Investment Rating - The report assigns a Neutral rating to the company with a target price of HKD 13.40, indicating a potential upside of 3.4% from the current price of HKD 12.96 [1][2][17]. Core Views - The company is expected to face short-term profit uncertainty due to increased promotional efforts for self-operated products, which may lead to a decline in gross margin. However, profitability is anticipated to improve in the fourth quarter of the fiscal year 2024 as operations normalize post-strategic adjustments [1][7][11]. - The main account's GMV (Gross Merchandise Value) has faced challenges, with a decline in traffic growth and some GMV being diverted to other channels. The company is focusing on expanding its self-operated product offerings, which are projected to grow significantly in the coming years [1][11][23]. Summary by Sections Financial Forecast - For the fiscal year 2024, the company is projected to achieve revenues of RMB 6.557 billion, a year-on-year increase of 45%. The adjusted net profit is expected to be RMB 688 million, reflecting a 37% decrease compared to the previous fiscal year [2][9]. - The company anticipates a revenue growth of 13% in fiscal year 2025, reaching RMB 7.433 billion, with an adjusted net profit of RMB 836 million [2][9]. Multi-Channel Strategy - The company has established a multi-channel layout, including Douyin matrix accounts, Taobao live streaming, and its own app, which is expected to enhance GMV contributions from non-live sales channels [11][23]. - The self-operated product segment is rapidly expanding, with GMV expected to reach RMB 36 billion in the second half of fiscal year 2024, representing a year-on-year increase of 108% [11][23]. Valuation - The report suggests a reasonable price-to-earnings ratio of 16 times based on the company's growth potential and profitability structure, leading to a valuation of HKD 145 billion [1][16][17]. - The valuation reflects a premium compared to other MCN (Multi-Channel Network) institutions due to the company's better profit margins and business ceiling [1][16].
东方甄选：自营建设虽具长期增长潜力，短期盈利不确定性仍存，首予中性