GUOTAI HAITONG SECURITIES·2026-03-31 15:26Investment Rating - The report maintains a "Buy" rating with a target price of HKD 7.26, corresponding to 0.4x NAV for 2026 [10]. Core Views - The company has made significant non-cash impairment provisions and value reassessments in 2025, focusing on its core business and managing non-performing assets prudently. The management has also proposed an increased dividend plan and actively repurchased shares, reflecting confidence in the company's future [2][10]. - The revenue for 2025 is projected at RMB 173.425 billion, a year-on-year decrease of 9.74%, with a net loss of RMB 23.396 billion, representing a 437.97% increase in losses compared to the previous year. However, net profit forecasts for 2026-2028 have been adjusted to RMB 1.974 billion, RMB 2.912 billion, and RMB 4.139 billion, respectively, indicating significant recovery [10]. Financial Summary - Total revenue is expected to decline from RMB 192.142 billion in 2024 to RMB 173.425 billion in 2025, before gradually increasing to RMB 207.603 billion by 2028 [4]. - Gross profit is projected to decrease from RMB 54.730 billion in 2024 to RMB 51.067 billion in 2025, with a gradual recovery thereafter [4]. - The net profit is forecasted to be negative in 2025 at RMB (23.396) billion, but is expected to turn positive in 2026 with RMB 1.974 billion, and continue to grow in the following years [4]. - The company’s PE ratio is expected to improve from -6.75 in 2024 to 7.10 by 2028, indicating a potential recovery in profitability [12]. Segment Performance - The health segment reported revenue of RMB 48 billion in 2025, a year-on-year increase of 3.1%, with a net profit of RMB 14.34 billion, up 59.2% [10]. - The happiness segment saw a revenue decline of 15.6% to RMB 64.7 billion, resulting in a significant net loss of RMB 90.67 billion, primarily due to external pressures on consumer spending [10]. - The wealth segment's revenue was RMB 55.865 billion, with a slight increase of 1.4%, but it faced a net loss of RMB 141.73 billion, largely due to substantial impairment provisions [10]. - The manufacturing segment experienced a drastic revenue drop of 50.3% to RMB 7.741 billion, with a net loss of RMB 15.46 billion, attributed to significant impairments in specific investments [10]. Dividend and Share Buyback - The company has committed to a dividend of no less than HKD 1.5 billion for the fiscal year 2026, with plans to increase the payout ratio from 20% to 35% in the future [10]. - A share buyback program of up to HKD 1 billion has been initiated, alongside a commitment from major shareholders to increase their stakes by up to HKD 500 million, demonstrating management's confidence in the company's prospects [10].