Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company's FY2025H1 revenue reached 2.187 billion, a year-over-year decrease of 9.3%, with a net loss attributable to shareholders of 968 million [8] - The company is focusing on a multi-channel strategy, with expectations for incremental contributions from WeChat stores [8] - The company has successfully launched competitive self-operated product lines, contributing to stable growth [8] - Adjusted net profit forecasts for FY2025-2026 have been revised down to 225 million and 502 million respectively, with a new FY2027 forecast of 695 million [8] Financial Performance Summary - Total revenue (in million) for FY2023A, FY2024A, FY2025E, FY2026E, and FY2027E is projected at 4,511, 6,528, 4,483, 4,998, and 5,448 respectively, with year-over-year growth rates of 651.26%, 44.69%, -31.33%, 11.50%, and 9.00% [1] - Net profit attributable to shareholders (in million) for the same periods is expected to be 971.29, 249.14, 35.56, 397.32, and 589.91, with year-over-year changes of 1,468.32%, -74.35%, -85.73%, 1,017.49%, and 48.47% [1] - The company's gross margin for FY25H1 improved by 0.7 percentage points to 33.6% [8] - The company’s self-operated products accounted for approximately 37% of total GMV in FY25H1 [8] Market Data - The closing price is 15.54 HKD, with a market capitalization of approximately 16,095.81 million HKD [5] - The price-to-earnings ratio (P/E) for FY2025E is projected at 415.72 [1]

Investment Rating - The report maintains a "Buy" rating for the company with a target price yet to be specified [7]. Core Insights - The company reported a total revenue of 2.187 billion RMB for FY25H1, a year-on-year decrease of 21.79%, and a net profit attributable to shareholders of -0.097 billion RMB, down from 0.249 billion RMB in the same period last year. Excluding the financial impact of the sale of "Yuhui Tongxing," the net profit from continuing operations was 0.033 billion RMB [1]. - The company's net revenue from continuing operations (self-operated products and live e-commerce) for FY25H1 was 2.2 billion RMB, a decrease of 9.3% year-on-year, with a GMV of 4.8 billion RMB, down 16.2% year-on-year [2]. - The company has launched 600 SKUs of self-operated products in FY25H1, expanding its product line beyond fresh food and snacks to include health products, pet food, and new-style clothing, with self-operated products accounting for approximately 37% of total GMV [4]. Summary by Sections Financial Performance - FY25H1 total revenue was 2.187 billion RMB, a decrease of 21.79% year-on-year; net profit attributable to shareholders was -0.097 billion RMB, compared to 0.249 billion RMB in the previous year [1]. - The net revenue from continuing operations was 2.2 billion RMB, down 9.3% year-on-year, with a GMV of 4.8 billion RMB, a decline of 16.2% [2]. Product Strategy - The company has developed 600 SKUs of self-operated products, expanding its offerings significantly [4]. - Self-operated products accounted for about 37% of total GMV in FY25H1 [4]. Marketing and Brand Development - The company is implementing a multi-platform strategy to enhance brand awareness, with significant contributions from Douyin and other platforms [2]. - The average contribution per user is steadily increasing, indicating high user loyalty and engagement [3]. Organizational Development - The company has built a comprehensive organizational structure to support rapid business growth, with a total of 1,733 employees in the self-operated products and live e-commerce team [5]. Future Outlook - The company plans to focus on product quality and explore new live streaming formats to tap into untapped markets, particularly in essential household goods [6][11].

Investment Rating - The investment rating for the company is "Buy" [6] Core Insights - The company experienced a revenue decline of 9.3% year-on-year in FY2025H1, with total revenue of 2.19 billion yuan. The live e-commerce GMV was 4.8 billion yuan, down 15.8% year-on-year. The self-operated product sales showed more resilience compared to other segments [1] - The paid membership system has been improved, with the number of paid subscribers on the app reaching 228,300, up from 123,800 in the same period last year. The app's GMV accounted for 13.6% of total sales, showing a significant increase from 8.4% in FY2024 [2] - The company's adjusted profit for FY2025H1 was 30 million yuan, with a non-GAAP adjusted profit of 130 million yuan, resulting in a GMV profit margin of 3.5%, slightly improved from 3.2% in FY2024H2 [3] - The company is actively exploring new channels such as WeChat stores, which have shown a significant increase in daily sales orders, indicating a positive trend in sales growth [3] Financial Summary - For FY2025, the company is projected to have a net profit of 36 million yuan, with adjusted net profits of 330 million yuan, leading to a PE ratio of 413.70x. By FY2027, the net profit is expected to reach 524 million yuan, with a PE ratio of 28.56x [4][11]

Investment Rating - The investment rating for the company is maintained at Neutral [1] Core Insights - The company reported a revenue of Rmb2.19 billion for 1HFY25, representing a year-on-year decline of 9.3%. The adjusted net loss attributable to the parent company was Rmb4.039 million, which aligns with expectations. The revenue decline and loss were primarily due to the spin-off of the "Yuhui Tongxing" live-streaming channel [4][9] - The spin-off of the live-streaming channel negatively impacted GMV growth, with GMV for 1HFY25 at Rmb4.8 billion, down 15.8% year-on-year. The GMV composition included Rmb1.77 billion from self-operated products and Rmb3.03 billion from third-party product sales. Following the spin-off, the company is focusing on a multi-live-streaming and multi-host strategy, which has started to show signs of recovery in GMV [5][10] - Business adjustments led to a significant increase in expenses, with administrative expenses rising by 180.7% year-on-year to Rmb392 million due to a personal reward of Rmb140 million given to Dong Yuhui. Marketing expenses also increased by 24.3% year-on-year to Rmb459 million. The profit margin for 1HFY25 recovered to 4.4%, a decrease of approximately 13.7 percentage points compared to the same period last year [6][11] Financial Data and Profit Forecast - The company’s revenue projections for FY25 to FY27 are Rmb4.717 billion, Rmb5.035 billion, and Rmb5.448 billion, respectively, with a forecasted decline of 27.71% in FY25 [7] - The adjusted net profit attributable to the parent company is projected to be Rmb245 million, Rmb382 million, and Rmb440 million for FY25, FY26, and FY27, respectively [12] - The target price is maintained at HK$13.9 [12]

Investment Rating - The report assigns a "Neutral" investment rating to the company, 东方甄选 (1797 HK), with a target price of HKD 15.60, indicating a potential downside of 3.6% from the current price of HKD 16.18 [1][2][11]. Core Insights - The company's short-term financial performance is expected to be impacted by business adjustments, but there are signs of operational recovery. The focus will be on enhancing self-operated products, brand influence, and expanding APP membership, particularly through collaboration with New Oriental Group [1][6]. - The financial forecasts for FY2025 show a revenue of RMB 4,710 million, a slight increase of 1.8% from previous estimates, while gross profit is expected to rise significantly by 46.0% to RMB 1,486 million [5][13]. - The gross margin is projected to improve to 31.5% in FY2025, up from 22.0% in the previous forecast, reflecting a recovery in self-operated products [5][13]. Financial Data Summary - Revenue for FY2025 is estimated at RMB 4,710 million, with a gross profit of RMB 1,486 million and a gross margin of 31.5% [5][13]. - The adjusted operating profit is forecasted to be RMB 64 million, a significant decrease of 78.4% compared to previous estimates, indicating challenges in operational efficiency [5][13]. - The net profit attributable to shareholders is expected to be RMB 76 million for FY2025, down 77.5% from prior estimates, reflecting the impact of strategic adjustments [5][13]. Market Performance - The company's market capitalization is approximately HKD 16,758.76 million, with a 52-week high of HKD 28.90 and a low of HKD 9.50 [4][11]. - The year-to-date stock price change is reported at -10.01%, indicating a challenging market environment [4][11].

Financial Performance - Total revenue for the six months ended November 30, 2024, was RMB 2,186.6 million, a decrease compared to RMB 2,795.0 million in the same period last year[5] - Gross profit for the six months ended November 30, 2024, was RMB 735.1 million, down from RMB 1,094.1 million in the previous year[5] - Net loss attributable to the company's owners for the six months ended November 30, 2024, was RMB 96.8 million, compared to a net profit of RMB 249.2 million in the same period last year[5] - Adjusted net loss for the six months ended November 30, 2024, was RMB 1.6 million, compared to an adjusted net profit of RMB 523.5 million in the previous year[5] - Net revenue from continuing operations (self-operated products and live e-commerce business) decreased by 9.3% to RMB 2.2 billion for the six months ended November 30, 2024, compared to RMB 2.4 billion for the same period in 2023[12] - Net loss from continuing operations was RMB 96.5 million for the six months ended November 30, 2024, compared to a net profit of RMB 160.7 million for the same period in 2023[12] - Excluding the financial impact of the sale of Yuhui Tongxing, the net profit from continuing operations was RMB 32.7 million for the six months ended November 30, 2024[12] - Total revenue from continuing operations decreased by 9.3% from RMB 2.4 billion in the six months ended November 30, 2023, to RMB 2.2 billion in the six months ended November 30, 2024[27] - Excluding revenue from the "与辉同行"直播间, total revenue from continuing operations decreased by 18.0% from RMB 2.4 billion to RMB 2.0 billion[27] - Revenue from self-operated products and live e-commerce decreased by 9.3% from RMB 2.4 billion to RMB 2.2 billion, with self-operated products contributing approximately RMB 1.7 billion[28] - Gross profit from continuing operations decreased by 7.4% from RMB 794.2 million to RMB 735.1 million, while gross margin increased from 32.9% to 33.6%[30] - Net loss from continuing operations was RMB 96.5 million, compared to a net profit of RMB 160.7 million in the same period last year[37] - Adjusted net profit from continuing operations, excluding the financial impact of the sale of "与辉同行", was RMB 32.7 million[37] - Adjusted (loss)/profit for the period from continuing operations was RMB (1,609) thousand, compared to RMB 434,288 thousand in the same period last year[41] - Adjusted (LBITDA)/EBITDA for the period from continuing operations was RMB (68,223) thousand, compared to RMB 500,128 thousand in the same period last year[42] - Total revenue for the six months ended November 30, 2024, was RMB 2,186,636 thousand, a decrease from RMB 2,411,323 thousand in the same period in 2023[74] - Gross profit for the six months ended November 30, 2024, was RMB 735,143 thousand, down from RMB 794,150 thousand in 2023[74] - The company reported a net loss of RMB 96,503 thousand for the six months ended November 30, 2024, compared to a net profit of RMB 249,191 thousand in the same period in 2023[74] - The company reported a loss attributable to owners of RMB 96,799 thousand for the six months ended November 30, 2024, compared to a profit of RMB 249,191 thousand in the same period in 2023[96] - The basic and diluted loss per share for the six months ended November 30, 2024, was RMB 0.094, based on a weighted average of 1,032,195,755 shares[96] GMV and Sales Performance - GMV for the six months ended November 30, 2024, was RMB 4.8 billion, down from RMB 5.7 billion in the same period last year[9] - GMV for self-operated products and live e-commerce decreased by 16.2% to RMB 4.8 billion for the six months ended November 30, 2024, from RMB 5.7 billion for the same period in 2023[12] - The company's total GMV for the six months ended November 30, 2024, was RMB 4.8 billion, with 13.6% coming from the app[18] - The number of paid orders on Douyin for third-party and self-operated products reached 50.1 million for the six months ended November 30, 2024[18] - Paid orders on Douyin decreased to 50.1 million for the six months ended November 30, 2024, from 59.6 million in the same period last year[9] - The company's app has over 200,000 paid members, with self-operated products accounting for 28.9% of total GMV for the first half of fiscal year 2025, up from 16.8% in the first half of fiscal year 2024[22] - Self-operated products accounted for approximately 37% of total GMV for the six months ended November 30, 2024[15] User and Membership Metrics - Number of followers on Douyin increased to 46.0 million as of November 30, 2024, from 45.8 million in the previous year[9] - Paid membership subscriptions on the company's own app increased to 228.3 thousand as of November 30, 2024, from 123.8 thousand in the previous year[9] - User satisfaction on the company's app reached 98.6% in the first half of fiscal year 2025, up from 96.6% in the first half of fiscal year 2024[22] Expenses and Costs - Sales and marketing expenses increased by 24.3% from RMB 369.6 million to RMB 459.3 million[32] - R&D expenses increased by 11.9% from RMB 60.8 million to RMB 68.0 million[33] - Administrative expenses increased by 180.7% from RMB 139.6 million to RMB 391.9 million[34] - Sales and marketing expenses increased to RMB 459,304 thousand in 2024 from RMB 369,634 thousand in 2023[74] - Research and development expenses rose to RMB 68,000 thousand in 2024 from RMB 60,753 thousand in 2023[74] - Administrative expenses surged to RMB 391,916 thousand in 2024 from RMB 139,610 thousand in 2023[74] - Total employee compensation expenses (including share-based compensation) for the six months ended November 30, 2024, were RMB 532.8 million, a decrease of 14.7% compared to RMB 624.8 million in the same period last year[50] Cash Flow and Financial Position - Cash and cash equivalents as of November 30, 2024, were RMB 1.7 billion, compared to RMB 2.3 billion as of May 31, 2024, and RMB 1.3 billion as of November 30, 2023[43] - The company's asset-liability ratio was 17.4% as of November 30, 2024, compared to 30.3% as of November 30, 2023, and 24.0% as of May 31, 2024[44] - Capital expenditures for the six months ended November 30, 2024, were RMB 23.4 million, compared to RMB 19.0 million in the same period last year[45] - The company's total assets decreased to RMB 5,698,465 thousand as of November 30, 2024, from RMB 6,163,887 thousand as of May 31, 2024[78] - Cash and cash equivalents decreased to RMB 1,705,703 thousand as of November 30, 2024, from RMB 2,262,464 thousand as of May 31, 2024[78] - The company's equity attributable to owners of the company was RMB 4,946,983 thousand as of November 30, 2024, slightly down from RMB 4,969,216 thousand as of May 31, 2024[79] - The company had no bank loans or other borrowings during the reporting period and has no plans to incur any borrowings within the next 12 months[52] - The unused balance from the 2020 subscription proceeds was approximately HKD 514.2 million as of November 30, 2024, with a slight decrease to HKD 512.1 million by the announcement date[65] - The company allocated HKD 6.5 million for sales and marketing, HKD 7.2 million for business-related personnel, and no funds for technology infrastructure and working capital during the six months ending November 30, 2024[66] - The expected timeline for fully utilizing the remaining proceeds has been updated to start from January 21, 2025, extending the original three-year period from January 21, 2022[66] Business Strategy and Operations - The company continues to focus on its multi-platform strategy, selling products on platforms such as Taobao, JD.com, Pinduoduo, Xiaohongshu, and its own app[8] - The company aims to promote high-quality agricultural products and improve supply chain efficiency through direct cooperation with producers and local businesses[6] - The company has developed and launched 600 SKUs of self-operated products as of November 30, 2024, up from 488 SKUs in the previous fiscal year[15] - The company's main business is operating live e-commerce, selling self-owned products, and providing agency services[81] - The company completed the sale of its education business on March 1, 2024, as part of its business restructuring[83] - The company's operating segment is now solely focused on live-streaming e-commerce, following the termination of its education business[89] - The company's non-current assets are all located in China, and all revenue from continuing operations is derived from external customers in China[89] Other Income and Expenses - Other income, gains, and losses from continuing operations increased by 83.0% from RMB 62.3 million to RMB 113.9 million[31] - Interest income from continuing operations increased to RMB 42,545 thousand in 2024 from RMB 35,271 thousand in 2023[90] - Exchange gains from continuing operations rose to RMB 24,293 thousand in 2024 compared to RMB 9,274 thousand in 2023[90] - The company recorded a loss of RMB 7,566 thousand from the sale of a subsidiary in 2024[90] - Income tax expense for continuing operations decreased significantly to RMB 24,022 thousand in 2024 from RMB 124,929 thousand in 2023[91] Share Repurchase and Dividends - The company repurchased approximately 5,883,000 shares on the Hong Kong Stock Exchange during the reporting period, with a total consideration of HKD 98,742,235[61] - The company did not declare or pay any dividends for the six months ended November 30, 2024, consistent with the same period in 2023[100] Financial Assets and Liabilities - The fair value of financial assets at fair value through profit or loss (non-listed equity investments) decreased slightly from RMB 94,889 thousand as of May 31, 2024, to RMB 92,459 thousand as of November 30, 2024[101] - The company's financial products, classified as current assets, increased from RMB 1,250,338 thousand as of May 31, 2024, to RMB 1,688,489 thousand as of November 30, 2024, with expected annual returns ranging from 1.81% to 4.56%[101][102] - Inventory decreased from RMB 422,341 thousand as of May 31, 2024, to RMB 407,050 thousand as of November 30, 2024[103] - Trade and other receivables decreased significantly from RMB 893,582 thousand as of May 31, 2024, to RMB 241,899 thousand as of November 30, 2024, primarily due to the settlement of deferred consideration from the sale of the education business[104][105] - Contract liabilities increased from RMB 49,595 thousand as of May 31, 2024, to RMB 51,316 thousand as of November 30, 2024, driven by increases in membership fees and other services[106][109] - Trade payables decreased from RMB 611,886 thousand as of May 31, 2024, to RMB 492,253 thousand as of November 30, 2024, with the majority due within 90 days[111] Corporate Governance and Share Structure - The company completed a share subscription of 59,432,000 shares at HK$30.00 per share on December 24, 2020[114] - The report period refers to the six months ending November 30, 2024[118] - The company's fiscal year 2024 refers to the financial year ending May 31, 2024[114] - The company's fiscal year 2025 refers to the financial year ending May 31, 2025[114] - The company's board includes executive directors Yu Minhong and Yin Qiang, non-executive director Sun Chang, and independent non-executive directors Lin Zheying, Dong Ruibao, and Kuang Weixin[119] - The company's shares have a par value of US$0.00002 per share[118] - The company's GMV refers to the total value of merchandise sold[115] - The company's SKU refers to stock keeping units[118] - The company's application refers to software that enables computers, smartphones, or electronic mobile devices to perform tasks, particularly self-operated products and live e-commerce applications[114] - The company's audit committee is responsible for overseeing financial reporting and disclosure[114]

Investment Rating - Maintains a "Buy" rating for the company [5][6] Core Viewpoints - WeChat Mini Store could bring new opportunities for the company's development [1] - The company has undergone significant changes in business, logic, valuation, and expectations since the "small essay" incident [1] - The company has deeply refined its self-operated products, improved supply chain capabilities, and refined online marketing strategies [1] - Successfully completed the operational transition under the background of traffic switching, remaining an excellent product technology and cultural company [1] Competitive Advantages - Wide recognition, brand endorsement, and precise positioning [2] - WeChat e-commerce has strong social attributes, and the company has natural recognition and trust due to previous public opinion events [2] - Brand awareness may be stronger than pure cost-effectiveness in gift-giving scenarios, aligning with the company's brand philosophy of "health, high quality, and high cost-performance" [2] - The company has established and continuously improved its membership system, providing more favorable products and comprehensive services to customers [2] - Rich SKU matrix with high product category selectivity [3] - Unlike single-brand offerings, a wider product range helps capture more traffic conversion opportunities [3] - Since April 2022, the company has developed and launched 488 SKUs of self-operated products, expanding its product line to more categories (2023 fiscal year: 120 SKUs) [3] - Product categories have expanded from fresh food and snacks to more diversified product series [3] - Over 100 self-operated products have become top three bestsellers in their categories on Douyin [3] - The company focuses on discovering unmet consumer needs, establishing differentiated market positioning, building strong brand awareness, expanding market coverage, and continuously improving and expanding product categories [3] - Strong team execution resilience and keen judgment on opportunities [4] - The company quickly responded to the WeChat Mini Store's gift-giving feature, demonstrating adaptability and learning ability in a changing environment [4] Financial Projections - Expected FY25-27 revenues of 7.4 billion RMB, 8.4 billion RMB, and 9.6 billion RMB respectively [5] - Adjusted net profit attributable to the parent company of 330 million RMB, 540 million RMB, and 630 million RMB respectively [5] - EPS of 0.32 RMB/share, 0.52 RMB/share, and 0.61 RMB/share respectively [5] - Corresponding P/E ratios of 49x, 30x, and 26x [5] Industry and Market Data - Industry: Non-essential consumption/Media & Entertainment [6] - Current price: 16.78 HKD [6] - Total HKD shares outstanding: 1,035.77 million [6] - Total HKD market capitalization: 17,380.16 million HKD [6] - Net asset value per share: 5.30 HKD [6] - Asset-liability ratio: 24.03% [6] - 1-year high/low: 30.65 HKD/8.92 HKD [6]

Core Insights - Wei Xue, a prominent internet celebrity, has made a strong comeback in live streaming, achieving impressive sales figures [1][2] - In December 2024, Wei Xue ranked third on Douyin's influencer sales leaderboard, surpassing competitors like Dongfang Zhenxuan [2] - The majority of Wei Xue's sales come from skincare products, with significant contributions from brands like Yestar [2] Sales Performance - Wei Xue conducted 13 live streams in the last 30 days, averaging over 5 million viewers per session and generating sales between 25 million to 50 million yuan, totaling over 300 million yuan [1] - In December, her estimated monthly income from live streaming could reach between 60 million to 90 million yuan, based on typical commission rates of 20% to 30% for beauty products [2] - The Yestar brand, associated with Wei Xue, accounted for 97.5% of the total sales from related live streams in the past month [2] Background and Influence - Wei Xue is recognized as an "early internet celebrity," having gained fame around 2010 through her personal life and fashion sense [3] - Her unique aesthetic has influenced many young women seeking fashion trends during the early days of social media [3] Business Structure - Wei Xue claims to operate her live streaming business independently, but the actual ownership and management structure appears more complex [4] - The company associated with her, Hangzhou Xueying Fanxing Cultural Media Co., Ltd., is fully owned by Chen Kaiyao, with no direct ties to Wei Xue [4] - Wei Xue is linked to two companies, holding a 99.9% stake in Shanghai Xuexueya E-commerce Co., Ltd., while another company she controlled has been dissolved [4]

Core Insights - On December 27, Dongfang Zhenxuan celebrated its third anniversary by releasing the "Top Ten Self-operated Bestsellers" list, marking the first time the company disclosed detailed sales data for its self-operated products [1] Group 1: Sales Performance - The list revealed that Dongfang Zhenxuan's top-selling self-operated products include grilled sausages, eggs, milk, toast, jelly oranges, chicken breast, shrimp, pasta, pizza, and blueberry lutein ester gummies [1] - Grilled sausages achieved cumulative sales exceeding 230 million units, with total sales reaching 11 million orders [1]

Group 1 - Oriental Selection (01797.HK) experienced a significant stock price increase, rising over 15% at one point and approximately 12% at the time of reporting, with a cumulative increase of nearly 30% over the past two days [1] - The WeChat team announced on December 18 that the WeChat Store has officially launched a "Gift Giving" feature in a gray testing phase, which will support this feature for most products except for jewelry, education training categories, and items priced over 10,000 yuan [1][2] Group 2 - CITIC Securities highlighted that WeChat, being one of the most popular social applications in China, is introducing the "Gift Giving" feature as a new business model, which is expected to create vast opportunities for optional and emotional consumption [3] - Given WeChat's current market position, the spread of the "Gift Giving" feature is anticipated to exceed expectations, with the thematic interest likely to carry over into the new year [3] - Investment directions suggested by CITIC Securities include focusing on five key areas: retail merchants for certainty, and e-commerce service providers, brands, and advertising agency operators for flexibility [3]