Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company experienced a 3.9% year-on-year increase in revenue for 2024, reaching 5.74 billion yuan, while the net profit attributable to shareholders decreased by 33.5% to 500 million yuan [5][11] - The first quarter of 2025 saw a significant decline in performance, with revenue dropping by 14% year-on-year to 950 million yuan and net profit down 84% to 28.34 million yuan [6][11] - The company is undergoing business transformation and optimization, focusing on brand operation and member management to strengthen its market position [11] Financial Performance Summary - In 2024, the company reported a revenue of 5.74 billion yuan, with a net profit of 500 million yuan, and a basic EPS of 1.20 yuan [5][11] - The gross margin for 2024 was 73.7%, slightly down from the previous year, but has shown signs of recovery since Q4 2024 [8][11] - The company’s operating cash flow for 2024 was 690 million yuan, reflecting a 13.8% increase year-on-year [10] Revenue Breakdown - In 2024, online channels contributed 68% of total revenue, with a year-on-year growth of 10.1%, while offline channels accounted for 22% with a decline of 10.7% [7][11] - The skincare segment remains the largest contributor to revenue at 84%, although it saw a slight decline of 1.4% year-on-year [7][11] Cost and Expense Analysis - The company’s expense ratio increased by 4.3 percentage points to 64% in 2024, driven by higher sales and management expenses [8][11] - The sales expense ratio rose to 50%, primarily due to increased marketing and promotional activities [9][11] Future Earnings Forecast - The report projects net profits of 690 million yuan, 830 million yuan, and 1 billion yuan for 2025, 2026, and 2027 respectively, with corresponding EPS estimates of 1.62 yuan, 1.97 yuan, and 2.36 yuan [11][12]

Core Insights - The growth of quality original brands continues, with over 4,100 brands on Tmall achieving over 100 million in transactions in 2024, maintaining a growth rate of 20% [1] - Tmall's strategic resource allocation focuses on merchant incentives, new product support, brand membership, quality live streaming, and user growth to expand the business ecosystem and ensure sustainable development [1][3] Group 1: Brand Support Strategies - Tmall's support for quality merchants is a long-term strategy aimed at maintaining high-value supply in the ecosystem amidst industry profit erosion due to market competition [4] - By the end of March, 90% of brands in beauty, apparel, and outdoor sports achieved double-digit growth targets through commission trials [5] - Tmall's systematic support strategy for quality brands is set to expand across all industries with high-frequency coverage throughout the year [6] Group 2: New Product Launches - Tmall launched 4,500 super new products in 2024, generating a total transaction of 100 billion, with 34,000 super single products achieving over 10 million in sales [10] - The competition for new products is fundamentally a battle for consumer attention, with the probability of new products becoming bestsellers decreasing [11][13] - Tmall has lowered the entry barriers for new products, allowing emerging brands with limited budgets to participate in the market [16] Group 3: User and Membership Growth - There are still 11.8 billion user relationships that have not become members, indicating significant potential for membership growth [27] - Tmall's data shows that over 50% of business from top brands is contributed by brand members, highlighting the importance of membership in driving sales [29] - The platform is enhancing membership operations to convert private domain activity into public domain traffic, creating a positive cycle of membership growth and sales increase [34] Group 4: Market Trends and Consumer Behavior - The consumer market is witnessing a shift towards value-driven consumption, with brands focusing on product innovation rather than low prices [46][48] - Tmall's internal observations indicate that the growth in the sports category is primarily driven by female consumers, suggesting a shift in target demographics [48] - The platform aims to create real value for users rather than being driven by short-term sales anxiety, indicating a long-term vision for brand growth [51]