 million, RMB80.1 million and RMB75.3 million, respectively, accounting for 9.8%, 9.5% and 7.4%, respectively, of our total revenue for the corresponding years.

During the Track Record Period, to the best knowledge of our Directors, there was no material channel stuffing issue and cannibalization risks among our distributors as a result of their "buy-out" model with us.

In 2025, we terminated business relationships with eight distributors following our periodic assessments, as they did not meet our selection and performance criteria.

In 2023, 2024 and 2025, sales to our distributors amounted to RMB624.5 million, RMB678.4 million and RMB2,480.5 million, accounting for 86.4%, 92.5% and 98.2% of our total revenue in the respective periods.

Although our distributor relationships are based on a buyer-seller model, we have put in place a number of measures to monitor actual sell-through and reduce the risk of channel stuffing.

Our distributor base expanded significantly from 185 at the beginning of 2023 to 503 by end of 2025, driven by the rapid market adoption of ESS and our proactive efforts to broaden our customer reach in different new markets.

As of December 31, 2023, 2024 and 2025, we had an extensive distribution network of 173, 237, and 241 distributors, respectively.

(2) The primary reasons for ceasing our relationships with certain distributors were: (i) business adjustments and channel optimization, including replacing distributors with others that have a stronger presence in the relevant regions; (ii) discontinuation of certain products; and (iii) transition from distributorship arrangements to direct sales for certain products.

We have implemented internal policies and measures, which would help ensure that our sales to distributors reflect genuine market demand and mitigate the risk of inventory accumulation in the distribution channels.

During the Track Record Period, sales to the JV Distributor amounted to approximately HK$3.5 million, HK$5.8 million and HK$4.3 million for 2023, 2024 and 2025, respectively representing 1.0%, 1.2% and 0.9% of on total revenue for the same periods, which our Directors consider to be immaterial.

The Directors confirm that all sales to the JV Distributor were conducted on arm’s length basis, and that the JV Distributor did not obtain preferential pricing, credit terms or rebate arrangements granted beyond those available to independent third-party customers.

On December 15, 2025, Mr. Lo entered into a sale and purchase agreement with the other joint venture partner, an independent third party, pursuant to which Mr. Lo shall transfer his entire equity interest in the JV Distributor to the other joint venture partner (the “JV Transfer”).

During the Track Record Period and in line with the industry practice, we primarily sell our pharmaceutical products through distribution.

As of December 31, 2025, our distribution network comprised over 80 distributors across vast majority of the provinces in the Chinese Mainland.

Our distributors are connected to the Distributors Data Integration (“DDI”) system, through which we review and manage the sales and inventory data from our distributors on a monthly basis.

During the Track Record Period and up to the Latest Practicable Date, we sold a limited portion of products through distributors.

We only entered into one distribution agreement under our scalp and hair care business, with a minimum sales commitment of RMB100,000 per year.

In addition, distributors are generally required to provide performance guarantee deposits.

For the years ended December 31, 2023 and 2024 and 2025, our total sales to offline distributors amounted to RMB3,077.0 million, RMB4,261.4 million and RMB5,731.7 million, respectively, accounting for 17.6%, 17.2% and 18.8%, respectively, of our revenue for the corresponding periods.

During the Track Record Period and up to the Latest Practicable Date, we maintain a network of distributors and do not rely on any single distributor.

We do not accept inventory buybacks from distributors in situations where they are unable to meet their sales obligations.

We launched our franchised model in March 2024 and achieved a notable increase in 2025.

. Under our maternal, infant and child business, franchisees are not subject to minimum purchase or sales commitments.

Except for defective products, franchisees are generally not entitled to return products purchased from us.

For the years ended December 31, 2023, 2024, and 2025, revenue from distributors amounted to RMB199.8 million, RMB195.5 million, and RMB266.0 million, respectively, accounting for 50.7%, 55.6% and 55.9%, respectively, of our total revenue, in the same periods.

To mitigate the risks of channel stuffing and cannibalization among our distributors, we have implemented robust risk management mechanisms.

We also entered into consignment agreements with certain online distributors during the Track Record Period, who resold our products to end-customers through their online platforms.

In 2024 and 2025, the revenue generated from our sales to distributors amounted to RMB1.8 million and RMB12.1 million, respectively, accounting for 100.0% and 100.0%, respectively, of our total revenue from product sales during the same years.

In 2024 and 2025, we engaged 11 and six new distributors, respectively.

During the Track Record Period and up to the Latest Practicable Date, we had not observed any material inventory buildup among our distributors.

We adopted hybrid sales channels and sold our products through both direct sales and distributors.

We have adopted a distributorship model for a portion of the sales and distribution of our products to end customers.

To mitigate the risk of channel stuffing, we require our distributors to establish formal inventory management systems, conduct regular inventory checks and maintain optimal inventory levels aligned with market demand, so as to avoid overstocking or stockouts.

In each year of the Track Record Period, our revenue from distribution channels accounted for more than 98.0% of our total revenue.

we adopt a buy-out distribution model under which revenue is recognized at the point when our distribution partner completes revenue recognition confirmation in the CRM system (CRM Confirmation), after which the distribution partner assumes all inventory risks.

Our management is of the view that channel stuffing is unlikely to occur in our distribution channels and generally does not pose significant managerial concern, mainly because (i) we account for products sold to our distribution partners as part of our inventory to carry out reasonable and effective dynamic inventory management to prevent channel stuffing

In line with industry practice, we adopt a distributorship model and we generally do not sell our products directly to hospitals or other medical institutions.

As of December 31, 2023, 2024 and 2025, we had 395, 478 and 397, respectively, distributors for Domestic Sales of pharmaceutical products, as well as 26, 27 and 24 distributors for Export Sales of pharmaceutical products.

During the Track Record Period, our addition of new distributors primarily reflected our continued sales growth and our efforts to expand market coverage.

As of December 31, 2023, 2024 and 2025, we engaged 307, 269 and 245 offline distributors, and had 312, 330 and 289 offline stores operated by them, respectively.

In 2023, 2024 and 2025, our revenue generated through distributor-operated offline stores amounted to RMB232.9 million, RMB245.7 million and RMB400.4 million, respectively, accounting for 22.8%, 18.9% and 18.3% of our total revenue for each year indicated, respectively.

We terminated with 27, 83 and 46 offline distributors in 2023, 2024 and 2025, respectively.

Our product returns from offline distributors amounted to RMB105.0 million, RMB100.9 million and RMB147.3 million in 2023, 2024 and 2025, accounting for 31.0%, 29.1%, and 26.9% in the same period in terms of total sales by offline distributors, respectively, calculated by dividing product returns by the sum of revenue generated from offline distributors and such product returns.

For adult winter down-filled apparel, the aggregate cap across the three windows is 30% (previously 35% in 2023), and for other products, the aggregate cap is 20% (previously 25% in 2023), in each annual sales cycle running from April 1 of the current year through March 31 of the following year.

During the Track Record Period, all of our product returns from our offline distributors were primarily attributable to the contractual return arrangements implemented under our return policies with offline distributors.

We regularly monitor our inventory to ensure timely supply of our products and reduce the risk of overstocking.

Our distribution agreement does not specify an agreed annual sales target or minimum annual purchase amount.

We believe this distribution model helps extend our coverage in a cost-effective manner while retaining proper control over our sales distribution network and enhancing our core commercialization capabilities through direct engagement with downstream hospitals.

In 2024 and 2025, sales to distributors accounted for 85.1% and 95.1%, respectively, of our total revenue from sales of pharmaceutical products.

(2) The decrease in the number of our distributors for functional ingredients and nutritional products from December 31, 2023 through December 31, 2025 was driven by our efforts in optimizing the distribution network for our nutritional products, which began in the second half of 2024 and have been enhanced since January 2025.

Since their capital is tied up in the inventory, the distributors are incentivized to order based on actual sales demand, thus reducing holding costs and the risk of overstocking or obsolescence.

We generated RMB535.9 million, RMB825.1 million and RMB820.7 million of commission income from our channel partners for the years ended December 31, 2023, 2024 and 2025, respectively, accounting for 99.9% of our commission income during the Track Record Period.

The movement of the number of individual insurance brokers was primarily caused by the launch and/or completion of certain projects, which required licensed personnel to facilitate the promotion and delivery of insurance products.

By engaging more end consumers and enhancing their loyalty through our platform, Baige LeBao, we aim to decrease our reliance on channel partners in the long term and reduce the referral fee paid to channel partners.

During the Track Record Period and up to the Latest Practicable Date, we sell AKK AM06™, our proprietary Akkermansia muciniphila strain raw material, to one independent third-party distributor incorporated in the PRC, which is responsible for the sale and distribution of the NGP raw material AKK AM06™ in the PRC, the U.S., Canada, Japan, South Korea, Thailand, Indonesia, and Malaysia.

We selected this distributor based on its business qualifications and marketing capabilities, such as distribution network coverage, quality, number of personnel, cash flow conditions, creditworthiness, logistics, compliance standard and past performance, and customer management capacity.

In 2025, our direct sales of the NGP raw material AKK AM06™ accounted for 32.0% of our total revenue from the NGP raw material AKK AM06™.