Future Wear Technology Announces Pre-IPO Dividend of ¥170 Million: Can It Weather Dual Pressures of Core Business Decline and High Marketing Costs?

ZC Asia has learned that Future Wear Technology Co., Ltd. (hereinafter referred to as ‘Future Wear’) has formally submitted its listing application to the Hong Kong Stock Exchange, with CITIC Securities International acting as the sole sponsor. This filing marks the company's shift towards the Hong Kong market for financing after two unsuccessful attempts to list on China's ChiNext board and the Beijing Stock Exchange.

Steady Performance Growth Amid Core Business Transformation

Established in 2007, Future Wear has focused on smart wearable health devices since 2016, operating under the renowned SKG brand. Its product portfolio encompasses four main categories: smart relaxation wearables, post-exercise recovery and body-shaping devices, smart health watches, and smart home health products.

Financial data reveals that from 2022 to 2024, the company's revenue stood at RMB 904 million, RMB 1.046 billion, and RMB 1.045 billion respectively, with net profits of RMB 119 million, RMB 127 million, and RMB 135 million. In the first three quarters of 2025, the company achieved revenue of RMB 878 million and net profit of RMB 106 million, maintaining year-on-year growth.

（Image source: Company prospectus）

However, revenue from its core business—smart relaxation wearables—declined in 2024, falling 3.7% year-on-year to RMB 856 million. with revenue for the first three quarters of 2025 reaching RMB 630 million, its share of total revenue falling from 85.3% in 2023 to 72.5%. In contrast, post-exercise recovery and body-shaping devices demonstrated significant growth, generating revenue of RMB 200 million during the same period—a 123% year-on-year increase—with their share rising to 23%.

Elevated Sales Expenses and Pre-IPO Dividend Distribution

During the reporting period, Future Wearable's sales and marketing expenditures continued to climb. From 2022 to 2024 and the first three quarters of 2025, these expenditures amounted to RMB 164 million, RMB 216 million, RMB 226 million, and RMB 198 million respectively, with their proportion of total revenue gradually rising from 18.2% to 22.6%. Advertising and promotional expenses consistently accounted for over 66% of this total.

Concurrently, the proportion of the company's research and development expenditure showed a declining trend. R&D costs for the same periods amounted to RMB 82.2 million, RMB 95.5 million, RMB 79.2 million, and RMB 58.1 million respectively, with the proportion of revenue falling from 9.1% to 6.6%. Sales and marketing expenditure for the first three quarters of 2025 was approximately 3.4 times that of R&D costs.

On the eve of its listing application, Future Wear conducted substantial dividend distributions. During the first nine months of 2025, the company declared dividends totalling RMB 199 million to equity shareholders, with payments completed in September and October of that year. This dividend amount represented approximately 187.74% of the net profit for the same period. Previously, in 2022 and 2023, the company had distributed dividends of RMB 50 million and RMB 30 million respectively.

According to the prospectus, the controlling shareholders, Mr Liu Jie and Mrs Xu Siying, control approximately 85.94% of the voting rights through a concert party arrangement. Based on this proportion, approximately RMB 170 million from this dividend distribution flowed into the hands of the actual controllers.

Concurrently with the substantial dividend payout, the company's interest-bearing bank borrowings increased significantly. As of 30 September 2025, this current liability reached RMB 180 million, compared to RMB 70.042 million at the end of 2024. The company stated that the borrowings were primarily used for working capital and business expansion.

Affected by factors such as the dividend distribution, the company's net asset value decreased from RMB 801 million at the end of 2024 to RMB 712 million. By the end of September 2025, the current ratio had fallen to 1.1, while the quick ratio stood at 1.0 – approaching levels generally regarded as cautionary.

The prospectus highlighted multiple risks, including substantial reliance on distribution channels (accounting for 82.7% of revenue in the first three quarters of 2025) and potential litigation or reputational damage stemming from product quality issues. The Black Cat Complaints platform has recorded hundreds of grievances concerning ‘SKG’, encompassing product malfunctions, quality defects, and refund disputes.

Furthermore, it was disclosed that certain factory projects in Foshan failed to meet agreed economic performance targets, while another project did not obtain its completion acceptance certificate within the contractual timeframe. The company stated it is in discussions with relevant authorities and has not yet been deemed in breach of contract or faced claims.

Future Wear's IPO fundraising plan will be allocated towards working capital, business expansion, R&D investment, and global market development. Whether the company can capitalise on opportunities amid industry expansion while effectively addressing multiple challenges—including slowing core business growth, channel management, and liquidity—remains subject to market observation.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.