Investment Rating - Maintain "Add" rating for the industry [5] Core Viewpoints - The retail channel transformation is accelerating, with significant potential in discount formats. The expansion of discount systems from snack categories to larger categories such as daily chemicals and grains is expected to cover more consumer groups and increase purchase frequency. The development of community multi-category discount formats is anticipated to further impact traditional supermarkets positively [4][28]. - The report highlights the emergence of new opportunities for brands as supermarkets optimize their supply chain and profit distribution mechanisms, benefiting upstream brand development while enhancing product iteration and quality focus from a consumer perspective [28][29]. Summary by Sections 1. Discount Supermarket Grassroots Research - The first "Lai You Pin" discount supermarket opened in Hefei on January 10, marking a shift from hard discount snacks to a multi-category discount supermarket format. The store includes snacks, daily chemicals, grains, frozen products, and more, with snack category share decreasing to approximately 45% [11][12]. - "Zhao Yi Ming" discount supermarket is expanding its product categories, primarily focusing on snacks while adding daily chemicals and baked goods. The price perception is strong, with items like freshly made sausages priced at 1.5 yuan each [19][22]. 2. Investment Recommendations - The report suggests that the discount format has ample room for growth, with the potential to cover a broader consumer base and increase purchase frequency. The ongoing evolution of retail channels is expected to accelerate, drawing parallels with market developments in the US and Japan [4][28]. - Supermarkets are optimizing their product selection and enhancing service quality, which presents new growth opportunities for quality-focused brands [28][29]. 3. Retail Channel Transformation - The report notes that the discount supermarket model is supported by mature supply chain operations and digital management systems, with leading systems already having a scale of over ten thousand stores [4][28]. - The expansion of private label brands by major retailers is expected to enhance cost advantages and create competitive pressure on upstream production brands [29].

Summary of Tuhu's Conference Call Company Overview - Tuhu operates in the automotive aftermarket industry, focusing on tire sales and automotive maintenance services. The company has expanded its business model through a franchise system, aiming to enhance brand value and customer retention [1][2]. Key Points and Arguments - **Expansion Plans**: Tuhu plans to have approximately 6,900 franchise stores and 140 self-operated stores by the end of 2024, leveraging a strong supply chain management system to achieve economies of scale and improve user repurchase rates from 31% in 2019 to 55% in 2022 [1][2]. - **Comparison with U.S. Market**: Tuhu is compared to leading U.S. automotive parts companies, which typically have over 5,000 stores and gross margins exceeding 36%, with some reaching 50%. Tuhu aims to replicate this model in China [1][5]. - **Revenue and Profitability**: Online orders account for over 70% of Tuhu's revenue. The company expects double-digit revenue growth from 2025 to 2026, with net profit margins increasing by 0.4 percentage points annually [1][7]. - **Product Diversification**: Tuhu has expanded its product offerings from standard tires to include maintenance products and oils, and is also venturing into quick repair services [1][8]. - **Supply Chain Management**: Tuhu's supply chain management allows for strong control over inventory and service quality, with all franchise store inventory owned by Tuhu. This has led to improved operational efficiency, as indicated by the increase in accounts payable to inventory ratio from 1.61 in 2019 to 2.16 in 2023 [1][4][9]. - **Private Label Brands**: Tuhu's own and exclusive brands now account for nearly 60% of sales, a significant increase of about 40 percentage points since 2019, enhancing its gross margins [1][3][10]. - **SKU Management and Inventory Turnover**: Tuhu manages over 66,000 automotive product SKUs with a robust three-tier warehouse network. The company maintains an inventory turnover period of around 60 days, reflecting strong fulfillment and inventory management capabilities [1][11]. - **Franchise Profitability**: The profitability of Tuhu's franchise stores has increased from 86% in 2019 to 93% in 2023, with an average payback period of 15 to 19 months for franchisees [1][12][13]. - **Future Profit Projections**: Tuhu anticipates adjusted net profits of HKD 440 million and HKD 910 million for 2025 and 2026, respectively, supported by product structure upgrades and a growing number of stores [1][14]. Additional Important Insights - **Market Positioning**: Tuhu's strategy of focusing on supply chain efficiency and customer service quality positions it well against competitors in the automotive aftermarket [1][6]. - **Investment Valuation**: Based on growth potential and market comparisons, Tuhu is assigned a 25x PE valuation, suggesting a reasonable market capitalization range of HKD 16.1 billion to HKD 20.2 billion [1][14].

Summary of Qixin Group Conference Call Company Overview - **Company**: Qixin Group - **Main Business**: Office procurement, including four major segments: office administrative supplies, MRO industrial products, employee benefits, and marketing materials [3][4] Market Size - **Office Supplies Market**: Approximately 20 trillion yuan - **MRO Industrial Products Market**: Approximately 90 trillion yuan - **Marketing Materials Market**: Approximately 20 trillion yuan - **Employee Benefits Market**: Approximately 10 trillion yuan [3][4] Key Clients - **Target Clients**: Focus on state-owned enterprises, central financial institutions, government, and Fortune 500 companies - **Market Share**: State-owned and centrally managed enterprises account for over 50% of the market share, with significant representation from the energy, power, and financial insurance sectors [4][5] New Client Acquisition - **2024 New Clients**: Ansteel, China Mobile, China Electronics, China Communications Construction Company, and China Railway [4][6] Digital Operations - **AI Integration**: Nearly 50 AI models launched, establishing the Qilin AI system for data governance, product sourcing, and bidding efficiency [4][7] - **Performance Evaluation**: AI technology used for standardized and timely supplier performance assessments [8] Self-Brand Development - **Sales Channels**: Online and offline channels including self-distributors, JD.com, Tmall, and Douyin; collaborations with IPs for trendy products [4][9] - **Market Expansion**: Focus on cross-border e-commerce with a growth rate exceeding 40% from late 2023 to 2024, targeting Europe, America, and Southeast Asia [4][12] Strategic Adjustments - **Haoshitong Business**: Shifted focus to online smart education, reducing R&D investment, with a goal to break even by 2025 [10][11] - **Future Focus**: Concentration on office supplies and self-branding to enhance gross and net margins, aiming for double-digit growth [4][13] Product Development - **IP Cultural Products**: Current offerings include Wuhuang Cat, Shanhaijing series, and Confucius-themed products, with plans to expand into new categories like badges and plush toys [15][19] - **Profitability Impact**: IP-enhanced products show a significant increase in gross margin, typically rising by 10-30 percentage points compared to traditional products [23] International Sales Performance - **2025 H1 Revenue**: Approximately 330 million yuan, with expectations of 600-700 million yuan for the full year; cross-border e-commerce contributing significantly [24] Future Plans - **Market Expansion**: Increased investment in cross-border e-commerce, particularly in the US and Southeast Asia, with potential establishment of offices based on market demand [25] - **Operational Efficiency**: Improvements in operational efficiency through the integration of the DIP system into the office procurement platform [26] Business Growth Goals - **Main Business Growth Target**: Aim for steady double-digit growth through internal structural adjustments and increased MO share [31]